There have been recent developments in the security for payment regimes applicable in Queensland and New South Wales. These changes will apply to any ‘construction work’ performed in those states, and (depending on their reception and application) may inform the future evolution of security for payment regimes in other jurisdictions.
A summary of the relevant changes is set out below.
The key amendments to the Building and Construction Industry Payment Act 2004 (Qld), which arise out of the ‘Wallace Report’ include:
- Payment claims must be made within 6 months of work concluding (subject to the contract providing for a longer period), which is a reduction from the current 12.
- Claims for a final progress payment must be made within 28 days of the expiry of the defects liability period (again, subject to the contract providing for a longer period).
- The time for lodging adjudication responses in ‘general’ matters has been increased from 5 business days to 10 business days.
- For ‘complex’ matters (i.e. claims for more than AUD750,000, or involving latent conditions or t ime-related claims) the time for lodging adjudication responses has been extended even further to 15 business days.
- Respondents be entitled to raise ‘new’ matters in their response, with the applicant having a right of reply.
- The period from 3 business days before Christmas Day, until 10 business days after New Year’s Day, are excluded from the definition of ‘business day’, to reflect the industry shutdown during this period.
- Different requirements will apply to the appointment and accreditation of arbitrators.
Parties should keep the above in mind in relation to construction contracts being drafted that may be subject to this legislation.
New South Wales
In contrast to Queensland’s apparent focus of providing some concessions to principal’s and head contractors, the newly commenced changes to the Building and Construction Industry Security of Payment Act 1999 (NSW) are directed far more towards the protection of subcontractors.
These changes, which apply to contracts executed after 21 April 2014, include:
- Payment claims no longer need to state they are made under the Act, for the Act to apply.
- Where head contractors are claiming an amount from a principal that has been paid to a subcontractor, the head contractor will now need to provide a ’supporting statement’ confirming that all subcontractors have received what is due and payable. penalties will apply if this statement is not provided, or if a Head Contractor includes a statement it knows to be false or misleading.
- A head contractor must be paid within 15 business days of submitting a payment claim, and subcontractors must be paid within 30 business days.
Implications for WA
It will be interesting to see whether the amendments gain any traction in the construction industry in other jurisdictions. In October 2014, a consultation discussion paper was released, as part of the statutory review of the Construction Contracts Act 2004 (WA). Written submissions as part of the review were due on 14 November 2014, and will not be considered by the review team