Recent amendments to the Building and Construction Security of Payment Act 1999 (NSW)
In response to the findings of the Independent Inquiry into Construction Industry Insolvency
(also known as the
Collins Inquiry), the NSW Government passed important amendments to the Building and Constructions Security of
Payments Act 1999(NSW) (SOP Act) in November 2013.
The date on which these changes come into effect is yet to be proclaimed, though this proclamation is anticipated in the coming months.
The main amendments are threefold.
No payment claim declaration required
Amendments to Section 13 of the SOP Act
have removed the requirement that a written declaration be provided on a
payment claim confirming that it is a payment claim made under the Act.
This means that the phrase “This is a claim made under the Building and
Construction Industry Security of Payment Act 1999 (NSW)”, or words to that
effect, will no longer need to be displayed in order for a payment claim to be
deemed valid.
Importantly, this means that in order to
constitute a valid payment claim under the amended SOP Act, the requirements will
be limited to:
- adequately identifying the
contractor to whom the payment claim is issued (which includes specifying the ACN
or ABN details of the contractor where appropriate);
- specifying the amount of the
progress payment that is claimed;
- adequately describing the goods
and/or related goods and services to which the payment claim relates; and
- ensuring that the payment claim
is served within 12 months of the works being last carried out or the related
goods and services last supplied. When serving corporate contractors by post,
care should be taken to ensure that the payment claim is posted to the
company’s registered address or ordinary place of business as listed with the
Australia Securities and Investments Commission in accordance with s109X of the
Corporations Act 2001 (Cth) or Section 31 of the SOP Act.
Provision of supporting statements
Amendments to Section 13 also make it an
offence for a head contractor to serve a payment claim on the principal unless
the claim is accompanied by a supporting statement declaring that all
subcontractors have been paid any amounts that have become due and payable.
Fines of up to $22,000.00 may be imposed.
Furthermore, if a head contractor serves a
payment claim on the principal accompanied by a supporting statement that is
materially false or misleading, fines of up to $22,000.00 and/or 3 months
imprisonment may apply.
Fixed deadlines for payment of progress payments
Section 11 of the SOP Act now requires that
a progress payment to a head contractor by the principal becomes due and
payable no later than 15 business days after a payment claim is made. A progress
payment to a subcontractor becomes due and payable no later than 30 business
days after the payment claim is made.
Commercial building contracts cannot,
therefore, specify any extended time period in relation to when progress
payments become due and payable, as the maximum deadline for these progress
payments is now fixed by the SOP Act.
Application
of the new amendments and timing
These changes do not apply to commercial
construction contracts entered into prior to the amendments taking effect
(which, as noted above, is yet to be proclaimed).
It should also be noted that subject to
limited exceptions residential construction contracts remain exempt from the
SOP Act and the amendments as outlined above.
Should you have any queries regarding these
recent changes to the SOP Act and their effect on your business, William
Roberts’ team of accredited building and construction specialists are able to
assist.