Building Law: An Overview of Building and Construction Industry Security of Payment Act 1999 in New South Wales

Building Law
9/19/2019
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Building Law 1
To regulate the commercial affairs of parties in the building as well as in construction industry,
different nations have developed their laws, which prescribe provisions related to work schedule,
payment schedule, dispute resolution under a construction contract and so on to protect the rights
of builders and contractors. Every state of Australia has different legislation on the topic of
security of payment1. The legislation selected for this essay is of New South Wales State of
Australia and is known as Building and Construction Industry Security of Payment Act 19992.
The report will discuss different aspects of this aspect such as its manner of working, the reason
behind its introduction, the manner in that it works with respect to regular court actions and
amendments for sub-contractors. At the end of this essay, a conclusion summarizing findings of
the report will also be discussed.
Staring the discussion about this act it is to say that as the name of the act implies, it ensures
timely payment for work under construction contract. The act consists of 38 sections, which
provides provisions related to various aspects. Section 5 of the Building and Construction
Industry Security of Payment Act (hereinafter mentioned as an act) includes repair, extension,
and restorations3. The scope of this act is quite wide as it also includes verbal contracts in
addition to the written ones. Even before this act, rights were available to contractors and sub-
contractors but this act ensures the availability of such entitlements in a more legal way. Under
every construction contract, mainly three parties are there namely owner, contractors, and sub-
contractors. As per this act, every person has the right to receive timely payment of the services
as well as provided in the course of a construction contract. The act outlines different time limits
under which payment must be clear and in this manner provides a very efficient safeguard to
1 James Pickavance, A Practical Guide to Construction Adjudication (John Wiley & Sons, 2015), 447.
2 Building and Construction Industry Security of Payment Act 1999 No 46
3 Classic.austlii.edu.au, BUILDING AND CONSTRUCTION INDUSTRY SECURITY OF PAYMENT ACT 1999 - As
at 19 July 2019 - Act 46 of 1999 (Austili) <http://classic.austlii.edu.au/au/legis/nsw/consol_act/bacisopa1999606/>.
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Building Law 2
those who often face hurdles in the receipt of their payments. Not only the sub-contractors but
also head contractors have some entitlements under this act since the owner is also obliged to
make the payment to such contractors in a given time frame. The act also provides the procedure
that a person asking payment is required to be followed. As per section 14 of this act, a
respondent can produce a payment schedule to a person who claims for payment.
Further section 15 states that in those cases where the respondent becomes unable to produce a
payment schedule and becomes liable to make the payment then in such a situation a claimant
has right to ask for the unpaid portion of the claimed amount. The act is mandatory in nature and
provides penalties for the parties who fail to make the payment according to provisions of this
act. In this manner, it can be stated that only rights are not granted under the act but remedies in
case of non-providing such rights are also mentioned. Provisions related to the recovery of
progress payment are mentioned under division 1 of the act and division 2 of the act provides the
manner disputes under this act can be adjudicated. Total of 10 sections is there in this division,
which will be discussed further in the essay. The act also provides provisions related to
nominating authorities, a fee of the adjudicator, services of notice and so on and in this manner
helps innocent claimants to receive the payment of goods and services provided by them. This
act summarized the rights and obligations of different parties of a construction contract and let
them know their expected behavior.
The act has been developed for many reasons out of which the lead reason was to legalize the
rights available to parties who provide goods and services to construction sites. If to discuss the
objectives behind this act, the same be divided into two parts. The first objective was to provide
specific protection as well as rights to contractors as well as sub-contractors and to provide a
legislative mechanism for the recovery of progress payments. Before 1999 when the act has been
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