Building Law - An Overview of the Building and Construction Industry Security of Payment Act (NSW)

Running head: BUILDING LAW
BUILDING LAW
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BUILDING LAW1
1)
In relation to the legislation regarding ‘security of payment’, the first jurisdiction where it
was introduced, was the New South Wales state of the country of Australia. The introduction of
this particular legislation was done because a proper legislation was needed that would be
appropriate for the industry in relation to construction and the structures. October was the month
and 1999 was the year when the Building and Construction Industry Security of Payment Act
(NSW) was enforced. For further reference the aforementioned Act may be called the NSW Act.
It was the fifth day in the October month of the aforementioned year when the NSW Act was
sanctioned. In the present times, the country of Australia has witnessed the acceptance of the
NSW Act by the different states and the various territories of the country. The NSW Act that was
introduced by New South Wales State, have been utilized as a guideline by the states and the
territories for the introduction of similar legislations in such states as well as territories. Only two
states, to be specific, have not based their legislations on the NSW Act. However, all the
legislations have the basic similarities in relation to the provisions. The nature of the NSW Act
and the other similar legislations was exclusively established for the industry of structures and
construction purposes1.
The NSW Act was introduced, so that the individuals holding different position in the
contractual chain can be provided a security or a kind of protection in relation to the payments
that are made in the construction and structures industry. The different individuals in the
different positions in the contractual chain are the consultants, the suppliers, the subcontractors
and the contractors. The individuals of this contractual chain shall hold a special privilege to
obtain the payments that are due, from any other party holding a position on the higher side of
1 Russo, Rocco. "Where do we stand on security of payments reform in the building and construction
industry?." Governance Directions 68.9 (2016): 551.

BUILDING LAW2
the chain, in relation to any labor or work done by such individuals. This Act was introduced in
relation to the main issue of the lack of protection of the contractors and the sub-contractors
regarding the payments that are owed by them. In the industry of structures and constructions,
there is a lack of security of the payments that should be made to the sub-contractors and other
parties. It has been a complete failure in this regard, whether in relation to complete payments or
payments that should be made on time. Even when contractual rights are present for the sub-
contractors and other similar parties, the rights are not upheld properly.
The Building and Construction Industry Security of Payment Act of NSW provides
exclusive rights in favor of the parties included in the contractual chain who do not receive
payments for their work in a proper manner, that is, in payments made in full and also within a
mentioned period. The rights involved are rights regarding payments not made in proper time,
rights to lien, rights regarding progressive disbursements and rights regarding appending of
work2.
The chief role of the NSW Act is the provision of the assistance and protection to all
those parties of the contractual chain, who do not receive the correct payments for the work done
by them in relation to the industry of structures and constructions. This particular Act is regarded
as a guideline that must be followed by the individuals, who all are being deprived from
obtaining proper payments for their respective works. An accommodating contrivance has been
established by the NSW Act for the adjudication procedure regarding the claims made for the
disbursements in the court.
2)
2 Burr, Andrew. "Australia: The East Coast model (with New South Wales as the principal
legislation)." International Contractual and Statutory Adjudication. Informa Law from Routledge, 2017. 110-147.