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What is retention?
Retention is a fixed percentage of the total payment due for a contract, withheld for a period as security for performance of your contractual obligations).
It is rightfully a subbies money but claiming retention using the Security of Payments legislation (SOPA) will depend on the form of the payment claim. A claim for ‘retention money’ is not a claim for construction work and therefore the SOPA will not apply.
Foursquare Construction v Chevron [2020] VCC 1928
Facts of the case
Foursquare sought judgment under SOPA after Chevron failed to serve a payment schedule in response to its payment claim.
Chevron disputed the payment claim because it only claimed retention monies which is not a claim for construction works or related goods or services.
Judgment
The Court agreed with Chevron and found that a payment claim solely for the purpose of recovering retention was not construction work and the SOPA does not apply.
Foursquare’s claim was dismissed and they had to pay legal costs to Chevron.
Read more about the case in the Victoria County Court record here
Takeaway Point
Retention moneys may be successfully claimed under the SOPA in certain circumstances.
The Court referred to the judgment in the County Court judgment in Zulin Formwork Pty Ltd v Valeo Construction Pty Ltd. The payment claim was not simply for retention; it included the balance of a contractual sum and variations and therefore it was a payment claim for construction work.
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