On 21 October 2019, the Building and Construction Industry Security of Payment Amendment Act 2018 (NSW) (Amendment Act) will commence.
The major changes to be implemented by the Amendment Act are that:
- The Act will no longer apply to any subcontractor 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.
- Payment claims may now be served on and from the last day of every 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 maximum payment term for subcontractors has been reduced to 20 business days down from 30 business days.
- 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 the determination affected by jurisdictional error and confirm the part of the determination not affected by jurisdictional error.
- The new Part 3A of the Act provides the Department of Finance Services and Innovations powers of investigation and enforcement to investigate compliance with the Act. Investigators are able to enter premises with or without a search warrant, make examinations and inquiries, provide directions to produce records for inspection, copy and seize records.
- The new Part 3A also makes it an offence to hinder, refuse or fail to comply with an investigation without reasonable excuse, fines apply to corporations up to $40,000 and up to $2,200 for individuals.
- Penalties have increased substantially with penalties for a corporate head contractor that fails to serve a supporting statement with a payment claim or for serving a supporting statement knowing that it is false or misleading now to a maximum of $110,000.
- Claimants now have an express right to withdraw an adjudication application after it has been submitted. The respondent has a right to object to such withdrawal and the Adjudicator can decide whether or not to uphold the objection.
- Corporations in liquidation are not permitted to serve or enforce a payment claim or make an adjudication application.
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.