Building Law: Detailed Analysis of the Security of Payment Act

This report provides a detailed analysis of the Building and Construction Industry Security of Payment Act, focusing on its purpose, key features, and amendments. The Act aims to secure payments for workers in the construction industry and provides mechanisms for resolving payment disputes, including adjudication. The report discusses the Act's impact on contractors, sub-contractors, and the broader construction industry, including relevant case law. It examines the procedures for payment claims, dispute resolution processes, and the role of adjudicators. The report also highlights challenges and criticisms associated with the Act, such as imbalances between contractors and sub-contractors and the cost of accessing the scheme. Furthermore, the report outlines the amendments made to the Act, including changes to payment terms and the establishment of trust accounts. Overall, the report provides a comprehensive overview of the Building and Construction Industry Security of Payment Act and its implications for the construction sector.

Running head: BUILDING LAW
BUILDING LAW
Name of the Student
Name of the University
Author Note

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Answer 1
The act which is considered to be the Building and Construction Industry Security of
Payment Act discussed that any person or individual who is considered to be a part of the
construction industry and does the work in the construction area are entitled to be paid for the
work. Thus, this particular Act takes care of those workers who are involved in the construction
work whether it is the suppliers who try to sell or supply any kind of goods or commodities
related to the construction business or the industry. Therefore, the payment of those individuals
who are involved in the construction business are taken care of under this Act.
The main purpose or the objective of the act is considered to be that the Act had been
introduced or enforced in order to ensure that the workers or any individuals who have been
involved in the working of the construction industry should be able to get the payments on time
and should not be delayed in getting the payments which would mean that the payment of the
workers in the construction industry should be fair and on time. Another purpose of the Act in
order to ensure the safety of the workers in the Act would try to secure the payment structure of
the workers who are a part of the construction industry (Hughes, Champion and Murdoch 2015).
The procedure of the payment structure in the act tries to provide improved provisions which
would help the workers to work accordingly and in an effective manner. The key features of the
Act include that the contracts which are formed under the construction industry would need to be
able to provide for intervals as to when the payment can be made. If there has been a legitimate
payment claim has been by a party then the party who is involved in paying for the claim needs
to provide with a notice earlier to making the payment if the claim is considered to be disputed.
The security of the payment needs to be in the form of a bank guarantee or through any kind of
deposit that needs to be done through cash in the workers designated trust account. Therefore, in

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order to conclude, this particular act is considered to be the act which provides a protection to the
workers who are involved in the construction industry and try to provide payment in a secure
way.
Answer 2
The act of Building and Construction Industry Security of Payments Act 1999 was
introduced and adopted by the states and territories of Australia in order to determine the
progress of the claims which were being made and involved the buildings which were being
created and constituted by the contractors and the sub-contractors or for any kind of the contracts
which would indicate that there has been any kind of supplies of the goods and services which
happened in the building industry. The Act was also established in order to carry out the process
of the cash flow in the economy in a progressive manner without the use of lengthy arbitration or
any kind of litigation process which would also be considered to be expensive (Coggins, Teng
and Rameezdeen 2016). The Act was introduced to listen to the claims and disputes of the
workers which were arising in the construction industry regarding the payment of the workers. In
the case of Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd [2016] NSWSC 770
this case talks about the adjudication which can be done without litigation or arbitration by
nominating third parties and it is considered to be less expensive in the court. This Act
introduces the primary dispute resolution system by the adjudicator which is considered to be a
less expensive way than the court proceedings or the litigation process or through arbitration.
This method or this approach was a quick way of solving the disputes of the parties. It can also
be observed in the case of Brodyn Pty Ltd v Davenport [2004] NSWCA 394.
The Act has faced certain challenges after being introduced there has been various
discussions about the powers of the contractors and the sub-contractors in the act whereby there

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has been a certain amount of imbalance which has been discovered between these contractors
and the sub-contractors who form a part in this Act. The comprehension of the legislative scheme
is considered to be poor which means that there is poor understanding of the provisions and the
schemes under the Act. The scheme that is to be accessed is considered to be an expensive affair.
Therefore, it can be understood, that the act was established or introduced in order to
create an easier way to solve the disputed which related to the payments of the workers or the
individuals who were involved in the building and the construction industry. It tried to provide
for an effective and secure way to create the payments which would be made to the workers in
the industry and if there have been any claims by the workers or the individuals involved in this
industry then the claims would not go un-answered and they would be able to take the disputes to
the adjudicators which would be considered to be less expensive than that of the litigation or the
court proceedings or the arbitration proceedings. Under this Act the adjudicators would be
appointed to act as the judge who would aim to resolve the disputes of the people involved under
this act. It is considered to be effective than the other court proceedings since the act provides for
a speedy dispute resolution method which would help the workers or the individuals who are or
have been associated with this construction or building industry.
Answer 3
The act is considered to be established which would concentrate on the payment
procedures for the workers who have been associated with the building or the construction
industry. It was introduced in order to resolve the disputes or the claims which have been made
by the workers in the industry relating to the payment procedures. It tries to protect the workers
by a speedy procedure in order to resolve the disputes. In this act in order to resolve the disputes
in an effective way an adjudicator is appointed who would be acting as the third party and would

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try to resolve the disputes by hearing the claims of both the parties. The adjudicator acts as a
nominee as the adjudicator has been appointed as a third party to resolve the disputes which have
aroused due to the claims which have been made by the two parties who needs to resolve the
disputes. As it can be seen in the case of Probuild Constructions (Aust) Pty Ltd v Shade Systems
Pty Ltd [2016] NSWSC 770. There have been claims made that an adjudicator can also be
considered to be biased in nature to one of the parties and therefore, it is done through an
Authorized Nominating Authority. The Queensland has abolished this and they have replaced the
Authorized Nominating Authority to the Adjudication Registrar but this is considered to be
facing difficulties as the number of cases which are considered to be withdrawn has increased in
numbers (Yung and Rafferty 2015).
Answer 4
There was an amendment where a Bill was passed which had certain changes under the
above-mentioned Act which had a few recommendations which were made. The Bill had
concentrated on the part of the sub-contractors but it had also focused on the stricter framework
for the head contractors. It had made an amendment on the payment terms where the progress
payments were considered to be payable within the fifteen business days which would be
considered to be a valid payment claim which had been laid down in the section of the amended
act. The claimant needs to make valid payment claim which would also help the claimant in
order to seek remedies for such claim which could be available in this legislation. This did not
change the fact that the payment claim can be only made once by the claimant. There needs to
new trust accounts which would help or assist in the retaining the money. The amendment states
that the money needs to retained in a trust account which would be entitled to only the sub-
contractors of that money. It has additionally added a penalty provision for the offence being

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committed under the provisions of the act and therefore, the head contractors would be
responsible under the provisions if they do not agree to the provisions for such.
Therefore, it can be understood that the amendments which were made under the act was
to improve the act in a certain way and concentrate and focus on the claims which needed to be
resolved. Therefore, the act was introduced to secure the payment structure and the procedure
which were taking place in the building or the construction industry and therefore, it aimed to
resolve the disputes which aroused due to this in an effective and speedy manner which would
also be considered to be less expensive than the court proceedings or the arbitration procedures.

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References
Brodyn Pty Ltd v Davenport [2004] NSWCA 394.
Building and Construction Industry Security of Payment Act, 1999.
Coggins, J., Teng, B. and Rameezdeen, R., 2016. Construction insolvency in Australia: reining in
the beast. Construction Economics and Building, 16(3), pp.38-56.
Hughes, W., Champion, R. and Murdoch, J., 2015. Construction contracts: law and management.
Routledge.
Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd [2016] NSWSC 770.
Yung, P. and Rafferty, K., 2015. Statutory adjudication in Western Australia: adjudicators’
views. Engineering, Construction and Architectural Management, 22(1), pp.54-72.