Security of Payment – More Changes

On 21 November 2018, the NSW government passed the Building and Construction Industry Security of Payment Amendment Act 2018.

This will make changes to the security of payment regime, and will take effect when the government announces so in the NSW Government Gazette.

So what are the main changes that builders and developers need to be aware of?

• A payment claim must once again state that it is made under the Building and Construction Industry Security of Payment Act 1999 (“endorsement”);
• Progress payments to a subcontractor are now due and payable 20 business days after a payment claim is issued (previously: 30 business days);
• The ‘reference date’ system for payment claims is abolished. Now, where the contract is silent on dates for serving payment claims, a payment claim may be served on the last day of the month that construction work was first carried out under the contract, and then for the last day of each month of work afterwards;
• Where a contract is terminated, a payment claim may be made from the date of termination;
• If a head contractor company issues a payment claim to a principal and provides a supporting statement that is known to be false or misleading, then any company director who knows about this false or misleading statement can be convicted of an offence;
• The Minister for Innovation and Better Regulation may make codes of practice to be observed by adjudicating organisations, and may cancel an adjudicating organisation’s authority for non-compliance with these;
• Once a corporation is in liquidation, it cannot serve payment claims or enforce them;
• Authorised officers from the Department of Finance, Services and Innovation now have extensive powers for the purposes of investigating, monitoring and enforcing compliance with the Act; and
• Maximum penalties for various provisions have been increased.

The amendments also confirm what the High Court has already decided: that there are very limited grounds for appealing the decision of an adjudicator once it is made.

Other changes have also been made. These changes do not apply to any contract entered into before the amendments take effect. If you’d like to know more, please contact us on +612 9248 3450 or email [email protected].