The Security of Payments Act serves as an alternative to traditional litigation for the recovery of unpaid invoices and payment claims in the construction industry. It provides for a faster dispute resolution method, but with the caveat of requiring strict protocols when issuing invoices and payment claims.
For payment claims to be valid under the Act, they must contain specific information requested by the construction contract, and identify the construction work or related goods and services which the payment claim claims for. They must also identify the amount of the payment to be made under the payment claim and must state that the claim is made under the Act.
There are specific circumstances which determine when a particular payment claim or invoice becomes due. Firstly, if the building contract specifies a due date for payment of payment claims and invoices, it will be that date. Or secondly, if the building contract does not specify a clear due date, then it will be 10 business days after the payment claim or invoice is made.
If an invalid invoice or payment claim is submitted, it may bar any enforcement or action on the invoice, and it is likely that the payment claim or invoice will need to be treated as a general commercial payment claim or invoice. It is thus advantageous for construction companies and their advisors to be conscious of the entitlements, rights and obligations surrounding Security of Payments Act payment claims and invoices.