Amendment of the Building and Construction Industry Security of Payments Act 1999

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Building and Construction Industry Security of Payments act 1999
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How the NSW Act work?
The amendment of the Building and Construction Industry Security of Payments act 1999
commenced on 21st April 2014. The amendment is only applicable where there is a construction
contract made during or after that date. The Act presented an exceptional form for the
adjudication of disputes on the amount to be paid as progress payments. An autonomous
adjudicator develops a provisional determination concerning the progress payments by a
respondent. It is Imperative to note that, it is only the applicant who can start the adjudication
process. Nevertheless, both sides are at liberty to deliver their individual proposals to the
adjudicator, subject to Section 20(b) of the Act. An adjudicator can only be selected, through an
authorized Nomination Authority selected by the claimant. The process as well as the time of
selection to the adjudication process are strictly administered through the Act. (Brand, &
Davenport, 2012 p. 17-23).
The determination of the adjudicator, while not the ultimate, is binding to both parties
pending an amicable solution to the matter is met through either a private arrangement, a court
order or any other suitable process. If the accused doesn’t meet the arbitrated amount by the
agreed date, the determination of the arbitrator can then be documented as a ruling in a court of
practiced jurisdiction. If a respondent subsequently applies to the court to have the verdict set
aside, the plaintiff is not eligible to make cross-claims against the applicant. Moreover, he cannot
raise any defense concerning the matters that might be arising under the Act. Under the amended
laws, it is observed that the respondent must pay an agreed amount to the court as security
awaiting the closing outcome of the court proceedings (Coggins, 2011 p. 15-18).

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The amended Building and Construction Industry Security of Payments act 1999 is not
applicable to construction contracts, particularly for residential building works on the party for
whom the work is carried out resides in. Such an agreement is often an exempt residential
construction contract.
Under the Building and Construction Industry Security of Payments act 1999,
Contractors are eligible to get progress payment within the agreements of the contract. This can
be done through a verbal, or written contract where the contract specify that the contractor has no
entitlement to receive progress payment. This includes independent contractor agreement which
provide the rights and obligations for both parties (Kwak, 2012 p. 158). Moreover, progress
payment is evaluated on the work value or supplies that have been conducted within the terms of
the contract. If there is disagreement over the amount owed in progress payments, contractors
might choose to bring in an arbitrator to assist in determining the dispute (Din, & Ismail, 2014).
In addition to that, unless the agreement states otherwise, any claim for progress payment can
only be paid once every month.
Payment schedule
If the defendant does not intend to reimburse the amount agreed by the claimant, they
have the right to deliver a new schedule within a period of ten days before the claim is made. A
payment schedule is a notice in written form that must be served to the claimant, informing him
that the respondent does not intend to pay the amount claimed. The schedule of payments must
indicate the amount payable to the claimant together with the reason why the respondent wants
to pay a lesser amount than the amount agreed (Coggins, Fenwick Elliott, & Bell, 2010 p. 178).
Breach of the Act: The act Safeguards the rights of the contractor as well as the supplier
under the construction contract in order to receive progress payment to conduct the services or

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supply the required goods. Contrary to the agreement, there are serious financial and criminal
penalties if the progress payment is intentionally breached and enforcement actions might be
considered against the property of the respondent (McGrath‐Champ, & Rosewarne, 2009 p. 34-
37).
2. Why was it introduced?
Most of the newly introduced amendments were made through recommendations made
by John Murray in His report regarding security of payment legislation passed in December
2017. The amendments are broad and important. Some of the fundamental changes include
Executive and accessorial liability, exposing directors and last but not least management of
personnel if a corporation commits an offence contrary to the guidelines provided under the Act.
Objects of the Act: Section 3(1) of the amendment Act offers a description the fundamental
objects of the of the Act being “Ensuring that any individuals who gets a construction contract
has the liberty to accept or recover progress payment in relation to the completion of the
services.” In simple terms the Act creates a new system that enables court to exercise statutory
entitlement. First, the claimant must serve the court with a written claim for payment upon the
individual who might be liable to make the payment under their agreement. If the respondent
disputes the liability, the respondent might prepare and serve the claimant as for the reasons as to
why he may be withholding the payment claim (Wong,Wang, & Do, 2014 p. 187-189).
In any case the dispute withholds, or the claimant does not receive any amount by the
agreed date, then the matter might be transferred to an adjudicator at the wish of the claimant.
Once the adjudicator makes his determinations, and no payments have been made yet, the
claimant can request the adjudication certification with the intention of ceasing the work. Such
an adjudication can be used as a judgement in a court of law and implemented accordingly.