Bill proposes stricter obligations and penalties for NSW Security of Payment Act

Published: 30 August 2018

The NSW government has released a draft bill, the Building and Construction Industry Security of Payment Amendment Bill 2018 (NSW) (SOP Bill) proposing significant reforms to the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOP Act).

If passed in its current form, the SOP Bill would create stricter compliance obligations for principals and head contractors as well as greater investigation and enforcement powers under the SOP Act.

Key changes

New offences

Directors and other officers of a corporation, including managers, may be personally liable for an offence committed by a corporation (such as those under sections 13(7) and 13(8) see Penalties below):

  • if they are an accessory to the offence; or
  • for certain offences (termed 'executive liability offences') – if they know or ought reasonably to know that an offence would be committed and they fail to take all reasonable steps to prevent or stop the commission of that offence.

Penalties increased

For incorporated head contractors penalties would increase from 200 penalty units (currently $22,000) to 1,000 penalty units (currently $110,000) for:

  • serving a payment claim on a principal without a supporting statement that all subcontractors have been paid for the construction work concerned - section 13(7); and
  • providing a supporting statement knowing that the statement is false or misleading in a material particular – section 13(8).

Deadlines for time for progress payments would be reduced

  • for principals: 10 business days (down from 15)
  • for head contractors: 20 business days (down from 30)

Endorsement

Payment claims would be required to state that they are made under the SOP Act.

Reference dates

  • Contractors would be entitled to make a payment claim at least once per month for work carried out in that month.
  • Specific reference dates apply in the case of a single one-off payment, a milestone payment and when a contract has been terminated.

Liquidation

If in liquidation a corporation will not be able to take any action to enforce a payment claim or an adjudication determination.

Adjudications 

  • Regulations may prescribe for how applications and responses are lodged.
  • Claimants may withdraw an application at any time before it is determined.
  • Adjudicators will have to determine applications within 10 business days after either a response is lodged or (if a response is not lodged) the deadline for lodging a response.
  • Persons authorised to nominate adjudicators may be required to observe a code of practice.

Supreme Court review

Allowed for a jurisdictional error made by an adjudicator, including setting aside the determination or remitting the matter to the adjudicator for redetermination.

Service of documents

The requirements would apply to all documents, not just notices.

Submissions on the SOP Bill

The public consultation period in respect of the SOP Bill ends on 18 September 2018.

The AMCA will prepare a submission in relation to this review. Formal submissions may also be made to Fair Trading NSW via email.