It is now clear that payment claims served out of time under the Victorian Building and Construction Industry Security of Payment Act (Act) will be invalid after the recent Victorian Supreme Court decision in Hallmarc Construction v Saville [2014] VSC 491.

Facts

Hallmarc Construction entered into a construction contract with Mr Saville for the supply and installation of joinery for a 134-apartment residential development.

The contract between the two parties made no express provision regarding time for payment, defects liability period or a final payment certificate. As a result, the default provisions covering such matters under the Act applied, meaning:

  • the reference date for a final payment claim was the date immediately following the day after the construction work or related goods or services were last carried out (s 9(2)(d) of the Act); and
  • the payment claim must be served no later than 3 months after the reference date (s 14(5) of the Act).

Justice Vickery found that the last date on which Mr Saville undertook construction work, or provided related goods or services, under the contract was 30 September 2013.Therefore the reference date was 1 October 2013, being the date from which the three month period began to run.

Mr Saville submitted his first payment claim on 21 February 2014, and the second payment claim on 16 May 2014. As a result, the Court found that both claims were 'hopelessly out of time' and, therefore, any Adjudication Determination made under the Act was void.

The Court found that while the Act is intended to provide for the timely resolution of claims under construction contracts, the availability of rights conferred by the Act, such as adjudication, depends upon strict observance of the time limits expressed in the Act.

Significance of the case

This decision highlights that parties seeking to assert their rights under the Act need to strictly adhere to its time limits. Nonetheless, contractors and subcontractors who fail to meet the time limits mandated by the Act remain able to seek recourse for any payment claims that may be due in court proceedings (rather than adjudication).

This case also highlights the need to ensure that parties ensure that their contracts specify the time periods for serving and paying claims in compliance with the Act.

For assistance and further information on how to meet your obligations under the Act please contact a member of our construction team below and view our practice webpage here.

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.