The Building and Construction Industry Security of Payment Act: What to look for following the 2019 amendments

20 Sep 2019

 

Introduction

1. On 21 November 2018, the New South Wales Parliament passed the Building and Construction Industry Security of Payment Amendment Bill 2018 (the SoP Amendment Act), which makes a series of changes to the Building and Construction Industry Security of Payment Act 1999 (NSW) (the Security of Payment Act).

2. The amendments are to commence on 21 October 2019 and apply to construction contracts entered into after that date. 1

3. Many of the changes come from recommendations in John Murray’s December 2017 Review of Security of Payment Laws (the Murray Report) which considered the laws from each Australian jurisdiction.

4. This paper and presentation is intended to offer some observations as to what lawyers should consider when dealing with a claim that has been made under the Security of Payment Act.

1 SOP Amendment Act, Schedule 1, [38].

No more reference dates

5. The single most significant change made by the SoP Amendment Act is the removal of the concept of reference date from s8 and s13(5).

  1. 6. Since the High Court decision in Southern Han v Lewence ((2016) 260 CLR 340), the statutory rights and entitlements of a party who has undertaken to do construction work to a progress payment was fundamentally founded on the existence and identification of a reference date. This has generally led to a consideration of two scenarios: (a) first, whether a payment claim was served prematurely or before a reference date had arisen; or
  2. (b) secondly, whether there was no available reference date because of the termination of the contract.
  3. 7. Upon the amendments made, s8 of the Security of Payment Act now grants a right to a progress payment as follows:

2

“A person who, under a construction contract, has undertaken to carry out construction work, or to supply related goods and services is entitled to receive a progress payment.”

8. However, the timing of or for a payment claim is now governed by the s13. These new provisions are as follows:

(1A) A payment claim may be served on and from the last day of the named month in which the construction work was first carried out (or the related goods and services were first supplied) under the contract and on and from the last day of each subsequent named month.

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Frank Hicks SC

Barrister 2003
Silk 2017

02 9151 2923

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TAGS:  Common Law

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