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Clean up your Act – ensure your dates comply with the SOPA

Construction Law News | June 2017

In the recent decision of Abergeldie Contractors Pty Ltd v Fairfield City Council [2017] NSWCA 113 the appellant builder of road works had served a payment claim on the respondent Fairfield Council (its client) under s.13 of the Building and Construction Security of Payments Act [NSW] ("the Act"). The contract provided that the “reference date” for the final payment claim to be served by Abergeldie Contractors (“the Builder”) was on the 28th day of the month immediately after "practical completion" had occurred.

The Builder notified the Council that in its view, practical completion occurred on 16 September 2016 and the Builder requested a certificate of practical completion from the Council (in accordance with the terms of the contract). The Council issued that certificate of practical completion on 25 November 2016. The Builder issued the payment claim on 25 November 2016 and the Council served a payment schedule stating the payment claim was not valid because it had not been served on the 28th day of the month in which practical completion had occurred, namely September 2016.

The Court was required to determine the date of practical completion for the purposes of ascertaining the reference date and the validity of the Builder’s payment claim. A reference date on a payment claim is an essential component of a valid payment claim under s.8(2) of the Act.

The Court of Appeal accepted that practical completion only occurred under the contract when the Council’s superintendent had provided its certificate of practical completion, and that certification could not in these circumstances have a retrospective effect, and there was no evidence to conclude that practical completion occurred on the date alleged by Council, being the date that the Builder notified the Council that in its view practical completion had occurred. The appellant Builder was successful in obtaining orders enforcing its payment claim.

This case highlights the importance of having clear and concise terms in a contract regarding the reference date on which a payment claim may be served by a builder on its client. The reference date is critical to the validity of a payment claim and can mean the difference between being paid and not being paid for work.

Forum Law Solicitors is a boutique legal practice in Sydney’s inner-west suburb of Leichhardt. We advise and assist builders and subcontractors to review or draft contracts and advise on all areas of building and construction law including resolving and litigating disputes. Contact us on (02) 9560 3388 8am–6pm Monday–Friday for a 30-minute obligation-free call to discuss your concerns.

Forum Law is an active member of several reputable law and industry associations. We have recently obtained ISO9001 accreditation.