In November 2023, a report was tabled recommending a raft of changes to Victoria’s Security of Payment Act which, if supported by Government, would bring the Security of Payment Act in Victoria more in line with that in New South Wales and other states.
Authors
Dominic Brown, Senior Associate
Last week the Department of Transport and Planning released the Government’s response, in which the Government has supported almost all of the recommendations in full. Some of the key changes that have been supported in full by the Government are:
- No more ‘second chances’ for respondents to articulate reasons – All reasons for withholding payment to be included in the payment schedule, with section 21(2B) to be repealed [Rec 15].
- Modernise how notices can be served (nb: the Security of Payment Act still currently contemplates service by fax) [Rec 20].
- No more excluded amounts – repeal ss 10, 10A and 10B of the Security of Payment Act [Rec 2].
- Introduce a ‘Christmas blackout period’ – definition of ‘business day’ expanded to exclude 22 December to 10 January inclusive [Rec 4].
- Remove the concept of reference dates and insert a statutory entitlement to claim payment [Rec 3].
- Due date for payment no more than 25 business days after the payment claim has been made [Rec 8].
- Notice based time bar clauses can be declared ‘unfair’ by an adjudicator [Rec 5].
- Claims for retention to be expressly allowed [Rec 9].
- Time limit for making payment claims extended to 6 months [Rec 7].
Government also supports, in principle, the recommendation to engage with the residential building sector to consider amending the Security of Payment Act to encompass construction contracts with homeowners, with amendments to provide that a payment claim made to a homeowner is not validly served unless it is accompanied by ‘standard information’ (ie. a VBA information statement) [Rec 10].
These changes will have a significant impact on the Victorian construction industry moving forward. To get ahead of these changes, and lessen their impact, we recommend that clients undertake a contract ‘health check’, to ensure that any standard form contracts contain adequate protections, particularly in relation to notice based time bars and delay.
More information
KCL Law’s dedicated construction lawyers are available to assist with contract health checks as required. For more information please contact Dominic Brown, Senior Associated on (03) 8600 8851 or djbrown@kcllaw.com.au.
This is a guide only and does not constitute legal advice.