Security Of Payments Act NSW 2013 Amendments
RECOUP warned of trouble ahead for Claimants and Respondents as a consequence of the Security Of Payments Act NSW changes that came into force on 21 April this year. And as we expected subcontractors are having to wait longer for payment and are wasting time and money on adjudication only to find out their payment claim is invalid. This can all be avoided.
The 2013 Amendments to the Building & Construction Industry Security Of Payment Act 1999 Apply Only to Contracts Entered Into On Or After 21 April 2014.
If you are a Claimant; your position is strengthened somewhat, but the danger of serving defective payment claims is increased dramatically.
If you are a Respondent; your degree of accountability will increase significantly, from now on you will need to treat all invoices as claims made under the Act, and in some cases you will have to pay claims sooner to be able to include that work in your claim to your client, and there will now be a maximum time for payment.
Changes To Security Of Payments Act NSW : “Due Date For Payment”
Principals now have to pay contractor claims within 15 business days, or sooner if the construction contract makes such a provision.
Contractors now have to pay subcontractors within 30 business days, or sooner if the construction contract makes such a provision.
And this is where you really need to be careful; Unless you have a written contract that expressly states what the payment terms are to be, and you are used to relying on the Act’s default of 10 business days, you will now have to wait up to 3 times as long to get your money or to be entitled to run your claim through adjudication under the Act.
Changes To Security Of Payments Act NSW : “Supporting Statement”
Head Contractors are now required to provide a supporting statement when submitting a claim to the principal. The Statement must include a declaration that all subcontractors engaged on the project have been paid what is due and payable. False declarations may attract penalties of up to $22,000.00 and / or 3 months imprisonment.
Proposed Changes To Security Of Payments Act NSW : “Payment Claims”
It will only be necessary for an invoice to state that it is a Payment Claim made under the Security Of Payments Act NSW if it relates to a residential construction contract.
This is proving to be a disaster for subcontractors. As the Act only allows on claim per Reference date (one claim per month) subcontractors submitting multiple invoices per contract in any one month are now in the position that all of these invoices are now invalid claims under the Act and need to sit on the sidelines until a new Reference date (new month) rolls around before they can serve another claim.
Unscrupulous builders are playing on this so be warned. The best solution is a written contract that specifically deals with times for making claims and time for payment. RECOUP helps many subcontractors modify their quotations a n contracts / agreements to ensure these problems don’t arise.