Security of Payment in Victoria: A Guide to Opting-In under Section 14
In the dynamic realm of construction projects, ensuring timely and fair payment is crucial for all parties involved. In Victoria, the Security of Payment Act (‘SOP Act’) plays a pivotal role in facilitating prompt payments for construction work and related goods and services. Among its key provisions, Section 14 outlines the process for creating a payment claim, a vital step in securing your entitlements under the Act.
Section 14 empowers individuals entitled to progress payments to serve a payment claim on the party liable for payment. Let’s break down the key elements and steps involved in creating a claim under Section 14:
Eligibility to Make a Claim:
On each reference date specified in a construction contract, Section 9(1) of the SOP Act grants entitlement to a progress payment to an individual who has committed to performing construction work or supplying related goods and services under the contract. The payment is calculated based on the reference date, allowing the person to submit a payment claim.
Claim Requirements:
The payment claim must be in the prescribed form, contain necessary information, identify the construction work or related goods and services, indicate the claimed amount, and explicitly state that it is made under the SOP Act.
Timing of the Claim:
For progress payments, the claim must be made within the contract-specified period or within 3 months after the reference date.
Final, single, or one-off payment claims must be served within the contract-specified period or within 3 months after the reference date.
Claimable Variations:
Claimable variations, or changes in the scope of work, may be included in the payment claim, whether agreed upon or disputed.
Disputed variations are subject to specific limits based on the original contract sum.
Excluded Amounts:
Certain amounts, known as excluded amounts, cannot be claimed under the Security of Payment Act, such as damages for breach of contract.
Section 10b excludes specific amounts under a construction contract, including those related to non-claimable variations, compensation claims for events like latent conditions, time-related costs, changes in regulatory requirements, damages for contract breach, and other legal claims not arising under the construction contract. Additionally, amounts falling under a prescribed class by regulations are also excluded.
Service of Payment Claim:
The payment claim must be served on the respondent, typically the party liable for payment, through specified methods like in-person delivery, postal services, fax, or email.
Reference Date and Due Date:
The reference date, essential for a valid payment claim, is determined by the contract or defaults to 20 business days after the last reference date.
The due date for payment is either as per the contract terms or 10 business days after the payment claim is made.
Responding to a Payment Claim:
The respondent has 10 business days to provide a payment schedule in response to the payment claim.
Importance of Section 14:
Mastering Section 14 of the SOP Act in Victoria is crucial for those navigating the intricacies of construction payment processes. By adhering to the guidelines outlined in this guide, individuals can confidently initiate and respond to payment claims, fostering a fair and efficient payment environment in the construction industry. Remember, timely and accurate compliance with the Act is key to safeguarding your rights and maintaining a healthy working relationship in the construction sector.
