New to Security of Payment Laws

Building & Construction Law 3/05/2011 by Sam Roberts

The Building and Construction Industry Security of Payment Act 1999 (NSW) applies to almost everyone who works in the building and construction industry or who supplies related goods or services. This includes quantity surveyors, planning consultants, project managers, engineers, carpenters, electricians, painters, pest inspectors etc. However, it does not apply if you do work directly for mum and dad who own or are building a residence that they intend to live in, but if you are a subcontractor it applies.

Why Bother…

The purpose of the Act is to facilitate cash flow for businesses in the industry. It does this by creating a statutory entitlement to payment in circumstances where you have served a valid Payment Claim and the other party does not respond by providing a Payment Schedule (a document setting out all the reasons why they don’t agree to pay the amount claimed in the Payment Claim) within 10 business days (or such less period as may be specified in the construction contract).

When you can rely on the Act to enforce a Payment Claim you can:

  • apply for Adjudication of any issues raised in a Payment Schedule provided in response to a Payment Claim. This a quick and cost effective way of resolving disputes and obtaining an enforcement Determination when you need it.
  • if no Payment Schedule is provided in time, successfully apply to the Court for a Judgment without the need for a hearing. Significantly, if you apply to the Court the other party is not permitted to bring a Defence or Cross Claim, even if there is a genuine dispute about the work or goods.

If you work in the industry, no doubt you are thinking “wow that is great” and are trying to think of any bad debtors you have at the moment. Well hold on because as usual lawyers have found a way to challenge the statutory right to payment but there is a way to overcome those challenges. Basically, because the consequence of not providing a Payment Schedule in response to a Payment Claim is so severe the case law that has evolved requires that a Payment Claim be issued and served strictly in accordance with the Act to be valid.

How We Help

We can assist your business by:

  • making available our complimentary Security of Payment Guide,
  • providing advice and assistance where needed,
  • serving and responding to valid Payment Claims,
  • preparing a TradeSafe Contract package for your business,
  • enforcing statutory rights to payment, and
  • acting in relation to Adjudicaiton Applications and Adjudication Responses.

There is no other law like this in the country. If you carry on a business in the building and construction industry you should have a contract that enables you to confidently serve valid Payment Claims. In the long run you will save money by avoiding the delays, expense and headaches normally associated with recovery proceedings when it comes time to recover money from a bad debtor particularly if the debtor disputes the amount or quality of the work.

Important Disclaimer

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