Building Law: Security of Payment Act Analysis - Western Sydney Uni

This report provides a detailed analysis of the Building and Construction Industry Security of Payment Act (NSW), focusing on its role in regulating payments within the construction and building industry. It examines the Act's purpose of protecting contractors and subcontractors from payment exploitation by larger entities, highlighting the introduction of 'security of payment' legislation and its widespread adoption across Australia. The report delves into the Act's mechanisms, including adjudication as a method of resolving payment disputes, and the 2013 amendments. It explores the rights afforded to minor parties, such as the right to interest, lien, and progressive payments, and the importance of these protections in ensuring fair financial practices within the industry. The report also discusses the impact of the Act on suppliers and the government's commitment to its effective implementation.

Running head: LAWS REGARDING CONSTRUCTIONS AND BUILDINGS
LAWS REGARDING CONSTRUCTIONS AND BUILDINGS
Name of the Student
Name of the University
Author Note

1LAWS REGARDING CONSTRUCTIONS AND BUILDINGS
Answer 1
The Building and Construction Industry Security of Payment Act (NSW) that was
sanctioned in 1999 (mentioned in this assignment as the Act), is considered as the guideline
regarding the payments that must be made in the constructions and edifices industry. In relation
to this Act, the legislation that is known as the ‘security of payment’ was introduced. The above-
mentioned legislation was established to provide an appropriate safeguard to the persons
involved in the constructions and edifices industry, who all are entitled to receive payments. In
the Australian nation, the region of New South Wales, a state in Australia, is the first among
others to introduce the legislation known as the ‘security of payment’. It was incorporated in the
aforementioned Act. Various legislations that has been based on the ‘security of payment’
legislation have been adopted in all the parts of the Australian nation with an exception of only
two regions in the country. It means that the New South Wales state legislation regarding the
constructions and edifices industry can be considered as the father of all the other legislations.
The aforementioned Act and the legislation is in connection to the various parties who all
are involved in the chain of contracts in constructions and edifices industry. The particular
legislation mentioned above is for the defense of the minor groups or parties against the
exploitation of the groups or parties who are in a higher place in the chain of contracts. The
individuals or the groups or the parties who are positioned in a higher place in the chain have a
tendency to exploit the ones who are below them by not making the payments due to the minor
groups in a proper manner and within a given period. This Act was established to see to the fact
that the minor groups are not exploited by the major groups and that the payments shall be
received by the minor groups in an accurate manner and in a timely manner, for the work or
labor contributed by them in any given project. It has to be stated with utter disgrace that the

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minor groups of the chain of contract are exploited even in the presence of contracts and the
presence of the rights arising from such contracts. Hence, the aforementioned Act and the
legislation was established to give the minor parties the right and the privilege to claim their
payments to which they are entitled to. These rights are the right to interest if there is any kind of
mishap regarding the payments, the right to lien, the right to progressive payments and the right
to appendance of the job or labor, as the case may be1.
The working of the aforementioned Act and the legislation mentioned above is grounded
on the defense and the safeguard that must be provided to the minor groups, especially sub-
contractors and other small-time contractors, against the exploitation of payments caused by the
parties belonging to the major groups who are positioned in a higher place in the chain of
contracts. These parties herald the power to command the minor groups of the chain. Therefore,
the primary working of the Act mentioned above can be related to a cloak of protection and
safeguard for the sub-contractors and other minor contractors.
Answer 2
An analysis has been executed by the respective authorities regarding the exploitation
that has been going on in the industry of the edifices and constructions. Such analysis has proved
the fact that the level or the degree of exploitation that has been committed by the higher ups of
the chain of contract is high. It is beyond the imagination of any rational human being that how
much the minor groups of the chain and their families have been suffering because of such
consistent exploitation that has been deliberately committed by the major groups of the chain.
Hence, the introduction and the enforcement of the Building and Construction Industry Security
1 Brand, Michael Charles, and Thomas Uher. "Follow-up empirical study of the performance of the New South
Wales construction industry security of payment legislation." International Journal of Law in the Built
Environment 2.1 (2010): 7-25.

3LAWS REGARDING CONSTRUCTIONS AND BUILDINGS
of Payment Act and the related ‘security of payment’ legislation became a mandatory step to
counter such deliberate exploitation in relation to the payments.
The major groups have exploited the minor groups by extracting every kind of work and
labor from them and not paying them properly for such contribution in relation to the labor or
work that is completed. Certain frequent mishaps that are committed by the major groups are the
suppression of the payments, the suspension in providing the payments and the unreasonable and
unwarranted depreciation of the payments that has to be made. The basic labor community such
as the people laying bricks, the people who all are in-charge of the plumbing and the electricity
of any building or complex, are the most recurrent sufferers of such exploitation of payments in
the construction and edifices industry. Even the families of such individuals suffer because of the
exploiting nature of the major groups2.
The minor groups, which involves the minor contractors and the sub-contractors as well
as the plumbers or the bricklayers or the electricians, have the chance or the opportunity to
convalesce their due payments that is not provided to them by the major groups, with the help of
the process of arbitration or the process of the litigation. The dependence of such minor groups
of the chain of contract is in relation to the dispute resolution procedures. However, it is very
evident that such resolution procedures or the litigation processes or the arbitration processes
cannot be availed by the minor groups because whenever the minor groups opt for the above
mentioned procedures, then they become frustrated facing issue such as the huge incidentals and
the suspension of time that is involved in the aforementioned procedures. The minor groups
involving the minor contractors and the sub-contractors work in particular type of job. The
nature of the work done by them do not permit them to delay even a single day. They cannot just
2 Ramachandra, Thanuja, and James Olabode Bamidele Rotimi. "Causes of payment problems in the New Zealand
construction industry." Construction Economics and Building 15.1 (2015): 43-55.

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sit around or take rest or a day-off even for single day. Hence, the suspension in time and the
increased expenditures involved in the aforementioned procedures cannot be afforded by the
minor groups of the chain of contract. Therefore, these minor groups give up their hope in
relation to any kind of justice regarding the aforementioned procedures and then the individuals
of the minor groups move on to other different ventures where they are able to find any kind of
work. This creates a cycle of the same situation happening again and again. The minor groups
get involved in this cycle and it becomes difficult for them to come out of such cycle. It affects
the earnings of the minor contractors and the sub-contractors.
Therefore, the Act stated above was brought into existence by the government of New
South Wales State. The minor groups could not depend on the litigation procedures or the
arbitration processes for dispute resolutions. Hence, the Act stated above was created for these
minor groups. The Act was something on which the minor groups could depend on. The main
purpose for the introduction of the Act stated above was that assurance shall be provided to the
individuals of the minor group that the payments for the work and the contributions forwarded
by them, shall be provided to them, without any kind of postponement in time or depreciation of
the actual amount to be received. The creation of the Act was done to assure the individuals of
the minor group that it shall be the right and privilege of such individuals to receive the
payments for the labor that they have put in, regarding the constructions and the edifices
industry. On various occasions, the suppliers in the constructions and edifices industry, are
considered among the minor groups. Hence, on these occasions the privileges of the Act are also
extendable to the suppliers. If no payment is being made properly to the suppliers for any supply
of materials or services, then the suppliers shall be able to utilize the provisions of the
aforementioned Act for their own advantage.

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The government of the New South Wales State of the Australian nation is very dedicated
towards the proper functioning of the aforementioned Act and the ‘security of payment’
legislation. The government of the State have accepted the duty to make sure that the Act works
in a proper manner and the minor groups are benefitted by the formation of this Act and the
exploitation is abolished after the proper effectiveness of the Act.
Answer 3
The Act as stated before, has a very prompt and different way of functioning in relation
to the court actions. This prompt and different way of working is known as the ‘adjudication’
method in relation to the Act mentioned earlier. The procedure of ‘adjudication’ is followed
under the Act and is considered as temporary solution to any matter of dispute or issues that may
arise between a party of minor group and a party of the major group, regarding the contracts
made in the constructions and edifices industry3. The ‘adjudication’ is a procedural method
followed by the parties involved in it. The temporary solution is a temporary determination that
is proclaimed by a third individual, who is not connected to the parties that are involved in the
procedural method for adjudication. Such decision is forwarded in any matter in relation to
postponement in making payments or deduction from the actual amount that must be paid or any
other connected issues to the payment. First, it must be ensured that a complete work is delivered
by a party to the particular process and then it must be investigated that whether or not the proper
payments were given to that party for such contribution. The decision shall be provided
accordingly. It shall be based on the circumstances and facts of each case. The individual who is
not connected to any of the parties to the procedural method of ‘adjudication’ and that same
individual who provides the temporary decision or determination is known as the ‘Adjudicator’.
3 Yung, Ping, and Kieran Rafferty. "Statutory adjudication in Western Australia: adjudicators’ views." Engineering,
Construction and Architectural Management 22.1 (2015): 54-72.

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The aforementioned Act is the one that is accountable for the control and the
management of the procedural method of ‘adjudication’4. The provisions as given in the Act, lays
down the guidelines that has to be followed during the process. The temporary decision that is
forwarded by the ‘adjudicator’ after a particular issue or matter of dispute is heard by him, shall
have a binding effect on the parties involved in the above mentioned procedural method. This
effect is until the time any court resolves the dispute completely. In the said procedural method,
when a party is obligated to pay an amount to another party as payment for any particular
contribution, then the party obligated to deliver the amount shall forward a particular schedule
that is known as the ‘schedule of payment’ to the party who shall receive the amount. In certain
situations, the party obligated to pay, may not make the payment of the adjudicated amount in a
proper manner and makes a suspension in time or a deduction regarding the amount that must be
paid. In these type of situations, the determination delivered by the adjudicator shall be declared
to be a judgment as given by a court after the appropriate process of registration is given effect to
in any court having the same authority. In these situations, the party who is obligated to pay and
has not paid the amount, will have no rights or privileges to counter the decision or the judgment
delivered by the ‘adjudicator’ and a sum, which shall be regarded as a portion of the amount
prescribed by the adjudication procedural method. A specific organization named Authorized
Nominating Authorities is responsible for maintaining the process of adjudication5.
Answer 4
The Act as stated in the assignment has undergone a major change in the year 2013. The
amendment that was made to the Act in the year mentioned above was in relation to certain
4 Bell, Matthew, et al. "Security of Payment in the Construction Industry: Does International Experience Provide a
Crystal Ball for North America?." (2018).
5 Bowyer, Kyle. "Improved Security of Payment Legislation and Project Bank Accounts: A Joint Solution to
Payment and Insolvency Issues in the Construction Industry." U. Tas. L. Rev. 37 (2018): 52.

7LAWS REGARDING CONSTRUCTIONS AND BUILDINGS
provisions of the Act. These provisions were in relation to the security of the minor groups, that
is, the minor contractors and the sub-contractors. These changes to the Act was done for the
advancement of the rights and the entitlements of the sub-contractors and other minor parties in
the chain of contract in relation to the construction and edifices industry. Sections 4, 11 and 13v
were among few of the sections which were amended in favor of the sub-contractors. These
amendments fortified the security regarding the payments in relation to the constructions and
edifices industry6.
6 Skaik, Samer, Jeremy Coggins, and Anthony Mills. "The Big Picture: Causes of Compromised Outcome of
Complex Statutory Adjudications in Australia." International Construction Law Review Journal (2016) (2016).

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References
Bell, Matthew, et al. "Security of Payment in the Construction Industry: Does International
Experience Provide a Crystal Ball for North America?." (2018).
Bowyer, Kyle. "Improved Security of Payment Legislation and Project Bank Accounts: A Joint
Solution to Payment and Insolvency Issues in the Construction Industry." U. Tas. L. Rev. 37
(2018): 52.
Brand, Michael Charles, and Thomas Uher. "Follow-up empirical study of the performance of
the New South Wales construction industry security of payment legislation." International
Journal of Law in the Built Environment 2.1 (2010): 7-25.
Ramachandra, Thanuja, and James Olabode Bamidele Rotimi. "Causes of payment problems in
the New Zealand construction industry." Construction Economics and Building 15.1 (2015): 43-
55.
Skaik, Samer, Jeremy Coggins, and Anthony Mills. "The Big Picture: Causes of Compromised
Outcome of Complex Statutory Adjudications in Australia." International Construction Law
Review Journal (2016) (2016).
Yung, Ping, and Kieran Rafferty. "Statutory adjudication in Western Australia: adjudicators’
views." Engineering, Construction and Architectural Management 22.1 (2015): 54-72.