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Confirmed: New amendments to NSW’s security of payment legislation set to commence on 21 October 2019

23 July 2019

#Construction & Infrastructure

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Confirmed: New amendments to NSW’s security of payment legislation set to commence on 21 October 2019

The NSW Government has at last confirmed that all the amendments in the Building and Construction Industry Security of Payment Amendment Act 2018 (the Amendment Act) and the accompanying Building and Construction Industry Security of Payment Regulation 2008 (the Regulation) will commence on 21 October 2019.

Interestingly, the NSW Government has opted for a single commencement date, rather than a staged commencement of the new amendments that was contemplated for a time. 

The new amendments reinforce the concept of ‘pay now argue later’ that underpins NSW’s security of payment legislation (SOPA). As detailed in our previous article, this includes:

  • reducing the maximum time a head contractor has to pay a subcontractor from 30 business days to 20 business days
  • removing the need for progress payments to be triggered by a ‘reference date’, instead claimants can make a payment claim at least once per month for work and make a final claim if a contract is terminated. The entitlement to make a post-termination’ payment claim addressing the effect of the High Court decision of Southern Han Breakfast Point Pty Ltd (in liq) v Lewence Construction Pty Ltd [2016] HCA 52
  • preventing a company in liquidation from making or progressing a claim under the SOPA.

The new amendments also introduce a more robust investigation and enforcement framework that is modelled on the powers contained in other legislation administered by NSW Fair Trading. Significantly, executive and accessorial liability now applies, exposing directors and management personnel to prosecution if a company commits an offence under the SOPA.

What to consider?

The amendments will apply to construction contracts entered into on and after 21 October 2019. Industry participants are encouraged to consider the impacts of these reforms on upcoming projects and to adjust construction contracts, contract administration and project management practices accordingly to ensure compliance and to avoid the increased penalties under the SOPA.

Authors: Helena Golovanoff & Divya Chaddha 

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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