The NSW Department of Services, Technology & Administration
has released a
discussion paper setting out possible areas of reform for the
regime applying to contractors claiming payment under the
Building and Construction Industry Security of Payment Act
The changes proposed to the Act will have important implications
for owners/principals and contractors alike. Some of the key
reforms proposed in the discussion paper are set out below.
Submissions on the discussion paper and the issues it raises are
due by 8 October 2010.
Exclusion of "predatory claiming practices"
One of the principal aims of the proposed reforms is to prevent
what it describes as "predatory claiming practices". This
label (applied to certain conduct on the part of some claimants)
reflects the concerns of many involved in the construction industry
that the Act is sometimes used in an aggressive or predatory
Certain types of claims may be overly complex or include
excessive documentation. As a result, it is difficult for
owners/principals to adequately respond to, or for an adjudicator
to assess, the claim in the short timeframes prescribed by the
The discussion paper proposes to exclude the ability of
claimants to bring:
prolongation claims (also referred to as
"acceleration", "delay", "disruption"
or "loss of productivity" claims);
claims for damages for breach of contract or breach of
legislation (such as the Trade Practices Act 1974);
claims for latent conditions.
Additional wording to be included in all payment claims
The Act currently requires that payment claims indicate clearly
that they are made under the Act. The discussion paper proposes
that all claims should also carry the following additional
"If the claim is not
paid or otherwise dealt with in accordance with the procedures or
periods prescribed by the Act, the claimant will be legally
entitled to pursue the claim under the adjudication process, or in
certain circumstances, judgment may be entered against the
principal for the full amount of the claim."
This wording is intended to ensure that respondents are alerted
to the possible consequences of failing to comply with the
requirements of the Act in responding to a payment claim.
Time limit for claims
It is also proposed that there be a 12 month time limit for
bringing a claim. While the Act currently provides for a 12 month
time limit, this has been interpreted by the courts as only
requiring some of the work claimed to have been performed in the
last 12 months.
In a move to avoid claims under the Act being brought years
after the relevant work was completed, it is proposed that all work
to which a claim relates must have been completed within the
previous 12 month period.
Interest to be charged on overpayments
The discussion paper proposes that interest apply to
overpayments resulting from adjudications. In other words, where a
progress payment determined by an adjudicator is in excess of the
progress payment finally determined in accordance with the contract
(for example, by arbitration or a court), interest would be charged
on the amount of the overpayment.
Other proposed reforms
Other proposed reforms have important implications for the
adjudication process, in particular:
changes to the criteria for eligibility to operate as an
authorised nominating authority;
specified levels of qualifications, experience and performance
for potential adjudicators;
provision of adjudication applications and responses to the
adjudicator at the same time;
setting a ten day period for the adjudication determination
commencing once both the adjudication application and response are
the possibility of a subcontractor "joining" a
principal in a claim brought by the subcontractor against the head
consideration of limiting the fees adjudicators can charge to
encourage the use of the system for small claims.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
The Sportscraft refunds and returns policy limitations went beyond consumer's rights under the Australian Consumer Law.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).