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SOPA Reform Bill Released on 24 October 2018

NSW is reforming security of payment laws which protect contractors and suppliers to construction projects. An amending Bill was introduced on 24 October 2018 into the NSW Parliament to promote cash flow and transparency in the contracting chain. 

Progress claims

The concept of a “reference date” will be removed from the legislation.  Progress claims may be served on or after the last day of every month in which construction work is done or materials supplied.   But a contractor doesn’t have to wait if the contract allows a progress claim mid-month.  A further progress claim also can be issued after early termination of the contract.

Work done over several months can be included in a single progress claim.  And work that has previously been the subject of a progress claim can be recycled into progress claims for subsequent months.

The principal will still have 15 business days to process a progress claim by the head contractor.   But the head contractor will be obliged to pay its subcontractors within 20 business days of receipt of a progress claim (down from 30 business days).

A contractor in liquidation will be prohibited from serving a payment claim.  However, contractors in voluntary administration or under other forms of external administration will remain entitled to use the system.

Adjudication

The legislation will permit a Code of Practice to be applied to ANAs.  The content of that Code of Practice won’t be known until regulations are drafted and gazetted in early 2019.

Applicants can withdraw an adjudication application before it is determined.  However, if the respondent objects, the adjudicator can proceed if he thinks it is the “interests of justice” to do so.

The timeframe within which an adjudicator must make a decision has been simplified.  A determination must be provided within 10 days from receipt of an adjudication response or (where the respondent did not provide a payment schedule) 10 days from acceptance of the application.  The determination must be served on both the applicant and respondent and not just the ANA.

Importantly, a determination may not be entirely invalid where the adjudicator has misconceived or exceeded his role.  The legislation will authorise the Supreme Court to overturn the incorrect part of the determination, rather than the whole. In this correspondent’s opinion, that will lead to more litigation, not less.

Compliance and enforcement

Fair Trading officers will be empowered to issue on-the-spot fines for some offences.

They will also be given increased investigatory powers.  They may question people, demand records, demand entry to premises and seize records under pain of substantial penalties, even if the person or records are outside NSW. They will then have two years from the date of the alleged offence  to prosecute  (up from 6 months).

Penalties will be increased.  For example, a corporation may be fined up to $110,000 if it does not provide, or provides false, supporting statements.

Company directors and managers will also be exposed to prosecution if:

  • they are personally involved or concerned in the commission of an offence by the company; or
  • if they fail to take reasonable steps to prevent the commission of the offence.

Hear all about the changes in our SOPA masterclass on Tuesday 30 October 2018 in the Auditorium at 1 Farrer Place Sydney. Click here to book.

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This communication is sent by Kreisson Legal Pty Limited (ACN 113 986 824). This communication has been prepared for the general information of clients and professional associates of Kreisson Legal. You should not rely on the contents. It is not legal advice and should not be regarded as a substitute for legal advice. The contents may contain copyright.