Building and Construction Industry Security of Payment Act 1999: An Evaluation

Building Law

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Table of Contents
Introduction............................................................................................................................. 2
How does this Act work?..........................................................................................................2
Why was it introduced?........................................................................................................... 3
How does the act work in relation to the regular court actions?.............................................4
What amendments are made in the act for sub-contractors?.................................................5
Conclusion................................................................................................................................ 7

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Introduction
In this report, the Building and Construction Industry Security of Payment Act 19991 (the Act)
will be evaluated. This act applies to the New South Wales, Australia and it assists parties in
receiving timely payments under a construction contract. Firstly, this report will evaluate
how this act works by analysing its operations. Secondly, the objective of enactment of this
act will be evaluated in this report to understand the role of this act. Thirdly, the provisions
given under the act for operations of regular courts while entertaining any cases involving
the payment issues raised in construction contracts will be discussed. Lastly, the
amendments which are introduced in this act for protection of the rights of sub-contractors
will be analysed.
How does this Act work?
This act is designed by the government to ensure that a person is able to receive payments
within appropriate time under a construction contract for providing services or carrying out
work related to construction work. The aim of this act is to ensure that contractors and sub-
contractors receive their payment promptly. This act is targeted on moving the cash quickly
in a construction relation contract to ensure that parties receive their payment within
appropriate time and disputes are resolved fairly and quickly. This act applies to both public
and private organisations. As per the working of this act, statutory rights of parties are
recognised under construction contracts based on which the parties have the right to
receive their payment within appropriate time2. Section 14 of the act provides that the
parties have to give the payment schedule to the contractors, sub-contractors or other
parties in the contract. This liability is imposed on them after a claim is made to receive the
payment. Various penalties are included by the government in this act for ensuring that the
provisions of this act work properly.
Section 15 defines such penalties which are imposed on parties who fail to make the
payment or give the payment schedule within appropriate time. Under those penalties, the
contract can be rescinded by the party. The parties also have the option to make
1 Building and Construction Industry Security of Payment Act 1999
2 Fair Trading, Security of Payment Reforms (2018) <
https://www.fairtrading.nsw.gov.au/about-fair-trading/have-your-say/security-of-payment-reforms>.