In brief - Supporting statements must accompany payment claims made by head contractors under contracts entered into from 21 April 2014
The prescribed form for the new supporting statement to accompany payment claims made by head contractors under contracts entered into from 21 April 2014 has been recently published in the Building and Construction Industry Security of Payment Amendment (Supporting Statement) Regulation 2014.
Significant amendments to the Building and Construction Industry Security of Payment Act 1999 commence on 21 April 2014
In our article Significant changes proposed for security of payment legislation in NSW we reported on the introduction of a bill to the NSW parliament on 24 October 2013, proposing significant changes to the Building and Construction Industry Security of Payment Act 1999 ("the Act").
The Building and Construction Industry Security of Payment Amendment Bill 2013, as amended in the NSW Legislative Council, passed both houses of parliament on 14 November 2013 and was given assent on 20 November 2013. (Please see our earlier article Retention money to be held in trust for subcontractors under security of payment laws in NSW.)
The amendments to the Act introduced by the Building and Construction Industry Security of Payment Amendment Act 2013 will commence on 21 April 2014 and will apply to contracts entered into from 21 April 2014.
Amending regulation clarifies supporting statement requirement and prescribes form of supporting statement
The Building and Construction Industry Security of Payment Amendment (Supporting Statement) Regulation 2014, which is to commence on 21 April 2014, amends the Building and Construction Industry Security of Payment Regulation 2008 by inserting new clause 4A and inserting a prescribed form for the supporting statement as a schedule to the Regulation.
New clause 4A provides that:
- the form contained in Schedule 1 is prescribed;
- a reference to an amount due and payable in a supporting statement (including a retention amount due and payable) does not include a reference to an amount in dispute between the head contractor and a subcontractor (which must be separately identified in the attachment to the supporting statement);
- the requirement to provide a supporting statement relates only to subcontractors or suppliers directly engaged by the head contractor;
- any payments referred to in a supporting statement that are due and payable (and not in dispute) must be paid in full before any declaration in the prescribed form is signed.
The prescribed form for the supporting statement requires a head contractor to:
- list all relevant contracts between the head contractor and subcontractors;
- declare (by a director or a person authorised by the head contractor) that:
- the person making the declaration is in a position to know the truth of the matters contained in the supporting statement;
- to the best of the person's knowledge and belief, all amounts due and payable to subcontractors have been paid (not including any amount identified as an amount in dispute).
- complete an attachment (in the prescribed form) which:
- lists the names of subcontractors which have been paid all amounts due and payable (as well as the ABN of each subcontractor, contract identifier/number, period of works and the date of the head contractor payment claim);
- lists the names of subcontractors for which an amount is in dispute and has not been paid (as well as the ABN of each subcontractor, contract identifier/number, period of works and the date of the head contractor payment claim).
Head contractors need to implement processes to comply with new supporting statement requirement
As the new supporting statement requirement for head contractors applies to contracts entered into from 21 April 2014, head contractors should implement the appropriate processes, to the extent they have not already done so, to comply with the supporting statement requirement as soon as possible.
As there is no guidance under the amending regulation as to what will constitute an amount being in dispute, it is to be expected that disputes will arise as to whether amounts claimed by subcontractors are legitimately in dispute for the purposes of the supporting statement.
Head contractors urged to be cautious when making declarations in supporting statements
Having regard to the new statutory offence where a head contractor serves a payment claim accompanied by a supporting statement which is known to be false or misleading in a material particular in the particular circumstances, a conservative approach should be adopted by a head contractor when making the declaration as to payment of subcontractors and amounts being in dispute with subcontractors.