What Is a Payment Claim Under SOPA?

What Is a Payment Claim Under SOPA?

By Mark Harley, Principal Solicitor, Boss Lawyers

If you work in the building and construction industry in Queensland, you have almost certainly heard of “SOPA” — the security of payment legislation that gives contractors, subcontractors, and suppliers a fast-tracked right to recover progress payments. But despite its importance, the payment claim process under SOPA is widely misunderstood, and getting it wrong can cost you your right to adjudication.

In this article, we explain what a payment claim is, what it must contain, how to serve one properly, and what happens if you receive one.

The Legislation: Building Industry Fairness (Security of Payment) Act 2017

In Queensland, security of payment is governed by the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (the BIF Act). This legislation replaced the former Building and Construction Industry Payments Act 2004 and introduced a modernised framework for progress payment disputes in the construction industry.

The BIF Act applies to construction contracts — agreements under which a person carries out construction work or supplies related goods and services. It covers written, oral, and partly written contracts, and applies regardless of whether the contract expressly refers to the Act.

The fundamental principle is straightforward: if you do the work, you have a right to be paid. A payment claim is the mechanism by which you exercise that right.

What Is a Payment Claim?

A payment claim is a formal written claim for a progress payment, served under section 68 of the BIF Act. It is not the same as an invoice, although it can take the form of an invoice provided it meets the statutory requirements.

A valid payment claim must:

1. Be in writing
2. Identify the construction work (or related goods and services) to which the progress payment relates
3. State the amount of the progress payment that the claimant claims to be due (the claimed amount)
4. State that it is made under the BIF Act

That last requirement is critical and frequently overlooked. If the claim does not expressly state that it is made under the BIF Act, it is not a valid payment claim — and the claimant cannot proceed to adjudication if the claim is not paid.

What Can You Claim?

A payment claim can include amounts for:

• Contract work: Work performed under the original scope of the contract
• Variations: Additional work directed or agreed to by the principal or head contractor
• Retention: Amounts held as retention that have become due for release under the contract
• Delay costs: Where the contract provides for time-related claims
• GST: The claimed amount should include GST where applicable

You cannot claim for amounts that are not progress payments under a construction contract — for example, claims for damages, interest, or professional fees that fall outside the scope of construction work.

When Must a Payment Claim Be Served?

Timing is governed by reference dates. A claimant is entitled to serve one payment claim per reference date. The reference date is:

• The date specified in the contract for making a progress claim, or
• If the contract is silent, the last business day of each month in which construction work was first carried out (and each subsequent month)

A payment claim must be served within the later of:

• The period specified in the contract for making a claim, or
• 12 months after the construction work to which the claim relates was last carried out

Serving a payment claim after the permissible period means the claim is not a valid payment claim under the Act, and the claimant cannot access the adjudication process.

How to Serve a Payment Claim

Service must comply with the requirements of the BIF Act. A payment claim may be served:

• Personally
• By post to the respondent’s ordinary place of business or registered office
• By email to an email address specified in the contract for service of notices

The method of service matters. If the contract specifies a method of service, use it. If service is disputed, the claimant must be able to prove that the claim was properly served. Keep records of service — delivery receipts, email read receipts, and file notes.

What Happens After a Payment Claim Is Served?

Once a valid payment claim is served, the respondent has two options:

Option 1: Pay the Claimed Amount

If the respondent agrees with the claim, they pay the claimed amount by the due date specified in the contract (or within 10 business days if the contract is silent).

Option 2: Serve a Payment Schedule

If the respondent disputes some or all of the claimed amount, they must serve a payment schedule within the timeframe specified in the contract (or within 15 business days if the contract is silent).

The payment schedule must:

• Identify the payment claim to which it relates
• State the amount the respondent proposes to pay (the scheduled amount)
• If the scheduled amount is less than the claimed amount, indicate why the respondent is withholding payment and the reasons for doing so

The Consequence of Doing Nothing

If the respondent fails to serve a payment schedule within time, the consequences are severe. The respondent becomes liable to pay the full claimed amount — and the claimant may:

• Recover the claimed amount as a debt in court, with very limited defences available to the respondent
• Apply for adjudication

This is the single most important point for anyone who receives a payment claim: you must respond with a payment schedule within time, or you lose the right to dispute the amount.

Common Mistakes That Invalidate Payment Claims

We regularly see payment claims that fail because of technical deficiencies. The most common mistakes include:

1. Failing to state the claim is made under the BIF Act: This is a mandatory requirement. Without it, the document is an invoice, not a payment claim.
2. Insufficient identification of work: The claim must identify the construction work with enough detail for the respondent to understand what is being claimed. Vague descriptions like “works as per contract” may not be sufficient.
3. Serving out of time: Claims served after the reference date window or outside the 12-month limitation are invalid.
4. Multiple claims per reference date: A claimant can only serve one payment claim per reference date. Serving multiple claims for the same reference date can invalidate subsequent claims.
5. Incorrect service: Serving on the wrong entity, at the wrong address, or by a method not permitted by the contract or the Act.

Each of these mistakes can strip the claimant of their right to adjudication. If you are preparing a payment claim, it is worth having it reviewed by a lawyer before service.

Payment Claims and Adjudication

If a payment dispute is not resolved through the payment claim and payment schedule process, the claimant may refer the matter to adjudication. Adjudication is a rapid, interim dispute resolution process in which an independent adjudicator determines the amount payable.

The key features of adjudication are:

• It is fast — typically 10 to 30 business days from application to decision
• It is interim — it determines who holds the money, but does not finally resolve the dispute
• An adjudication decision can be filed as a judgment in court and enforced
• The respondent can only raise reasons for withholding payment that were included in the payment schedule

That last point is crucial. If you are a respondent and your payment schedule does not adequately set out your reasons for withholding payment, you will be unable to raise those reasons at adjudication. The payment schedule is your first — and often only — opportunity to put your case.

Practical Tips

For Claimants

• Include the BIF Act endorsement on every payment claim — make it prominent and unambiguous
• Describe the work clearly and in sufficient detail
• Keep records of service and follow up if no response is received
• Mark your reference dates in the calendar — they determine when you can claim
• Consider getting legal advice before serving your first payment claim under a new contract

For Respondents

• Diarise the deadline for serving a payment schedule the moment you receive a payment claim
• Even if you dispute the claim entirely, serve a payment schedule — silence is treated as acceptance
• Set out your reasons for withholding payment in detail — you cannot raise new reasons at adjudication
• If in doubt, seek legal advice immediately — the timeframes are short and the consequences of missing them are harsh

Get Advice on Your Payment Claim

Whether you are preparing a payment claim or responding to one, the stakes are real. A well-drafted payment claim can unlock rapid payment through adjudication. A poorly drafted one — or a missed deadline — can leave you locked out of the system entirely.

Boss Lawyers regularly acts for claimants and respondents in security of payment disputes across Brisbane and South-East Queensland. If you need advice on a payment claim, contact us or call 1300 267 711.

This is general information only and is not legal advice. You should obtain professional advice specific to your circumstances.