The Tasmanian Security of Payment Act has commenced
operation. The South Australian and the ACT Acts have passed but
have not yet commenced. Each of the new Acts closely reflect the
NSW legislation, although in the case of Tasmania (unlike its
mainland counterparts) the Act applies to some residential building
These three Acts each apply to a broad range of construction
work. Each Act entitles contractors to receive progress payments
and pursue disputed progress payments by referring them to a rapid
adjudication process. If an adjudicator determines any amount to be
owed, it will be an enforceable debt. However, the outcome of an
adjudication is provisional, in the sense that it will not
prejudice any subsequent arbitration or court proceedings.
Similar schemes are already in force in New South Wales,
Victoria, Queensland, Western Australia and the Northern
The Building and Construction Industry Security of Payment
Act 2009 (Tas) commenced operation on 17 December 2009.
A key point of difference between the Tasmanian scheme and the
security of payment regimes in other jurisdictions is that the
Tasmanian Act applies to building work or construction work that is
performed on residential structures where one party is the owner.
However, homeowners undertaking construction work on their homes
are granted more leniency under the Act (eg. through the use of
more generous timeframes) than commercial entities.
The Act also amends the Judicial Review Act 2000 (Tas)
so that a decision made by an adjudicator under the Act will not
qualify for review under the Judicial Review Act. This is in
response to a recent Victorian case which held that an adjudication
under the Victorian security of payment legislation was susceptible
to judicial review.
Australian Capital Territory
The Building and Construction Industry (Security of Payment)
Act 2009 (ACT) will apply to contracts entered into after 1
The ACT Act is based largely on the NSW legislation but is
silent as to whether it binds the Crown, meaning the ACT Act will
not bind the Crown in right of the Commonwealth. Head contractors
entering into contracts with the Commonwealth should be conscious
that they may be in a position where they have security of payment
obligations under a subcontract without having any security of
payment rights under the corresponding head contract with the
Commonwealth. This position could be altered if the Commonwealth
elects to be bound by the scheme, either by:
including provisions in relevant head contracts on a select
the development of a Commonwealth policy to be bound by the ACT
The ACT Act provides a right of appeal from an adjudicator's
decision to the ACT Supreme Court on a question of law.
The relevant Minister must review the operation of the ACT Act
on 1 July 2012.
The South Australian parliament is yet to proclaim a
commencement date for the Building and Construction Industry
Security of Payment Act 2009 (SA), however a date is expected
to be proclaimed following the General Election in that state on 20
Like the ACT Act, the SA Act is based on the NSW legislation and
is silent as to whether it binds the Crown. However, because of the
Acts Interpretation Act 1915 (SA), the SA Act binds the
Crown in right of South Australia, "but also (so far as the
legislative power of the State permits) to the Crown in any other
capacity" (unlike the position in the ACT).
The definition of "construction work" is slightly
broader than in other states as it includes contracts which govern
construction work involving "fences", while the
definition of "business day" also excludes any "day
on which there is a Statewide shut-down of the operations of the
building and construction industry".
The SA Act also provides:
where a construction contract is silent on the issue, a valid
payment claim must be submitted by the claimant within six
months of the completion of the work to which the claim
relates (NSW, Tasmania and the ACT have 12 months); and
that certain timeframes for various
requirements under the Act (for example, issuing a payment schedule
after the receipt of a payment claim, or making an adjudication
application in circumstances where the scheduled amount is less
than the claimed amount) are set at 15 business
days unlike the period of 10 business days in other
jurisdictions such as NSW, Victoria and the ACT.
The SA Act is to be reviewed by the relevant Minister at the end
of three years following the date on which the Act comes into
operation to ensure the policy objectives remain valid.
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.
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