Security of Payments Act
5 March 2022 in Building and Construction LawWhat is the Security of Payment Act?
The Building and Construction Industry Security of Payment Act 1999 (NSW) is a piece of legislation which operates to ensure that people who carry out or assist with construction work under a construction contract are paid for their work. This piece of legislation is more commonly referred to as the Security of Payment act. The act creates an entitlement that people who contribute to construction work will receive progress payments for the goods and services they have provided. It has also created a framework for people to make claims for payment for completed construction and for the resolution of disputes relating to payment for construction work. This is via adjudication, a form of arbitration, which allows disputing parties to have their dispute decided by an independent, neutral decision maker
Recent Amendments
The Security of Payment Act has received two important amendments in 2021. Following an amendment in March 2021, the act now applies to home building where the builder has contracted directly with the homeowner. In these arrangements, progress. payments must be made in accordance with the contract. Alternatively, if the contract provides no provision for progress payments, progress payments must be made within 10 days of a payment claim being made. (Security of Payment Act s11 (1C)).
Following an amendment in June 2021, the act now requires all construction contracts over the value of $20,000, must include a Security of Payment guide. Penalties apply in circumstances where construction contracts fail to include a Security of Payment guide.
How can the lawyers at BSM help me?
We are industry experts with over 40 combined years experience handling residential, commercial and industrial construction legal advice and building disputes. Our clients include builders, home owners, property developers, contractors, engineers and body corporates. We have extensive experience in every stage of the building process including pre-contract negotiations, drafting and review of construction contracts, negotiation and review of finance contracts, legal advice regarding construction claims, debt recovery and dispute resolution. In relation to the Security of Payment act we can assist with:
Advice about the Act
Our highly experienced team can explain to you the complexities and nuances of the act and how they apply to your unique circumstances. We can explain your rights and obligations and your eligibility to make a claim.
Making a Claim
We can make and enforce a claim under the Security of Payment act. We can advise on how the payment will be calculated and when the progress payments are legally due.
Applying for Adjudication of a Claim
The BSM building and construction lawyers can explain the criteria, eligibility and application requirements when making an adjudication application. We can represent and strongly advocate for you during the adjudication process.
Call us to arrange a free 20 minute no obligation consultation that includes case evaluation and cost estimate.
What is a Progress Payment?
What is a Progress Payment?
This is a payment which a person who has contributed to a construction work is entitled to under the Security of Payment Act. It includes the final payment, a one-off payment and payment in relation to a date or event in the construction work. Section 4 Security of Payment Act.
Are there Similar Laws which apply to other Jurisdictions?
Are there Similar Laws which apply to other Jurisdictions?
Yes, there a number of laws across Australia’s legal jurisdictions that ensure people are paid for completed construction work. They include:
- Building and Construction Industry Security of Payment Act 2002 (Vic)
- Construction Contracts (Security of Payments) Act 2004 (NT)
- Building and Construction Industry Security of Payment Act 2009 (SA)
- Building and Construction Industry Security of Payment Act 2009 (Was)
- Building and Construction Industry (Security of Payment) Act 2021 (WA)
- Building Industry Fairness (Security of Payment) Act 2017 (Qld)
Does the Security of Payments Act apply to all Construction Contracts?
Does the Security of Payments Act apply to all Construction Contracts?
No, there are some contracts where it does not apply such as construction contracts that form part of a loan agreement or contracts that relate to work completed outside of NSW.
If I make a Claim under the Act, do I need to Continue Working?
If I make a Claim under the Act, do I need to Continue Working?
No, according to Section 27 of the act a claimant has the right to suspend any construction work or the supply of related goods and services until 3 days following receipt of the proper payment.
