NSW Security of Payment Legislation

NSW

New amendments to the NSW Security of Payment Legislation came into effect from 21 April 2014 as a result of an inquiry into insolvency in the construction industry. The amendments include:

• a requirement that payment claims made by a head contractor include a supporting statement declaring that any subcontractors have been paid all amounts due
• the removal of the requirement that a payment claim must state that it is being made under the Act ‘unless’ it is related to residential work
• maximum payment terms of 15 business days (for head contractors) and 30 business days (to subcontractors)

In December 2014, the NSW Dept Fair Trading released the Government’s Building and Construction Industry Security of Payment Amendment (Retention Trust Money Account) Regulation 2014 which:

• applies to contracts between head contractors (or principals) and subcontractors, for non-residential building projects worth over $20 million
• requires that head contractors deposit subcontractors’ retention money into approved accounts with authorised deposit-taking instructions (ADI’s)
• was forecast to commence on 1 February 2015 (however has not yet been enacted)

Interestingly, since December 2014, there has been little mention from the Government of when the final amendments will take effect.