Building and Construction Industry Security of Payment Act 1999 No 46

Property Law
Running head: PROPERTY LAW 0
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Contents
Introduction........................................................................................................................3
How the act does works?...................................................................................................3
Why the act has been introduced?....................................................................................5
How act works regarding regular court actions.................................................................6
Amendments in respect to Sub-contractors......................................................................8
Conclusion.........................................................................................................................9
References.......................................................................................................................10

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Introduction
In the world full of commerce, rights and obligations of parties are required to be clear
under a transaction. This requirement becomes more crucial when more than two
parties are involved in a commercial transaction. In transactions related to business and
construction industry, many parties remain involved such as owner, contractor, and sub-
contractor and they face issues related to receipt of their payments many times. To
address such issues, a different state of Australia has enacted their legislation on the
payments of entitlements under a construction contract (Securityofpaymentsact.com.au,
2019). In New South Wales, Building and Construction Industry Security of Payment Act
1999 No 46 (hereinafter considered as an act for the purpose of this report) is there for
this purpose, which has been enacted in 1999. This report is to produce to property
council answering different questions conserving the said act. The way of working of the
act, objectives of the same, court actions, amendment for sub-contractors and aspects
related to the act will be discussed in this report under different headings.
How the act does works?
If to discuss the way of working of act, this is to state that the process can be divided
into various steps. In the very first step, parties are required to check whether the
invoice or claim has been issued under this act or not. It means firstly the applicability of
the act is required to be checked. The act provides rules concerning to payment claims
and payment schedules. As per section 13 of the act any person who is entitled to claim

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the progress payment under a construction contract may give the payment claim to the
person to whom such entitlement is due (Legislation.nsw.gov.au, 2019). The party who
provide such payment claim is considered as claimant of the case and the other party to
whom such claim is served is known as the respondent. The act provides a time frame
for various claims and payments. On receipt of a payment as per section 13, the
respondent gets an option to reply to such claim by serving a payment schedule. Such
payment schedule must be provided within the time mentioned in the construction
contract or 10 business days whichever is earlier. Further, such a payment schedule is
necessary to identify payment claim and schedule amount that a respondent propose to
make. It is called a first notice (Macindoe, 2015). Further, if the respondent does not
reply with payment schedule then claimant becomes eligible to submit second notice
where claimant shows his/her intention to use adjudication.
To initiate a claim under adjudication process, a claimant is required to ensure certain
factors such as construction contract exist in a case, goods are which are mentioned
underpayment claim has been charged at the agreed rates, a valid payment claim has
been provided and so on. Rules related to adjudication will further be discussed in detail
in the following part of the report. For the procedure of adjudication, an adjudicator is
required to be selected by the claimant. By following the adjudication process
appropriately and correctly, the claimant may reach up to a final settlement and can
receive the payment of the claim. The act works in practice in this whole manner. The
significant feature of the act is mentioned under section 5 where the definition of
construction work is provided. The section identifies the scope of the act and states that
construction also includes extension, alteration, maintenance, alteration and any other