How do you get paid under the Security of Payment Act?

What the Act is for

The Building and Construction Industry Security of Payment Act was introduced to keep cash flowing through the construction industry. Contractors, subcontractors and suppliers often cannot absorb long delays in payment while paying those below them.

The Act gives a right to payment for construction work done, or related goods and services supplied, and covers both progress claims and final claims. A claim can be made while a project is still under way. It also sets up adjudication, a quick process for deciding how much is payable on a disputed claim, administered by the Singapore Mediation Centre.

The payment claim

The process starts when the claimant serves a payment claim. It must be served by the date or within the period set out in the contract. Where the contract is silent, the High Court has held that the claim is treated as served on the last day of the calendar month. A claim served earlier than the contract allows is treated as served on the contractual date.

Getting the date of service right matters, because every later deadline runs from it.

The payment response

The party receiving the claim must serve a payment response by the date in the contract or within 21 days after the claim is served, whichever is earlier. If the contract says nothing, the response is due within 14 days.

The response should set out the amount the respondent will pay and its reasons for paying less than the claimed amount. Respondents are generally limited to the reasons given in their payment response if the matter goes to adjudication, so a late or incomplete response can be costly.

Applying for adjudication

If the claim is disputed, or no response is served, there is a 7-day dispute settlement period. After that, the claimant has 7 days to serve a notice of intention to apply for adjudication and to lodge the adjudication application with the Singapore Mediation Centre.

The application includes the prescribed form, a copy of the notice of intention, the payment claim, any payment response, and the relevant contract terms, together with the fees.

These windows are applied strictly. An application lodged too early or too late can mean the adjudicator has no jurisdiction, and the determination can later be set aside. Missing the window for a particular payment claim can mean losing the right to adjudicate it.

The adjudication

The respondent may lodge an adjudication response within 7 days of receiving the application. An adjudicator appointed through the Singapore Mediation Centre then decides how much is payable, on a short timetable.

The determination is binding on the parties, but only on an interim basis. The same issues can be reopened later in arbitration or court proceedings, often after the project is complete. A determination can also be challenged in the High Court on limited grounds, and in some cases reviewed. A party who wants to challenge a determination generally has to pay the adjudicated amount first, to be held pending the outcome.

With the court's permission, a determination can be enforced like a court judgment.

Practical points

For both claimants and respondents:

• Read the payment provisions of your contract before the first claim is served.
• Diary every deadline as soon as a claim or response is served.
• Keep proof of when and how each document was served.
• As a respondent, serve a full payment response on time, setting out all your reasons.
• Take advice early, as there is little time to correct mistakes once the timetable starts.

Getting advice

Security of payment disputes move quickly. A lawyer can check your contract and the documents served so far, work out the deadlines that apply, and help prepare or respond to a payment claim or an adjudication application.