In September 2025, the Building Legislation Amendment (Fairer Payments on Jobsites and Other Matters) Act 2025 (BLA Act) foreshadowed significant amendments to the Building and Construction Industry Security of Payment Act 2002 (Vic) (Act). Those amendments have now come into effect as of 15 April 2026.¹

The amendments substantially widen the scope of adjudication claims that can be pursued in Victoria and introduce other changes that more closely align Victoria’s adjudication regime with that of other Australian jurisdictions.²

The changes apply retrospectively to contracts predating 15 April 2026, except in respect of payment claims under the Act that were served prior to that date.

Below are some of the key changes you ought to be aware of.

Summary of the key amendments

Expanded scope of adjudication claims

The concepts of ‘excluded amounts’ and ‘claimable variations’ have been abolished through the repeal of section 10A and 10B of the Act. Adjudications in Victoria may now involve claims for latent conditions, time-related costs, and changes in regulatory requirements. The provisions in relation to non-claimable variations and the assessment of whether the contract provides a “method for resolving disputes” are (thankfully) no more.

Conversely, respondents in Victoria may now, in their payment schedules, deduct certified liquidated damages from payment claims where there is a set-off clause or another contractual mechanism for doing so.³

Although the ability to adjudicate delay claims will be a welcome relief for many contractors, preparation — including the potential briefing of experts — may need to commence well in advance of the service of a payment claim. This is because the time periods for issuing an adjudication application in respect of such a claim remains 10 business days from the payment schedule disputing the claim which will be insufficient for all but the most straightforward delay claims.

Right to claim a release of security

Payment claims can now include claims for the release of performance security, which includes retention money, performance bonds, or guarantees (performance security claim).⁴

This puts to rest the previous controversy as to whether a claim for retention moneys was a claim for “construction work” under the Act.⁵

A performance security claim can be made where there is no entitlement to retain the security, for example upon practical completion or expiry of the defects liability period (DLP) as provided for in the contract. The date on which the performance security is released is as per the contract, provided that the period must not exceed 20 business days after the performance security claim is served.

If the contract does not expressly provide for when performance security should be released, the performance security claim may be served on or after 20 business days following expiry of DLP. The performance security must then be released within 10 business days after service of the claim.

If the contract does not specify a DLP, a deemed DLP now applies which commences with the date of practical completion and ends with the day on which work to rectify any omission or defect is completed.

As with any other payment claim under the Act, the performance security claim must:

• identify the work to which the claim relates;
• specify the type and the amount of performance security claimed; and
• state that the claim is made under the Act.

A respondent wishing to resist a performance security claim must, in its payment schedule, provide reasons as to why it is entitled to do so. For example, security may be retained if there are defects and the respondent has served a notice to rectify which extends the date for release or if after DLP a notice is served under section 35 of AS4000 and a separate DLP is nominated for completion of the defect rectification.

If the respondent fails to provide reasons within 10 business days of the performance claim, the same consequences follow as in the case of a failure to respond to a standard payment claim, namely the respondent becomes liable to release the security and the claimant may apply to court for an order that it do so, alternatively may commence adjudication seeking release of the security.

Written notice before any recourse against security

Regardless of whether the parties are engaged in adjudication, no recourse against security provided under a construction contract is now permitted in Victoria unless 5 business days written notice is given to the party who provided the security.

The notice must identify the construction contract, the provisions in the contract relied upon and the circumstances that entitle the party to have recourse.

Power to nullify notice-based time bars

Modelled on the WA Act equivalent, a new section 13A of the Act empowers a decision maker (which includes an adjudicator, a court, an arbitrator or expert determiner) to declare a notice-based time bar clause ‘unfair’ if compliance would be unreasonably onerous or not reasonably possible. Examples of such clauses includes EOT notices, claims for delay damages, and notices claiming variations and latent conditions.

Not every time bar will be deemed unenforceable. The factors to be considered are:

• when the party required to give notice would reasonably have become aware of the last day on which notice could be given;
• when and how notice is required to be given;
• the relative bargaining power of each party when entering into the contract; and
• if compliance with the provision is alleged to be unreasonably onerous, whether the matters set out in the notice are final and binding.

The onus of proof in respect of the above factors lies on the party seeking to avoid the time bar. It will not be sufficient for a party to contend that it did not read and understand the terms of the contract or lacked commercial and technical competence.

Examples of clauses that could meet the above criteria are where the period of time for compliance is so short that it does not allow a contractor to appreciate that it has an entitlement or where the information required under the notice cannot reasonably be to supply within the period.

The existence of a time bar in a related contract, for example in an upstream contract, is irrelevant to whether it should be regarded as unfair.

The validity of a time bar is determined on a case-by-case basis. Unlike similar provisions in the Unfair Contract Terms legislation,⁶ once declared invalid, the clause may continue to operate in other circumstances.

Maximum payment terms

Payment terms can no longer be any later than 20 business days after the payment claim is served.

If no payment terms are stated, the deemed payment terms are 10 business days after the earliest date on which the claim can be served. This gives rise to the anomalous outcome that payment may fall due before service of the claim.

Timing of payment claims

The concept of a ‘reference date’ as the trigger for issuing a payment claim has been abandoned.

Regarded as ‘very confusing’⁷ and open to abuse — particularly where a principal terminates a contract to avoid the accrual of a reference date⁸ — the concept has now been replaced with a right to make one payment claim per month on and from the last day of the month in which work was first carried out, and each subsequent month in which further work is performed.

Milestone progress claims longer than a month including for stage payments by builders under domestic building projects where the owner is a residential developer can still be made outside the SOPA regime but not as payment claims under the Act.

A contract may still stipulate that payment claim can be served earlier than the last day of each month. A payment claim served earlier than the last day of the month or the date stipulated for service is not invalid⁹ and is now simply deemed to be served on the earliest date on which it could be served.

Repeat payment claims for the same work in a named month are still not permissible but it remains possible to ‘roll forward’ unpaid claims into a subsequent month’s payment claim.

Termination no longer brings to an end the accrual of any further right to serve a payment claim.¹⁰ Following termination, contractors now have an express right to make a final payment claim including a claim for release of any security.

The “drop dead” date after which no payment claim can be served is now the later of the date determined under the contract (for example, the final payment claim after DLP) or six (6) months after practical completion of all construction work to be carried out or all goods and services to be supplied under the contact.

All other requirements for payment claims remain, including that it expressly states that it is made under the Act and that it sufficiently identifies the construction work and goods and services to which it relates.

Christmas shutdown period

The definition of ‘business day‘ is amended to block out the period from 22 December to 10 January. Payment claims for work or goods or services supplied between 22 December and 31 December may be served on or after 31 January the following year.

This recognises that the construction industry traditionally shuts down over the Christmas period and while it will not prevent respondents from being “ambushed” with adjudication applications lodged immediately before Christmas, the time period for responding (still 5 business days) will only start on the next business day after 10 January.

New reasons in an adjudication response are prohibited

A respondent may no longer raise new reasons for withholding payment that were not identified in its payment schedule. As a result, payment schedules must be carefully prepared to ensure all reasons and supporting details are identified at the outset.

How should you prepare for these changes?

For Contractors, the following must now be considered:

• If EOT, delay damages claims or complex latent condition claims are contemplated, prepare well in advance of the month in which the payment claim is served.
• Include in any payment claims all claims for release of any security, including any retention.
• Consider whether any time bars may now be declared invalid under the above provisions.
• Ensure that only one payment claim under the Act is served per month.
• Ensure that the final payment claim is served within the time period under the contract or 6 months after practical completion of all construction work to be carried out or all goods and services to be supplied.
• The Christmas period may no longer be a time of the year to ambush the principal with a payment claim or adjudication application.

For Principals or head contractors facing claims by sub-contractors, the following must now be considered:

• If EOT or delay damages claims are being flagged by a contractor, carry out investigations as early as possible.
• Ensure that your contracts have a properly drafted set-off clause that entitles you to deduct LDs from payment claims and ensure these are certified.
• Ensure that payment terms are not longer than 20 business days.
• Ensure that defect notices are served to extend the date for PC and DLP so that you can defend performance security claims.
• Ensure that time bar clauses are not overly onerous and that there is a severance clause in your contract should the time bar be declared invalid.
• Provide 5 days’ notice before recourse against any security.
• Include all reasons for withholding payment in your payment schedule and as much detail as possible.

Our team has significant depth of experience in relation to adjudication claims and we are happy to discuss these changes with you should you have any questions.

The C&I team in Victoria dealing with adjudication claims is: Paul Graham, Partner, Theo Kalyvas, Partner, Leighton Moon, Partner, Brian Rom, Partner, Tara Nelson, Special Counsel, and Fin Neaves, Senior Associate.

This article was written by Brian Rom, Partner.

¹ Two provisions are excluded dealing with performance security claims and adjudicators’ fees. The exclusion of s25(4) of the BLA Act in relation to performance security is curious as this prevents an adjudicator from considering performance security schedules and submissions under s 23(2) of the Act.

² Many of the changes are modelled on provisions in the Building and Construction Industry (Security of Payment) Act 2021 (WA) (WA Act) and Building and Construction Industry Security of Payment Act 1999 (NSW) (NSW Act).

³ In line with the position in J Hutchinson Pty Ltd v Glavcom Pty Ltd [2016] NSWSC 126 at [57].

⁴ Similar to the provisions in Division 6 of the WA Act.

⁵ Punton’s Shoes Pty Ltd v Citi-Con (Vic) Pty Ltd [2020] VSC 514 and Hunters Green Retirement Living Pty Ltd v J.G. King Project Management Pty Ltd [2023] VSC 536.

⁶ Part 2-3 of Australian Consumer Law.

⁷ John Murray Review of Security of Payment Laws: Building Trust and Harmony, December 2017 [130].

⁸ Relying on Southern Han Breakfast Point Pty Ltd (in liq) v Lewence Construction Pty Ltd [2016] HCA 52.

⁹ Premature payment claims were not permitted following MKA Bowen v Carelli Constructions [2019] VSC 436.

¹⁰ n 8.