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Security of Payment Act – Securing your Cashflow during the Pandemic

Posted by Nicholas Achurch | 19 June 2020 | Construction & Infrastructure

We understand that cashflow is difficult to maintain during this pandemic, particularly for the construction industry when site operations have been scaled down to comply with current social distancing measures.

Whilst other methods of recovering payments have been made less potent by recent legislative changes, the Security of Payment Act always provides a solid option for contractors seeking to maintain their cashflow and recoup outstanding amounts which have accrued over the course of a project. None of the rights under this legislation have been affected by recent Covid related regulatory changes in response to the pandemic.

It is worth remembering that SOP Adjudications, although still an interim solution for progress claims can be effectively used as a fast and cheap alternative to filing Court proceedings. Although not immune to subsequent Court challenge our experience is that in most instances they resolve disputes once and for all.

During this time, it would be beneficial for contractors to consider:

  1. The amount and extent of the payment claim to be made – can and should it involve delay or scope change claims as a result of Covid implemented measures;
  2. If you are on the receiving end of a payment claim, the urgency and requirements for serving a valid Payment Schedule within 10 business days;
  3. The capacity to prepare or assist in preparation of an Adjudication Application, including the enforcement of it;
  4. Is a Payment Withholding Request on the Head Contractor or Principal appropriate?; and
  5. What evidence you will need to prove or defend your claims.

The Nexus construction team is highly experienced in this area and has conducted hundreds of Security of Payment matters over the years. If you require any assistance or advice in relation to a SOP claim, please contact Nicholas Achurch or Marcus McCarthy.


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