By Andrew Blair
The Victorian Court of Appeal’s decision in JG King v Hunters Green [2024] VSCA 310 (“JG King”) exposed a critical tension in the Building and Construction Industry Security of Payment Act 2002 (Vic) (“SOP Act”): whether retention moneys and final certificates could delay or defeat a contractor’s statutory entitlement to payment. The Building Legislation Amendment (Fairer Payments on Jobsites and Other Matters) Bill 2025 (“Bill”)responds directly, reshaping the legal landscape for progress payments and performance securities.
How the Bill Responds to JG King
Niall and Kennedy JJA in the majority, held that retention moneys represent amounts earned for construction work and are not excluded from the SOP Act, and that they are held as security does not preclude their inclusion within a progress claim. In dissent Macaulay JA took a narrower view and concluded that security retentions ceased to be part of a claim for construction work, and became subject to separate contractual mechanisms.
The Bill clearly responds directly to this decision by:
- Creating a statutory right to release of performance securities (retention and bonds), with dedicated claim and adjudication procedures (new Division 1A).
- Limiting contract terms that delay payment or release beyond 20 business days after a claim is served.
- Removing the “excluded amounts” regime, which previously blocked claims for variations and delay costs.
- Replacing reference dates with a named-month claim system and special rules for December–January.
- Tightening adjudication procedure, removing review rights and enforcing adjudication certificates as judgment debts.
- Restricting defences: respondents must include all reasons in their payment or performance-security schedules or lose the right to raise them later.
Implications for Existing Contracts
Contracts that rely on final certificates or retention release clauses to delay payment may now be overridden. Retention moneys are no longer shielded from statutory claims. Adjudication will move faster, and enforcement will be harder to resist. Solicitors must audit their clients’ existing contracts and disputes to determine which fall under transitional carve-outs and which will be governed by the new regime.
Practical Steps for Solicitors
In anticipation of the implementation of the Bill, which had its second reading speech on 11 September 2025 and was passed by the Legislative Council of parliament on 30 October 2025, solicitors should take the opportunity to value add to their clients’ business by considering the following practical steps.
- Audit Contracts and Disputes
Identify defects liability periods, retention amounts, bond providers, and claim/adjudication timelines. Flag matters likely to be affected by the Bill’s transitional provisions. - Redraft Risk Clauses
Amend clauses that delay payment or release beyond statutory limits. Rework pay-when-paid and cascading payment clauses to avoid invalidation. - Implement Schedule Discipline
Ensure clients include all reasons for withholding payment or refusing release in their schedules. Create checklists and templates for compliance. - Prepare Performance Security Templates
Draft compliant claim and schedule forms for retention and bond release under the new statutory framework. - Train Project Teams
Educate clients on the new monthly claim rules, blackout periods, and adjudication timelines. Update internal workflows and calendaring systems. - Monitor Regulatory Changes
Watch for regulations that may void classes of contract clauses. Prepare to respond to industry consultations.
The Bill prioritises cashflow and enforceability. Solicitors must act now to protect client entitlements, avoid unenforceable clauses, and prepare for faster, stricter adjudication.
Liability limited by a scheme approved under Professional Standards legislation. The information referred to above has been supplied by the barrister concerned. Neither Victorian Bar Inc nor the barrister’s clerk have independently verified the accuracy or completeness of the information and neither accepts any responsibility in that regard.
