Security of Payment Act Reforms

The NSW Government is currently seeking public and stakeholder feedback on proposed reforms to the Building and Construction Industry Security of Payment Act 1999 (Act).

The Building and Construction Industry Security of Payment Act 1999 (Act) aims to ensure that a person can receive payments under a construction contract for carrying out construction work or providing goods and services related to construction work.

The Act is designed to facilitate prompt payment for contractors and subcontractors and provide a fair and quick process for resolution of payment disputes.

A discussion paper regarding reforms to the operation of the Act was released in late 2015. The proposed reforms follow a considerable period of consultation with stakeholders since this time.

The stakeholder feedback revealed that while there is strong support for this Act to continue, there is room for improvement within the Act to ensure that it more effectively meets its objectives.

The key reforms include:

• Overhauling the definition of ‘reference date’ to establish a statutory minimum monthly entitlement to a progress payment/payment claim;
• Establishing a statutory entitlement to make a final progress payment after termination of the contract;
• Shortening payment due dates;
• Reinserting the requirement for the endorsement of payment claims as being made under the Act;
• Reform for inspection of trust account records to increase transparency to subcontractors;
• Giving the Minister the ability to make a Code of Practice for Authorised Nominating Authorities, which are responsible for receiving adjudication applications and appointment adjudicators;
• Giving the Supreme Court the power to sever and remit adjudication determinations;
• Expanding investigative and enforcement powers in relation to compliance with the Act.

Consultation on the proposed amendment bill and the consultation paper closes on 18 September 2018.

If you would like to discuss any issues you may have with respect to The Building and Construction Industry Security of Payment Act 1999 (Act), please contact Donovan Oates Hannaford on 02 6583 0400 or info@dohlaw.com.au.