Unintended Consequences for Building Subcontractors – Construction Contracts made after 21 April 2014

Building & Construction Law 4/08/2014 by Sam Roberts

security of payment guide

Construction Contracts made after 21 April 2014

All rights under the Security of Payment laws from the service of a valid Payment Claim. However, only a single Payment Claim may be issued in relation to each Reference Date.

Subcontractors that were not previously familiar with the security of payment laws and who did not use the following words on a progress claim could usually still use the Act to recover a progress payment or resolve a dispute simply by issuing a new progress claim (a Payment Claim) with the following statement:

“This is a Payment Claim under the Building & Construction Industry Security of Payment Act 1999”

For Construction Contracts entered into from 21 April 2014 for work in NSW there is no longer any requirement for a Payment Claim to include the above statement (with the exception of progress claims in relation to residential building work).

Whilst Subcontractors who render progress claims are now more likely to serve valid Payment Claims:

  • if the Subcontractor has a practice of serving multiple progress claims each month and/or separate claims for variations, they will likely inadvertently exhaust the available Reference Dates as result of which their rights under the Act will either be lost or limited to only part of amounts claimed to be owing, and
  • if the other party responds with a Payment Schedule, and the Subcontractor is not aware of the strict time limits that apply to the Act or act in time (see Schedule 4 of our Guide), they may miss out on the ability to use the Act to resolve a dispute and recover payment.

What should you do?

If you have put off learning about the Security of Payment laws, such ignorance may now backfire and actually prevent you from relying upon the Security of Payment regime to recover a progress payment or resolve a dispute.

  1. Click here to get your complimentary copy of our Security of Payment Guide, now updated to incorporate changes applying to the Act from 21 April 2014.
  2. Print, read and make notes on the Security of Payment Guide.
  3. Call me or one of our Building & Construction Lawyers to discuss any questions you have.
  4. Be organised. Ensure that you know how to interpret and manage the Reference Dates applicable to each job.
  5. Consider the benefits of our TradeSafe Contract packages (see Schedule 7 of the Guide).
  6. For each project, serve a single valid Payment Claim on or after each Reference Date for the whole amount to be claimed including variations.
  7. If you receive a Payment Schedule specifying an amount that you do not accept call and speak to me without delay.

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