On 21 November 2018, the New South Wales Parliament passed the Building and Construction Industry Security of Payment Amendment Act 2018 (NSW) (Amendment Act) which means amendments will commence on the 21st of October 2019.
The major changes to be implemented by the Amendment Act are that:
- The Act will no longer apply to any subcontract or builders performing residential building work under the Home Building Act where the person for whom the work is carried out resides or proposes to reside in. Previously subcontractors could make claims under the Act against builders but this is now precluded in such circumstances.
- The concept of “reference dates” has been removed and instead there is now a statutory right to progress payments.
- The maximum payment term for subcontractors has been reduced to 20 business days down from 30 business days.
- Payment claims may now be served on and from the last day of the month in which work was first carried out and the last day of each subsequent month, or an earlier date in any particular month if the contract allows.
- A payment claim may now be made following termination of a construction contract whereas previous case law determined that in some circumstances reference dates ceased on termination and the mechanisms of the Act were unavailable.
- The requirement to endorse that a particular claim was a claim under the Act has been re-introduced.
- A minor jurisdictional error will no longer invalidate the entire determination and instead the Supreme Court of NSW has express power to set aside only that part of determination affected by jurisdictional error and confirm the part of the determination not affected by jurisdictional error.
We recommend that contractors begin preparing for the changes and, in particular, recommend that all claims again start being endorsed with the words “This is a payment claim made pursuant to the Building and Construction Industry Security of Payment Act”.