02 September 2020
3 min read
#Construction, Infrastructure & Projects
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The Building and Construction Industry Security of Payment Regulation 2020 (NSW) (New Regulation) has been developed and released to replace the existing Building and Construction Industry Security of Payment Regulation 2008 (NSW) (Regulation).
The New Regulation, which was released by NSW Fair Trading on 26 June 2020, commenced on 1 September 2020.
The New Regulation aims to deliver a more secure system of contractor payments within the building and construction industry, with the primary objective being to provide the legislative support and administrative detail for the operation of the Building and Construction Security of Payment Act 1999 (NSW) (Act). The New Regulation follows recent amendments to the Act which were introduced by the Building and Construction Industry Security of Payment Amendment Act 2018 (NSW) to address poor payment processes and the large number of insolvencies within the industry. The reforms to the Act commenced on 21 October 2019.
The New Regulation is not retroactive, and therefore will not apply to contracts entered into prior to its commencement date of 1 September 2020.
What are the changes?
Reporting requirements
The New Regulation removes the annual reporting requirements for trust accounts to NSW Fair Trading. These requirements were in cl. 16 of the Regulation.
The New Regulation also removes the power previously held by the Secretary to require information from a head contractor, subcontractor or approved authorised deposit-taking institution in relation to enforcement or administration of trust accounts for retention money. This power was in in cl. 15 of the Regulation.
Trust account records
The New Regulation introduces a requirement for head contractors to keep a ledger for retention money held in respect of each subcontractor. It also introduces an obligation to provide trust account records to subcontractors if their money is held in trust (cl. 16).
Supporting statements
Under the New Regulation, supporting statements are only required for subcontractors or suppliers directly engaged by the head contractor (cl. 18). Previously, cl. 19 of the Regulation specified that a reference to an amount due and payable in a supporting statement:
The New Regulation does away with this. The New Regulation also removes reference to the need for payments that are due and payable (and not in dispute) to be paid in full before any declaration in the supporting statement is signed.
Adjudicator eligibility
The New Regulation introduces qualifications and eligibility requirements for adjudicators (cl 19). The eligibility requirements include either a degree or diploma in a relevant specified field with at least 5 years’ experience, or at least 10 years’ experience in a relevant specified field. The continuing professional development requirements for adjudicators will commence on 1 September 2021. Current adjudicators will be ineligible if they do not meet these requirements.
Key implications from the New Regulation
Supporting statements will only be required for subcontractors or suppliers directly engaged by the head contractor and will no longer be required to separately identify amounts in dispute with subcontractors.
Following commencement of the New Regulation, any contract references to the Building and Construction Industry Security of Payment Regulation 2008 (NSW) will need to be updated to the Building and Construction Industry Security of Payment Regulation 2020 (NSW).
Authors: Christine Jones & Rebecca Weakley
Disclaimer
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this newsletter is accurate at the date it is received or that it will continue to be accurate in the future.
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