In a recent case delivered on 8 September 2023, the Supreme Court of Victoria examined whether claims by a contractor for the return of retention funds qualified as “payment claims” under the Act.

JG King was to provide retention funds to Hunters Green at specific project milestones.

Upon project completion, JG King submitted two “Final Payment Claims” that included:

1. A ‘current contract claim‘ for the difference between total work value and payments made.
2. A claim for outstanding retention funds.

Hunters Green challenged both claims, leading to an adjudication in favor of JG King, followed by an appeal to the Supreme Court. The main appeal ground was that JG King’s ‘payment claims‘ didn’t relate to construction work as required by the Act.

Ultimately, Justice Attiwill ruled that the payment claims were linked to “construction work” due to the clear connection between the retention funds and unpaid construction work amounts. 

In summary, this court decision implies that the Act can enforce payment claims, including claims for retention funds from progress payments, when they’re tied to construction work.