01 May 2019

Amendments to NSW Security Of Payment Laws

This article was written by Steve Swan, Larissa Buriak and Lucinda Everson

On 28 November 2018, the Building and Construction Industry Security of Payment Amendment Act 2018 (NSW) (the Amendment Act) received royal assent.

The Amendment Act changes to the Building and Construction Industry Security of Payment Act 1999 (NSW) (the Act) come into force on 21 October 2019.

The key changes under the Amendment Act are outlined below.

1. Payment Claims

1.1. Payment claim must be labelled

A payment claim must state that it is a payment claim “made under the Building and Construction Industry Security of Payment Act”.

1.2. Post-termination payment claims

If a construction contract has been terminated, payment claims can be served on and from the termination date.


2. Progress Payments

2.1. Time for payment reduced

Progress payments need to be made to a subcontractor no later than 20 business days after a payment claim is made. Under the present regime, the contractor has 30 business days to make payment.

Parties to construction contracts remain free to agree to a shorter timeframe.

2.2. Removal of “reference date”

If a construction contract has been terminated, payment claims can be served on and from the termination date.


3. Corporations in Liquidation

A claimant corporation in liquidation is prohibited from taking any steps under the Act.


4. Adjudication

4.1. Timeframes

An adjudicator has 10 business days from either:

  1. receiving a response to an adjudication application (that is, from a principal responding to a contractor or from a contractor responding to a subcontractor); or
  2. the period in which a response may be made (5 business days after receiving a copy of the adjudication application), to make a determination.

A claimant can now withdraw an adjudication application at any time before the determination is delivered.

4.2. Courts empowered to partially sever adjudication determinations

A new section 32A allows the Supreme Court to sever a part of an adjudicator’s determination if that part of the determination is affected by a jurisdictional error. The Court may confirm the balance of the determination.


5. Enforcement and Penalties

5.1. New Part 3A providing investigation and enforcement framework

The new Part 3A will allow for authorised officers of the Department of Finance, Services and Innovation (or investigators appointed under the Fair Trading Act 1987 (NSW)) to investigate, monitor and enforce compliance with the Act.

The powers include the ability to require information and records, enter premises, and seize material.

Prior to the Amendment Act, section 36 provided for powers only in respect of supporting statements. That provision will be repealed as part of the introduction of the new Part 3A.

5.2. Penalties increased

Penalties throughout the Act have been increased, with maximum penalties for corporations rising to $110,000.

5.3. Company directors and managers personally liable

Directors and people who are involved in the management of companies will now be held responsible for the commission of corporate offences under the Act.

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