What is the Security of Payment Act in NSW?

The Building & Construction Industry Security of Payment Act 1999 (NSW) (‘the SOPA’) aims to facilitate efficient debt recovery processes undertaken by construction companies.  In particular, it regulates the completion of progress payments for completed works by contracted parties (known as a ‘Payment Claim’).

The SOPA provides a framework for the assessment and determination of Progress Payment Claims in the event of party disputes, and marks out timeframes for parties to adhere to.

One of the most significant timeframes the SOPA provides for is the 10 business days (or less if provided in the contract) within which the recipient of a Payment Claim must either pay the sum or serve a Payment Schedule, either disputing the claim or marking out a plan to satisfy the Claim.

Changes in Service Methods in the Security of Payment Act

There are a range of usual requirements for a Payment Schedule to be considered valid, including that it must be in writing and clearly set out the details of the claim.

If the party is disputing the amount of a claim, the exact amount disputed and the reasons for the dispute must also be set out.

As of amendments passed on 27 June 2017, all Sopa Notices (including Payment Claims and Schedules) can now be served by Email. This extension seems logical in the increasingly digital world of business communications where emails are both quick and convenient.

The amendments have replaced fax with email as a valid method of service and they apply to construction contracts entered into both before and after 27 June 2017.

How to Serve a Payment Claim or Payment Schedule

A Payment Claim or Payment Schedule can therefore now be served in a variety of ways including;

• Personal delivery;
• Lodgment during normal office hours at the person’s ordinary place of business;
• Posting addressed to the person’s ordinary place of business;
• Email to an email address nominated by the party for SOPA notices; and,
• A method that is specified in the contract.

Note: Service by email will only be valid if there is a written term in the contract where the party has specifically nominated an email address to receive SOPA notices, and the SOPA notices are sent to that address.

Potential Issues with Email Service

As these amendments are new, it is unclear what issues may arise from email service, and how the Court may deal with this as an issue. It would be prudent to combine one of the other forms of service with email service, if in doubt.

Get in Touch

If you would like to discuss the impact of these amendments with one of our experienced solicitors, please contact Etheringtons Solicitors on 9963 9800 or at [email protected].

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