As of 21 October 2019, building and construction contracts entered into will be subject to the most recent amendments to the Building & Construction Industry Security Of Payment Act 1999.

The significance of the changes for claimants is worth noting carefully.

The changes to the Building & Construction Industry Security Of Payment Act 1999 legislation have simplified reference dates. Reference dates are the time that a claimant is allowed to make a claim under the Security of Payment Act NSW. A claimant is now assured of at least one reference date per month and it is than last day of the month unless a particular date is stated in a contract.

No longer can a Claimant be deprived of making a claim under the Building & Construction Industry Security Of Payment Act 1999 legislation when a contract has been terminated.

However it is of the utmost importance to not that there is only one opportunity to do so after termination so it is crucial to ensure that the claim is well prepared, valid, and properly served. For help with this we direct you to our Security Of Payment Act NSW Specialists via our Online Claim Form.

The next most important change for Claimants is the reduction of the time allowed for Respondents to pay a payment claim served under the Building & Construction Industry Security Of Payment Act 1999 legislation. If the contract between the parties makes no express provision, or overly long payment terms, than the maximum time now allowed for payment under the Security Of Payment act NSW is 20 business days from the date that the payment claim was properly served on the respondent.

There has also been changes to how head contractors must manage monies held in trust under the Building & Construction Industry Security Of Payment Act 1999 legislation that provide further protection for claimants and add increased penalties for directors of head cantor companies who fail to meet their obligations under the Security Of Payment Act NSW.

Changes have also been made to allow claimants to withdraw adjudication applications when it is in their best. interests to do so.

Liquidated damages are the often the biggest issue to catch sub-contractors by surprise.

Sub-contractors will invariably sign a building & construction contract that has a “time for completion” clause clearly identified in the contract, and a “liquidated damages” clause also clearly identified in the contract.

As the job progresses, and the subcontractor is delayed baby others or weather, or the sub-contractor simply falls behind for whatever reason of their own making. the “time for completion” becomes less likely as the days march on toward that day.

The builder doesn’t appear bothered and assures the sub-contractor all is well, and insists the subcontractor shouldn’t worry about “liquidated damages”.

But, and it is a very big BUT…… The sub-contractor should be getting himself back on track if he has fallen behind, or, the subcontractor should be claim for an extension of time “EOT” for delays caused by others or the weather.

Obtaining an extension of time pushes out the “time for completion” and means the subcontractor will not be liable for liquidated damages providing they complete the work under the contract by the amended “time for completion”.

All too often the sub-contractor mistakenly trusts the builder not to enforce their right to claim “liquidated damages” when the job is not finished on time.

But, and again a very big BUT…… By the time the end of the job rolls around the builder’s margin isn’t what he would like it to be, their cashflow isn’t what they would like it to be and they have a client claiming liquidated damages from them.

And yes you guessed it…. All of a sudden the builder points out to the sub-contractor that they should have claimed for an “EOT”.

Don’t get caught out. Contact us before or during a project (not just after it finishes when it might be too late) and we will help you draft a “EOT” claim.

Contact us here

Security Of Payments Act Payment Claims

New South Wales Payment Claims

* This version of the Security Of Payments Act NSW legislation is current and therefore applies to construction contracts entered into on or after 21 April 2014 only

(1) A person referred to in section 8 (1) who is or who claims to be entitled to a progress payment (the
“claimant” ) may serve a payment claim on the person who, under the construction contract concerned, is or may be liable to make the payment.
(2) A payment claim:
(a) must identify the construction work (or related goods and services) to which the progress payment relates, and
(b) must indicate the amount of the progress payment that the claimant claims to be due (the
“claimed amount” ), and
(c) if the construction contract is connected with an exempt residential construction contract, must state that it is made under this Act.

(3) The claimed amount may include any amount:
(a) that the respondent is liable to pay the claimant under section 27 (2A), or
(b) that is held under the construction contract by the respondent and that the claimant claims is due for release.

(4) A payment claim may be served only within:
(a) the period determined by or in accordance with the terms of the construction contract, or
(b) the period of 12 months after the construction work to which the claim relates was last carried out (or the related goods and services to which the claim relates were last supplied),
whichever is the later.
(5) A claimant cannot serve more than one payment claim in respect of each reference date under the construction contract.
(6) However, subsection (5) does not prevent the claimant from including in a payment claim an amount that has been the subject of a previous claim.
(7) A head contractor must not serve a payment claim on the principal unless the claim is accompanied by a supporting statement that indicates that it relates to that payment claim.
Maximum penalty: 200 penalty units.

(8) A head contractor must not serve a payment claim on the principal accompanied by a supporting statement knowing that the statement is false or misleading in a material particular in the particular circumstances.
Maximum penalty: 200 penalty units or 3 months imprisonment, or both.

(9) In this section:

“supporting statement” means a statement that is in the form prescribed by the regulations and (without limitation) that includes a declaration to the effect that all subcontractors, if any, have been paid all amounts that have become due and payable in relation to the construction work concerned.

Victoria Payment Claims

(1)     A person referred to in section 9(1) who is or who claims to be entitled to a progress payment (the  claimant ) may serve a payment claim on the person who, under the construction contract concerned, is or may be liable to make the payment.

(2)         A payment claim—

(a)     must be in the relevant prescribed form (if any); and

(b)     must contain the prescribed information (if any); and

(c)     must identify the construction work or related goods and services to which the progress payment relates; and

(d)     must indicate the amount of the progress payment that the claimant claims to be due (the claimed amount ); and

(e)     must state that it is made under this Act.

(3)     The claimed amount—

(a)     may include any amount that the respondent is liable to pay the claimant under section 29(4);

(b)     must not include any excluded amount.

Note

Section 10(3) provides that a progress payment must not include an excluded amount.

(4)     A payment claim in respect of a progress payment (other than a payment claim in respect of a progress payment that is a final, single or one-off payment) may be served only within—

(a)     the period determined by or in accordance with the terms of the construction contract in respect of the carrying out of the item of construction work or the supply of the item of related goods and services to which the claim relates; or

(b)     the period of 3 months after the reference date referred to in section 9(2) that relates to that progress payment—

whichever is the later.

(5)     A payment claim in respect of a progress payment that is a final, single or one-off payment may be served only within—
s. 14

(a)     the period determined by or in accordance with the terms of the construction contract; or

(b)     if no such period applies, within 3 months after the reference date referred to in section 9(2) that relates to that progress payment.

(6)     Subject to subsection (7), once a payment claim for a claimed amount in respect of a final, single or one-off payment has been served under this Act, no further payment claim can be served under this Act in respect of the construction contract to which the payment claim relates .

(7)     Nothing in subsection (6) prevents a payment claim for a claimed amount in respect of a final, single or one-off payment being served under this Act in respect of a construction contract if—

(a)     a claim for the payment of that amount has been made in respect of that payment under the contract; and

(b)     that amount was not paid by the due date under the contract for the payment to which the claim relates.

(8)     A claimant cannot serve more than one payment claim in respect of each reference date under the construction contract.

(9)         However, subsection (8) does not prevent the claimant from including in a payment claim an amount that has been the subject of a previous claim if the amount has not been paid.

Queensland Payment Claims

(1) A person mentioned in section 12 who is or who claims to be entitled to a progress payment (the claimant) may serve a payment claim on the person who, under the construction contract concerned, is or may be liable to make the payment (the respondent).

(2) A payment claim—

(a) must identify the construction work or related goods and services to which the progress payment relates; and

(b) must state the amount of the progress payment that the claimant claims to be payable (the claimed amount); and

(c) must state that it is made under this Act.

(3) The claimed amount may include any amount—

(a) that the respondent is liable to pay the claimant under section 33(3); or

(b) that is held under the construction contract by the respondent and that the claimant claims is due for release.

(4) A payment claim may be served only within the later of—

(a) the period worked out under the construction contract; or

(b) the period of 12 months after the construction work to which the claim relates was last carried out or the related goods and services to which the claim relates were last supplied.

(5) A claimant can not serve more than 1 payment claim in relation to each reference date under the construction contract.

(6) However, subsection (5) does not prevent the claimant from including in a payment claim an amount that has been the subject of a previous claim.

The Key Changes are:

• Who to lodge your adjudication with
• The increased importance of a strong payment claim
• Extra time for a respondent to provide a payment schedule
• More opportunity for a respondent at adjudication

Call us to find out what these changes mean for you.

Under the Security Of Payments Act a “construction contract” means a contract or other arrangement under which one party undertakes to carry out construction work, or to supply related goods and services, for another party.

The Security Of Payments Act is the means by which this Act ensures that a person is entitled to receive a progress payment is by granting a statutory entitlement to such a payment regardless of whether the relevant construction contract makes provision for progress payments.

Section 7 of the Security Of Payments Act says

(1) Subject to this section, this Act applies to any construction contract, whether written or oral, or partly written and partly oral, and so applies even if the contract is expressed to be governed by the law of a jurisdiction other than New South Wales.

(2) This Act does not apply to:

(a) a construction contract that forms part of a loan agreement, a contract of guarantee or a contract of insurance under which a recognised financial institution undertakes:

(i) to lend money or to repay money lent, or

(ii) to guarantee payment of money owing or repayment of money lent, or

(iii) to provide an indemnity with respect to construction work carried out, or related goods and services supplied, under the construction contract, or

(b) a construction contract for the carrying out of residential building work (within the meaning of the Home Building Act 1989 ) on such part of any premises as the party for whom the work is carried out resides in or proposes to reside in, or

(c) a construction contract under which it is agreed that the consideration payable for construction work carried out under the contract, or for related goods and services supplied under the contract, is to be calculated otherwise than by reference to the value of the work carried out or the value of the goods and services supplied.

(3) This Act does not apply to a construction contract to the extent to which it contains:

(a) provisions under which a party undertakes to carry out construction work, or supply related goods and services, as an employee (within the meaning of the Industrial Relations Act 1996 ) of the party for whom the work is to be carried out or the related goods and services are to be supplied, or

(b) provisions under which a party undertakes to carry out construction work, or to supply related goods and services, as a condition of a loan agreement with a recognised financial institution, or

(c) provisions under which a party undertakes:

(i) to lend money or to repay money lent, or

(ii) to guarantee payment of money owing or repayment of money lent, or

(iii) to provide an indemnity with respect to construction work carried out, or related goods and services supplied, under the construction contract.

(4) This Act does not apply to a construction contract to the extent to which it deals with:

(a) construction work carried out outside New South Wales, and

(b) related goods and services supplied in respect of construction work carried out outside New South Wales.

(5) This Act does not apply to any construction contract, or class of construction contracts, prescribed by the regulations for the purposes of this section.

The New South Wales Parliament voted in favour of amendments to the Building & Construction Security Of Payment Act 1999 in October 2013.

The Security Of Payments Act NSW 2013 Amendments Are Expected To Be Proclaimed Sometime In April 2014

Security Of Payments Act NSW changes passed through the NSW Parliament in October 2013.

The three amendments are:

• the introduction of maximum payment terms for progress payments, ie: 15 business days and 30 business days;
• the requirement that when payment claims are made by a contractor they must include a supporting statement that declares that all subcontractors have been paid what is due and payable to them at the time of making the claim; and
• that an invoice will no longer need to have the endorsement that it is being made under the Act to be a valid payment claim.

These changes will have significant implications for both Claimants and Respondents.

The full Government release of the proposed changes is available at Security Of Payment Act NSW

Once the Security Of Payments Act NSW 2013 Amendments are proclaimed and the final detail of the changes is available we will provide a comprehensive report on how both Claimants and Respondnets will need to deal with changes in their businesses.

Check back regularly until we release our report – you will find a link to it here so bookmark this page.

For all the support and assistance you need to work you way through Security Of Payment Act NSW in your business go to this link and select the appropriate topic for further details and support.

The Building & Construction Industry Security Of Payments Act 1999 is the New South Wales Legislation which enables contractors, subcontractors, consultants and suppliers who have completed construction work and or supplied related goods and services to press for their entitlements under the Construction Contract.

Security Of Payments Act NSW Payment Claims Demand Full Payment in 10 Business Days

A payment claim served under the Security Of Payments Act NSW for a contract claim, a variation claim, an extension of time claim or a retention claim is a demand for payment that must receive either full payment or a valid payment schedule. No response to a payment claim served under the Security Of Payments Act NSW can have dire consequences for a respondent.

Security Of Payments Act NSW Prevents Unfair Withholding Of Payment

The Security Of Payments Act NSW works to prevent debtors from withholding payment without genuine reasons permitted under the BCISPA 1999 to increase their profits, supplement their working capital or to sustain their cash-flow. A Respondent must include vaild reasons for withholding payment in a payment schedule served in response to a payment claim.

Security Of Payments Act NSW Adjudication Provides A Fast Track To A Judgement Against Your Debtor.

It is strongly recommended to retain the services of a Security Of Payments Act NSW Specialist to assist with the preparation, service and lodgement of Payment Claims and Adjudication Applications.

A Claimant is entitled to serve a Notice To Suspend Works if the Respondent (debtor) does not pay by the due date for payment. Suspending work under the security Of Payments Act provides protection against claims and back charges from the Respondent.

Your Adjudication Application will need to be lodged with an Authorised Nominating Authority. Your Security Of Payments Act Expert can advise you best on which Authorised Nominating authority to choose. It is the Authorised Nominating Authority’s role to nominate and appoint an Adjudicator to determine your application.

Once your Adjudication Application has been determined you will need to proceed to debt collection if the debtor doesn’t pay on the Adjudicators instruction to do so.

Security Of Payments Act NSW Payment Withholding Requests

The Security Of Payments Act NSW makes provision for a subcontractor, supplier, consultant to bypass the contractor (debtor) and collect payment from the principal contractor by means of the Contractors Debts Act. This is achieved by first serving a Payment Withholding Request and then obtaining a Debt Certificate.

Debt collection with a Security Of Payments Act determination is processed without delay. Judgment can be entered five business days after the Adjudicators Determination has been served on the Respondent. We recommend engaging a Licenced Debt Collector to recover your money through the means provided by the Security Of Payments Act NSW as well as traditional debt collection for contractors methodologies.

For Assistance call 1300 BCISPA  (1300 224 772)

This a Guide for Building & Construction Contractors who need to make a claim under the Security Of Payments Act because a dispute has arisen and / or the debtor’s cash-flow is under pressure and he is slow making payment.

SECURITY OF PAYMENTS ACT LEGISLATION

Each state and territory government administer their own security of payments act legislation. Each of the states legislation can be found by clicking on the following links:

• Building and Construction Industry Security of Payment Act 1999 [NSW]
• Building & Construction Industry Security of Payment Act 2002 [Vic]
• Building Industry Fairness (Security of Payment) Act 2017 [Qld]
• Building and Construction Industry (Security of Payment) Act 2009 [ACT]
• Building and Construction Industry Security of Payment Act 2009 [SA]
• Building and Construction Industry Security of Payment Act 2009 [Tas]

Who Can Use The Security Of Payments Act

‘Security Of Payment’ is the term used to describe the entitlement of building & construction contractors, subcontractors, consultants or suppliers in the contractual chain, to receive the payments that are due to them under a construction contract.

Why Use The Security Of Payments Act

The purpose of the Security Of Payments act is to ensure continuity of payment to building & construction contractors, subcontractors, consultants or suppliers to avoid costly project delays, and stopping principal contractors or contractors from withholding or reducing payment for the benefit of their own cash-flow and profit.

When To Use The Security Of Payments Act

The Security Of Payments Act generally permits building & construction contractors, subcontractors, consultants or suppliers to make one claim per Reference Date (per month). All invoices need to be endorsed as a payment claim made under the Security Of Payments Act for the relevant state or territory.

For more information or assistance contact the Security Of Payments Act Experts to help you through the process.

Ph: 1300 BCISPA  (1300 224 772)