The recently proposed security of payment reforms in New South Wales under the Building and Construction Industry Security of Payment Amendment Bill 2018, were officially passed on 21 November 2018 and are now awaiting assent.
Whilst the date for commencement is still yet to be set, stakeholders should immediately begin to familiarise themselves with the important changes, including:
- 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 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 that declares that 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;
- re-establishing the requirement for payment claims to be endorsed under the Act (in stark contrast to the QLD amendments that commence on 17 December 2018 removing this requirement);
- explicitly excluding corporations in liquidation from serving payment claims or taking any action to enforce a payment claim;
- enabling subcontractors to be able to inspect the head contractor’s retention money trust account records; and
- directors and certain managers of a corporation may now be foundguilty of an offence if the director or manager knows or ought reasonably to know an offence is being committed by the corporation and fails to take all reasonable steps to prevent or stop the commission of that offence.
Take away
We consider that industry participants and stakeholders should begin preparing for the commencement by:
- familiarising themselves with the changes and integrating adequate systems to avoid the penalties for noncompliance (i.e. fines, imprisonment and disciplinary action); and
- amending their contracts to ensure maximum protection under the new regime.
As outlined in our previous update, the New South Wales security of payment amendments bear little resemblance to the changes coming to Queensland on 17 December 2018. As a result, industry participants that operate on both sides of the border must ensure that they are familiar with their rights and obligations in each jurisdiction.
CDI Lawyers will continue keep you up to date with any further developments as and when they become available.
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