Amendments to NSW’s Security of Payment Legislation

December 20, 2018

The NSW Parliament has recently passed legislation amending the Building and Construction Industry Security of Payment Act 1999 (NSW). The changes were partly in response to the recommendations made by the Murray Review of Security of Payment Laws across Australia, and were aimed at strengthening the protections afforded to subcontractors under the Act.

 

Some of the most significant changes are as follows:

 

  • claimants will be entitled to progress payments at a statutory minimum of once per month, rather than according to a contractually determined “reference date”;

 

  • the timeframe for when progress payments to subcontractors are due has been shortened from 30 to 20 business days after a payment claim is made. For progress payments to head contractors, the timeframe has been shortened from 15 to 10 business days after a payment claim is made;

 

  • claimants will be entitled to serve a payment claim after a contract has been terminated in order to receive a final progress payment for work carried out (or related goods and services supplied) up to the date of termination;

 

  • the 10 business-day deadline for the determination of an adjudication application will commence from the date on which the respondent lodges an adjudication response, rather than the date on which notice of the adjudicator’s acceptance of the application is served on the parties;

 

  • jurisdictional error will no longer invalidate the whole of an adjudicator’s determination, with the NSW Supreme Court being provided the power to sever part of a determination affected by jurisdictional error;

 

  • authorised officers and investigators appointed under the Fair Trading Act 1987 (NSW) will be given extensive powers to investigate, monitor and enforce compliance with the Act; and

 

  • criminal liability for a corporation’s contravention of the Act will be extended to the corporation’s directors and relevant management staff.

 

These changes mark a departure from the Security of Payment legislation currently in force in other States under the East Coast model (Victoria, South Australia, Queensland, ACT and Tasmania). It remains to be seen whether the other States will follow suit and adopt the same approach.

 

While the commencement date for the amendments is yet to be announced, the changes will not apply to construction contracts entered into prior to the date of commencement of the amendments.

 

A full version of the amending Act can be found here.

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