Using the Security of Payment Act - Q&A
Robert Macindoe has successfully used the Security of Payment Act to recover outstanding fees. He answers key questions about the process.
The Security of Payment Act provides a fast, low-cost debt recovery process that empowers subcontractors, contractors, suppliers and consultants. It ensures continuity of payment to any person who undertakes to carry out construction industry work under a construction industry contract.
The Security of Payment Act has 3 main applications for architects:
- Architects chasing payment
- Builders chasing payment where the architect is the superintendent
- Consultants chasing payment where engaged by the architect
Following firsthand experience of the New South Wales Building and Construction Industry Security of Payment Act 1999 No 46, Robert Macindoe answers key questions about using the Act. See here for Robert's seven-step guide to the process.
Security of Payment – Questions and Answers
Was it a simple process?
Yes. It is a straightforward process that is well defined in the Act.
Did you use a lawyer?
No. It is a do-it-yourself means of debt recovery. The Act and the adjudication application are relatively user-friendly documents to comprehend and to apply.
What did it cost?
$1,210 (inc GST) upfront. However, the determination required the respondent to pay the fees in full as part of the adjudicated amount.
What were the benefits/risks?
The benefit was that we received payment of fees that were well over 365 days old, and which we were getting no response on. The risk was that the client might not use our services again or that they might go digging to make a counter claim. Unfortunately for the client in question, those responsible for not responding or actioning the matter had left the company. We met with the client after and the outcome was amicable.
Why did you use the SOP process?
We saw it seen as our last form of action before writing off the debt. Our invoices had been issued under the SOP Act and the procurement contract under which we provided the services contained a specific clause on the SOP Act.
Were there any tricks that others could get stuck on etc?
Yes. It is critical to have good records and evidence, to follow the steps and timeframes as required under the Act to a tee, and find a good Authorized Nominating Authority. If you are heading to adjudication hope the respondent does not provide a payment schedule in response to the first and second notices. That way the respondent cannot include in the adjudication response any reasons for withholding payment unless those reasons have already been included in the payment Schedule (if any) provided to the claimant.
If you were to use the SOP again, what would you do differently?
The client was embarrassed by being caught out with no ability to head off the adjudication determination. They would have preferred for us to contact the senior management as the staff responsible had left. I’m not sure if the client would still have paid if we had done this.
Our experience was good, quick and successful, and we received with full adjudicated amount including fee. Apart from considering elevating the matter within the client hierarchy I don’t believe there is anything we would change in the process of applying the SOP Act.
We were lucky to find Adjudicate Today through a web search. That was the bit we did not have much information or guidance on. Who or what is an Authorized Nominating Authority? How do they appoint an Adjudicator? Adjudicate Today were friendly, prompt, efficient and overall excellent to work with on our SOP Act Adjudication Application.
Robert Macindoe is a principal of dwp | suters in New South Wales.