In Australian Capital Territory:   

The Building and Construction Legislation Amendment Act 2023 recently made amendments to the Building and Construction Industry (Security of Payment) Act 2009 (ACT Act).

The following key changes will apply to construction contracts entered into on or after 11 March 2024:

1. Regular Payment Claims

Section 10 of the ACT Act previously defined “reference date” as “a date stated in, or worked out under, the contract” or where there is no date provided, the last day of each month.

Noting the contract terms govern the existence of a reference date, contracts commonly included a provision that the reference date does not arise between practical completion and final completion. As a result, if a variation was directed in that period, it prevented contractors from making a payment claim and only a single claim could be made after a prolonged period of time.

The amended section 10 of the ACT Act removes the “reference date” and will allow:

• the claimant to lodge a payment claim on the last day of each calendar month; or
• an earlier date in the calendar month as provided in the contract.

This change is similar to the NSW provisions where contractors are entitled to make a monthly payment claim as a statutory right. It also simplifies the adjudication process for contractors as there will be reduced confusion as to what the applicable reference date is.

The ACT Act also introduced new section 15(3A) which provides that a payment claim may be given on or after the day of termination of a construction contract. This provision is likely to be interpreted consistently with the NSW Act and we draw your attention to BCFK Holdings Pty Ltd v Rork Projects Pty Ltd [2022] NSWSC 1706, which confirmed that only a single payment claim may be made under the Act after termination.

Link to our article on this case: https://keystonelawyers.com.au/security-of-payment-act-update-court-confirms-only-one-payment-claim-may-be-made-after-termination/

2. Due Date for Payment

Section 13 of the ACT Act provided that a due date for payment is:

• on the day when the payment becomes payable under the contract; or
• if the contract does not set a day – 10 business days after the payment claim is served.

This created cashflow difficulties for claimants who had to wait an extensive timeframe set out in the contract before they could serve a payment claim.

The amended section 13 clarifies the due date for payment will be the earlier of:

• 15 business days after a payment claim is given by the claimant; or
• The day when the payment becomes payable under the construction contract.

It is worth noting that the changes apply to both head contractors and subcontractors in ACT. This is different from NSW position where the subcontractor and head contractor payment terms are distinguished.

In Victoria:

On 1 February 2024, a new amendment to section 49 of the Building and Construction Industry Security of Payment Act 2002 (VIC Act) was published.

The VIC Act has been amended to permit and extend the use and disclosure of information received by the Victorian Building Authority (VBA) to the extent necessary to perform its registration and disciplinary action against a registered building practitioner who fails to pay an adjudicated amount under the VIC Act.

There are more changes anticipated to the VIC Act following the Victorian Government’s Environment and Planning Standing Committee inquiry into non-payment of subcontractors.

Amongst the most significant changes include:

• recommendations to remove the concepts of ‘excluded amounts’ and ‘non-claimable contract variations’ which are unique to the VIC
• prevent respondents from submitting new reasons for withholding payment during the adjudication process.

The recommendations are modelled on other state legislations to align Victorian security of payment procedures with other Australian jurisdictions.

Takeaways

It is important to ensure that building practitioners are aware of the recent changes to the Security of Payment legislation applicable to their jurisdiction.

Keystone Lawyers are experts in Security of Payment legislation across various Australian States and can assist in reviewing payment claims, drafting payment schedules and advising on general strategy when it comes to the adjudication process.