Australia: Commencement of Security of Payment Act amendments in NSW
Last Updated: 13 April 2014

The amendments to the Security of Payment Regime in NSW may commence on 21 April 2014

According to the NSW Government, the amendments to the Building and Construction Industry Security of Payment Act 1999 (NSW) (Act) (which we told you about in our updates of 13 and 14 November), will take effect on 21 April 2014. If so, the changes to the Act will apply in relation to all construction contracts entered into on and from that date.

A reminder of the changes

All payment claims are caught

  • Claimants will no longer need to note on a payment claim that the claim is made pursuant to the Act to obtain the benefit of the Act.
  • Any claim for payment under a construction contract will now be subject to the provisions of the amended Act.
  • Recipients of claims for payment should treat those claims as claims made under the Act.

Prompt payment

The amended Act prescribes times for making payments:

  • Progress payments from a principal to a head contractor are due and payable 15 business days after receipt of the payment claim.
  • Progress payments from a head contractor to a subcontractor are due and payable 30 business days after receipt of the payment claim.

Supporting statements

  • A head contractor must not serve a payment claim on a principal unless it is accompanied by a "supporting statement". A failure to do so is an offence with a maximum penalty of $22,000.
  • A supporting statement is a declaration that the head contractor has paid its subcontractors all amounts that have become due and payable.
  • Penalties of $22,000 or 3 months imprisonment or both apply for knowingly providing a false or misleading supporting statement.

Retention money

  • The amendments to the Act also provide that regulations may be made requiring head contractors to hold retention monies in a trust account.
  • These regulations have not yet been made.

Get your house in order

  • Contracts entered into before 21 April 2014 will not be affected by the amendments.
  • You should identify which of your contracts fall under the amended Act and which are governed by the current Act and be prepared to administer them accordingly.

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