April 21, 2014

Changes to the Building and Construction Industry Security of Payments Act

Well, it’s finally here. The amendments to the Building and Construction Industry Security of Payments Act 1999 (NSW) (the Act) come into effect from Monday 21 April 2014. Yes, Easter Monday!!!

To recap our December 2013 newsletter, the Building and Construction Industry Security of Payments Amendment Bill 2013 (the Bill) proposed a number of key amendments to “provide greater protection for subcontractors and promote cash flow and transparency in the contracting chain”.

Those amendments include:

  1. Introducing statutory time periods in which payment claims became due and payable – 15 business days for a Principal to pay a Head Contractor and 30 business days for a Head Contractor to pay a Subcontractor.
  2. Removing the necessity for Payment Claims to be specifically endorsed as claims made under the Act.
  3. Mandatory contractor statements – the form of which is to be prescribed in the regulations. This is expected to be available from the effective date.
  4. Introducing an enforcement mechanism to ensure compliance with the time periods – a fine of up to $22,000 or 3 months imprisonment (or both) for a head contractor who serves a payment claim without a supporting statement, or who serves a payment claim accompanied by a supporting statement which it knows to contain a false or misleading statement.

It is important to note that the amendments will apply to all contracts entered into on and from the effective date – 21 April 2014.

SV Partners Turnaround Management team possess specialist construction expertise enabling them to tailor individual solutions to resolve a crisis. We are concerned with the long-term health of the business and consequently the flow-on effect to those associated with it. If you would like further information about the proposed changes to the NSW Security of Payment Legislation, call SV Partners on 1800 246 801.

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