THE QUESTIONABLE VALIDITY OF PAYMENT CLAIMS MADE UNDER THE BUILDING AND CONSTRUCTION INDUSTRY SECURITY OF PAYMENT ACT (2004)

Abstract

Cash flow forms an essential component of the construction industry. The importance of prompt progress payment for construction work to progress smoothly, coupled with persistent payment-related problems indicated the need for a security of payment legislation. Singapore’s Building and Construction Industry Security of Payment Act (2005) was modelled after the New South Wales’ Building and Construction Industry Security of Payment Act (1999). Section 10 of the Act requires claimants to submit payment claims for all claims for payment made under the Act. However, certain ambiguities in the wording of the Act have resulted in the questionable validity of payment claims. The result of payment claims being deemed invalid is that claimants could potentially be prevented from their right to apply for adjudication under the Act, or have adjudication determinations made in their favour set aside, resulting in them being unable to receive payment. Through the study of books, journal articles, legislations and cases relevant to the issue of payment claim validity, proposals will be suggested to refine the Act in order to ensure that payment claims more effectively serve their purpose under the Act. Some limitations to this study include the restriction on length, the relatively short time frame and the exclusion of some primary research methods such as surveys and interviews. The Security of Payment Act is a relatively new piece of legislation and much refinement and improvement can be continually made to it.