Are you a builder, subcontractor, developer or supplier to the construction industry and concerned about cashflow?
If you are concerned about debt recovery, don’t delay getting advice. The longer you wait, the fewer options you will have.
Watch this video from our Litigation Lawyer, Andrew Wilson and learn how the Security of Payments Regime affects your business.
The Security of Payments Regime provides the easiest, simplest and cheapest avenue available to get payments claims for builders, subcontractors, developers or suppliers to the construction industry.
If you are concerned about your cash flow, you can use the Security of Payments Regime to get paid. Conversely, your subcontractors and suppliers can use the Security of Payments regime against you.
To make the Security of Payments Regime work for you, you need to:
- Understand the fundamentals;
- Ensure that your systems and processes comply with the Act; and
- Know when to seek advice.
The Building and Construction Industry Security of Payment Act applies to most construction work in NSW.
Similar legislation applies in all other states and territories. It does not apply to residential building work where you do work for an owner-occupier. It does apply to work done for a body corporate. It does not apply to parts of mining and oil and gas extraction. It does apply to architectural work.
If you don’t know if it relates to work you do or work you commission, you need advice.
The fundamental elements of the Security of Payments regime are payment claims and payment schedules.
If you get these right, you are halfway towards making this legislation work for you.
A claimant, a person who did work or supplied materials, can render a payment claim once a month (or more often if the relevant contract allows for it).
A payment claim must:
(a) identify the construction work (or related goods and services) to which it relates, and
(b) must indicate the amount of the progress payment that the claimant claims to be due.
A payment claim only needs to state that it is made under the Act if it is connected with an exempt residential construction contract.
If you are unsure if this applies to you, you need advice.
A respondent, the person who had the work done or received the materials, must render a payment schedule within 10 business days of service of the payment claim.
If they don’t, the claimant can claim the amount in the payment claim in court and the respondent from arguing their standard defence. They cannot argue that the works are incomplete or defective. The cannot may any argument based on the terms of the contract. They can only raise a technical defence regarding compliance with the Act.
If you engage subcontractors or suppliers, you don’t want to get this wrong.
The Building and Construction Industry Security of Payment Act provides the option of adjudication as an alternative to pursuing a claim in court.
Adjudication is simpler, quicker and cheaper than court proceedings.
However, strict limitation periods apply to adjudication applications.
If your claim falls outside of a limitation period, your adjudication application can fail. If you are concerned about debt recovery, don’t delay getting advice. The longer you wait, the fewer options you will have.
On 21 October 2019 amendments to the Building and Construction Industry Security of Payment Act will come into effect.
These changes will:
1. impact on the ability of respondents to challenge payment claims and adjudication decision in court; and
2. increase fines for non-compliance with parts of the Act.
Aubrey Brown Lawyers represents all parts of the building and construction industry, from small subcontractors to major builders, from civil contractors to architects. We have found that the best thing we can do for all our clients, regardless of their size or scale, is it gives them good advice.
If you don’t know if it relates to work you do or work you commission, you need advice. Call us on 02 4350 3333 or contact us here and we will assist and support you to ensure you and your cashflow are protected.
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*Everything in the video is general in nature. As always, there are exceptions to rules stated.
