With the proposed commencement of the new security of payment provisions in Qld under the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (BIF Act) on the horizon (currently expected to commence on 17 December 2018), the New South Wales Government has this week also proposed further changes to its security of payment regime under the Building and Construction Industry Security of Payment Amendment Bill 2018 (NSW) (NSW Bill).
Whilst both states have emphasised that the changes are to provide greater payment protection for subcontractors, the NSW Bill has proposed certain amendments which are in stark contrast to the BIF Act, including the proposed reintroduction of the requirement for payment claims to be endorsed under the legislation (which will be removed in Queensland under the BIF Act and was previously removed by NSW as part of the NSW 2014 amendments).
The other proposed reforms under the NSW Bill include:
- reducing the maximum time period for head contractors to pay subcontractors after receiving a payment claim from 30 business days to 20 business days;
- creating an entitlement for claimants to make:
- a payment claim at least once per month; and
- a final payment claim after a contract is terminated;
- increasing the compliance and enforcement powers of NSW Fair Trading (for example enabling an “authorised officer” to physically enter premises and inspect documents without a search warrant and issue penalty notices for certain offences);
- increasing the current pecuniary penalties from 200 penalty units to 1000 penalty units (which currently equates to $110,000) for:
- serving a payment claim without a supporting statement which declares all subcontractors have been paid; and
- providing a supporting statement knowing that the statement is false or misleading (while also retaining the current penalty of up to 3 months imprisonment);
- establishing a code of practice for persons who are authorised to nominate adjudicators; and
- explicitly excluding corporations in liquidation from serving payment claims or taking any action to enforce a payment claim.
The changes proposed in the NSW Bill are consistent with (and are predominantly the result of) the recommendations made by John Murray AM in the national review of security of payment laws (Murray Report).
As outlined in our update “Report on national security of payment laws released”, the Murray Report made 86 recommendations to improve security of payment, including that Australia should implement a nationally consistent legislative model because the disparate nature of state legislative models has produced confusion and inefficiencies.
It is presently unclear whether the BIF Act will be implemented in its current form or will be subject to further substantive changes in consideration of the Murray Report and the NSW Bill prior to its commencement.
CDI Lawyers will keep you abreast of any further changes to the BIF Act and the NSW security of payment regime as and when they are announced.
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