Security of Payment for Waterproofing Work?
It is a common question. What is the Security of Payment Act? The most many contractors can say about it is that they refer to it on the bottom of their invoices. But what is it and how does it work?
In short; Security of Payment is a process whereby a dispute over payment gets decided by an external adjudicator based on written submissions only. No hearing, no meeting, no lawyers. Each side makes its submissions in writing and the adjudicator sends out a written decision as to who-owes-who how much.
From claim to decision in about 5-6 weeks.
There is a different version of this Act in each state but they all contain the basics. There are three parts to this process;
- Payment Claim: The party owed money, the Claimant, sends its client a Payment Claim setting out the work done, and the amount claimed for payment.
- Payment Schedule: Within 10 business days the Client sends back a Payment Schedule which is a document setting out what it is prepared to pay, even if its $0.00, and the reasons for withholding payment.
- Adjudication Application: Within 10 business days if getting the schedule, the Claimant takes its claim, and the payment schedule, and prepares its written
arguments on why it is owed the claimed amount and why the reasons in the payment schedule are wrong. This is wrapped up into an adjudication application and lodged with
an Authorised Nominating Authority who will appoint an adjudicator to decide it.
- Determination: The adjudicator will decide what is owing, if anything. If there is money payable then it is generally due within 5 business days of the determination being released. If the money is not paid the Claimant can register the decision in Court as a judgment. This is not a court hearing. It is done by submitting the paperwork at the court registry.
The process then allows you to get to an enforceable judgment without a lengthy and costly court process. This is its power. We recover about $500,000 every month using this process. So, it’s got teeth.
Back in 2006 I could see the benefits of this process, but also saw that it was highly technical and word intensive. Most contractors did not want to deal with it or take the time out to study it. Most did not want to use lawyers, and most were honest about the fact that they were not
So Contractors Debt Recovery was born
in 2006 to run Security of Payment for contractors. We run the process from start to finish for a fixed fee. If the debt is over $20,000 then there is a small success fee based on what you get paid. In Victoria the Act is quite complicated. It is in fact the most complicated version of all the states and often involves further submissions. We do those at no extra charge. As a general calculation the fee is about 8% of the debt give or take.
This provides a secure and simple way to run these matters, and above all it forces the dispute into the open. If your client is not paying then it will have to make its arguments and back it up with evidence.
The beauty of this process is that it gives your client a taste of what it would be like to argue the matter in court. If they cannot get the reasons to stack up now it won’t get better. We present the Claimant’s case with every shred of evidence we can, so if the claim succeeds then it does so by a country mile. This is why the rate of payment after decision is very high.
We have run many claims for waterproofing and so long as you are clear about the scope
and rate, you’d have a strong claim. The one regular hole is the quantum. You really need to create ongoing take-offs or have the architecturals or some plan to show the areas you have completed. Often these are missing. Also, variations particularly external ones [planter boxes etc] never get documented properly and are always at the end, they are not treated formerly enough.
If you can get basic administration right on your job then the Security of Payment Act can really work for you. Even if a lot of stuff is agreed orally, the Act still applies. There
are strict time limits in Victoria on when you can make your claim, so do not wait more than 8 weeks after completion to have the argument. Otherwise you’ll miss your chance of using this great process.
CONTACTORS DEBT RECOVERY