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Construction and Infrastructure update: Security of Payment Act (Vic) update

Dec 10, 2014

As always, the Christmas holiday period is a treacherous time for respondents insofar as the service of payment claims under the Security of Payment Act (Vic) (Act) is concerned.

During the shut-down over the Christmas holiday break respondents should be prepared to be served with, and to respond to, a contractor’s payment claim under the Act. Respondents that fail to respond within time to a payment claim leave themselves open to the possibility of the contractor claiming the amount as a debt due in Court.

Contractor’s service of a claim

Importantly, under the Act, a contractor’s claim may only be served by the later of:

  • the period determined by or in accordance with the terms of the contract; or
  • the period of 3 months after the date to be determined by or in accordance with the terms of the relevant contract as the date on which a payment claim may be made (‘reference date’).

In the case of a one-off payment, if there is no contractual provision, the reference date is the date immediately following the day that construction work was last carried out or goods or services were last supplied.

Service of a claim can be achieved by personal delivery, lodgement at the office, post or facsimile, or, significantly, in any other manner specified in the relevant construction contract.

Respondents are therefore strongly advised to monitor any possible addresses of service throughout the Christmas period to avoid any unnoticed service of a claim. For postal delivery, service is deemed to have taken place, regardless of the respondent’s knowledge, 2 business days after the day the claim was posted, and in the case of facsimile, on the date received, or if after 4pm, the next business day.

What days are excluded over the Christmas Period?

The only days that are excluded over the 2014/15 Christmas period in calculating the respondent’s responsibility to respond to a payment claim are weekends and the following non-business days:

  • Thursday, 25 December 2014 (Christmas day);
  • Friday, 26 December 2014 (Boxing day); and
  • Thursday, 1 January 2015 (New Years day).

By way of example, if a payment claim is served on a respondent on Tuesday, 23 December 2014, then the respondent must respond to the payment claim by Friday, 9 January 2015.

Key point

In order to avoid that unwanted Christmas present over the holiday period, respondents should carefully monitor when and where potential payment claims may arise and appropriately respond to such claims within the time limit.

More information

For more information on how developments in building and construction law affect your rights, please contact Darren Cain, Principal Lawyer and Head of Construction and Infrastructure, on (03) 8600 8835 or dcain@kcllaw.com.au.

Note: This update is a guide only and is not intended to constitute legal advice.