Procedure for Debt Collection

Procedure for Debt Collection under the Building & Construction Industry Security of Payment Act 2002 (VIC)

Collecting on a debt can be difficult.  As either a construction worker or a supplier of related goods and services working under a construction contract, it has been made a little easier.  The Building & Construction Industry Security of Payment Act 2002 (VIC) aims to ensure that both construction workers and suppliers (herein referred to as claimants) can do just that by granting them a statutory entitlement to that payment.  

In order to ensure this, the claimant must follow a procedure that involves:  

(a)    The claimant making a payment claim against the respondent;  

(b)    The provision of a payment schedule by the respondent;  

(c)     The referral of a disputed claim to an adjudicator for determination;  

(d)    The payment of the amount determined by the adjudicator;  

(e)    Recovery of the progress payment in the event of a failure to pay;  

It is important to be aware that the claimant is entitled to exercise a lien over any unfixed plant or materials supplied by the claimant until payment is received.  However, prior to exercising this lien, a notice in the prescribed form must be served on the respondent.  The claimant should first serve the debtor with a payment claim, which identifies the construction work or related goods and services in question, indicates the claimed amount .  The claim must state that it is made under the Act.  Following this, the claimant may receive a payment schedule from the debtor in response.  To be considered a payment schedule, this response must identify the payment claim to which it relates, indicate the scheduled amount the respondent proposes to make, and identify any amount of the claim which the respondent proposes to exclude.  If the respondent fails to pay the claimed amount or does not meet the schedule payments specified in the payment schedule, the claimant can apply for adjudication * provided the respondent has been notified of this intention within the period of 10 business days immediately following the expired due date for payment and been given 2 business days to issue another payment schedule.  

Following this, the respondent may lodge a response with the adjudicator.  The adjudicator must consider the construction contract in question, the payment claim, the payment schedule, and other relevant matters in making their determination.  Once they have considered all relevant matters, they then determine the amount of the progress payment, the date payment needs to be made and the rate of interest payable.  If the claimant or the respondent is not satisfied with the result, they can make an application for a review of the decision, provided the amount meets the specifications set out in s28A of the Act.  The consequences of not paying the adjudicated amount are that the claimant may suspend the construction work or the supply of related goods and services under the construction contract and request an adjudication certificate under section 28Q.  

*Fees Apply