Jane Button & Associates Pty Ltd

Lawyers & Adjudicators


Amendments to NSW Security of Payment Act

Posted on 13 April, 2014 at 1:15

From 21 April 2014 important amendments proposed in late 2013 by the NSW Department of Finance and Services (DFS) will commence.

All contracts that are entered into from that date will be affected.  The new provisions provide as follows:

- Maximum payment terms of 15 business days for head contractors,

- Maximum payment terms of 30 business days for subcontractors,

- Payment claims do not have to state they are made “under the Act” (except where work is subcontracted residential building work) and

- Statements must be included with payment claims declaring all subcontractors have been paid.

FOR ALL CONTRACTS ENTERED INTO PRIOR TO 21 APRIL 2014, THE CURRENT PROVISIONS WILL CONTINUE TO BE IN FORCE (that is, all payment claims must be endorsed with the words "This is a payment claim under the Building and Construction Industry Security of Payment Act" and payment terms of 10 business days apply for all applicable construction work).

Contract administrators will need to take care during transition of the new provisions, in particular where a project comprises a head contract entered into before 21 April 2014 and subcontracts entered into after that date.

As part of the proposed amendments and as further security to subcontractors, a proposed new statutory retention trust mechanism is still being worked through by the NSW Government.  We will give an update about that in due course.  It is expected that:

- head contractors will be required to pay retention into an account operated by the Office of the Small Business Commissioner (OSBC);

- the OSBC will be the trustee of the retention trust fund;

- details of the expected completion date and expiry of the defects liability period for the subcontract works are to be provided to the OSBC;

- retention is to be released by joint agreement/authorisation, failing which the OSBC would facilitate a mediation between the parties (or the matter be resolved through adjudication). 

We would be pleased to assist you with a review of your contracts or with resolving payment issues.  If you have any queries, please email us:  [email protected]

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