Building and Construction Industry Security of Payment Amendment Bill Passed in Both Houses

UPDATE TO ARTICLE PUBLISHED ON 31 OCTOBER 2013

On 14 November 2013, the Building and Construction Industry Security of Payment Amendment Bill 2013 (the Bill), proposing significant amendments to the Building and Construction Industry Security of Payment Act 1999 (the Act), was passed by the NSW parliament.

The Bill gives effect to a number of important changes to the Act including the following:

1. Removal of requirement that a Payment Claim must state it is made under the Act

A payment claim served under the Act, will no longer need to state that it is a payment claim made under the Act (with the exception of residential construction contracts that are connected with a residential construction contract between a head contractor and a consumer).

2. Amendments to the due dates for progress payments

For payment claims made by a head contractor to a principal, the due date for the progress payment will be 15 business days from the date the payment claim is made, or an earlier date provided for in the contract.

For payment claims made by a subcontractor to a head contractor, the due date for the progress payment will be 30 business days from the date the payment claim is made, or an earlier date provided for in the contract.

For payment claims made under a construction contract connected with an “exempt residential building contract”, the due date for the progress payment will be on the date it becomes due and payable under the contract, or if the contract makes no provision for the due date for progress payments, 10 business days after the payment claim is made.

A construction contract will have no effect to the extent that it might allow the due date for a progress payment to be made later than the dates set out above.

3. Requirement for Payment Claims to be accompanied by a supporting statement

A head contractor serving a payment claim on a principal must include with the payment claim a supporting statement in the prescribed form including a declaration that all subcontractors have been paid all amounts owing to them.

It will be an offence punishable by fines and/or imprisonment for a head contractor to serve a payment claim without the required supporting statement, or with a supporting statement knowingly making false or misleading statements.

“Authorised officers” will be appointed under the Act to investigate a head contractor’s compliance with this new provision. Head contractors will be required to provide information and all documents relating to the payment of subcontractors. There will be penalties of fines and/or imprisonment for a failure or refusal to do so.

4. Retention monies to be deposited into a trust account

The Bill as passed also includes a new section 12A to the Act which states that the regulations may make provisions for the head contractor who holds retention money to pay the retention money into a trust account established and operated in accordance with the regulations.

The above amendments do not apply to a construction contract that is entered into before the commencement of the amended Act.

We will keep you informed as to the date the Bill receives the royal assent.

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Please contact Kreisson on 02 8239 6500 or email us at excellence@kreisson.com.au for further information.

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