Changes to the Building & Construction Industry Security Of Payment Act 1999 (NSW) Commence on 21 October 2019.

Significant changes to the Security Of Payment Act NSW that come into force on 21 October 2019 are the most important changes to the Security Of Payment Act NSW since it’s inception in 1999.

The changes mean the Security Of Payment Act NSW will be more effective than ever for subcontractors and contractors seeking payment of disputed claim,s and or claims being ignored, for building and construction work that has been carried out, and or related goods and services that have been provided, in New South Wales.

The changes are:

  1. Security Of Payment Act NSW payment claims will (once again) need to bear the endorsement stating that they are made under the Building & Construction Industry Security of Payment Act 1999.
  2. The need for a ‘reference dates’ to make a claim will be entirely removed from the legislation and claimants will be able to make a claim under the Security Of Payment Act NSW for up to 12 months after completing work or providing goods and services without restriction.
  3. If a construction contract is terminated, the contractor will still be able to make a payment claim under the Security of Payment Act NSW.
  4. A company that has been placed in liquidation or has had external administrators appointed will no longer be able to serve payment claim under the Security Of Payment Act NSW.
  5. A claimant will be able to withdraw an adjudication application lodged under the Security Of Payment Act NSW. A respondent will be able to object to the withdrawal if they chooses to if an adjudicator has been appointed, but the adjudicator will have the final say on whether or not the withdrawal by the claimant is accepted or not.
  6. The Security Of Payment Act NSW Act will give the Supreme Court the express right to set aside an adjudication determination for jurisdictional error. If only part of a determination made by an adjudicator under the Security Of Payment Act NSW Act is affected by jurisdictional error, the court may set aside that particular part only, while ordering that the balance of the determination will stand.
  7. Maximum subcontractor payment terms for contracts governed by the Security Of Payment Act NSW Act will be reduced down to 20 business days from 30 business days.
  8. The maximum penalties for companies for offences under the Security of Payment Act NSW will increase and directors and managers will become personally liable for such penalties in some circumstances.

The change to the Security Of Payment Act NSW relating to “reference dates” will eliminate many arguments about a claimant’s right to make a claim that have been raised by respondent’s since the inception of the Security Of Payment Act NSW and will focus the adjudication process on the actual issue of non payment.

This change alone will increase the claimant’s chance of success at adjudication dramatically.

The shortening of the maximum time for payment under a construction contract is also a huge improvement. The 20 business day maximum term for payment will also be the default if there are no terms of payment expressly agreed in a contract.

But…. if possible, we strongly encourage that all agreements for building and construction work  be in writing, and signed by both parties, and state clearly that payment terms are “10 business days”.

For further clarification of what these changes will mean for you and your business please call to discuss specific scenarios that may affect you.