State Parliament is considering significant amendments to the Building and Construction Industry Security of Payment Act 2009 (Act).
On 26 May 2021, the amendments passed the second reading stage in the Lower House. It is not yet certain whether the amendments will become law before the next election.
If passed in the current form, the Small Business Commissioner (SBC) will take a central role in administering the Act.
The key changes likely to impact members are:
- Regardless of the contract terms, payment must be made no later than 25 business days after receipt of a payment claim. If there is no specific time frame for payment in the contract, payment must be made within 10 business days.
- It will be an offence to attempt to threaten or intimidate a person in relation to their right to make a payment claim with maximum fines of $50,000 for individuals and $250,000 for companies.
- Payment claims can be made for all residential building work. The present legislation limits payment claims to subcontractors and builders constructing investment properties.
- The concept of a reference date is gone. Payment claims can be made each month or more often if the contract terms allow.
- A payment claim can be made after termination of a contract. Presently no claim can be made after termination unless a reference date remains available.
- A payment claim can be made when the final invoice is issued under a contract or at the end of the defect liability period.
- Payment claims must be made in a form approved by the SBC. The form will be specified in regulations yet to be made.
- Payment claims must specify the period for which a payment schedule is to be provided.
- Payment claims by head contractors must include a supporting statement confirming all amounts due to subcontractors have been paid. A copy of the supporting statement must be provided to all relevant subcontractors within five business days of the claim.
- Providing a false supporting statement will be an offence with a penalty of up to $20,000 or one year in jail for individuals. Corporations face fines of up to $110,000. A similar offence applies to persons involved in management or in positions of influence in the business and who know of, or are recklessly indifferent to, the false supporting statement.
- Disputes about the return of retention or bank guarantees can be determined by adjudicators. Presently, adjudicators have no power to decide these issues.
- Unlicensed contractors will have no right to make a payment claim.
- Payment schedules must be provided in response to payment claims within 10 business days rather than the existing 15 business days.
- Contract clauses placing conditions on variation claims or claims for extensions of time will be void if they are not reasonably possible to comply with, unduly onerous or serve no commercial purpose. This provision appears to have application beyond adjudications.
- Timelines under the Act will not run between 22 December and 10 January.
- Service by email, to an email address provided by the party, will be deemed receipt at the time of sending the email.
- Hourly rates for adjudicators will be prescribed in regulations.
- The SBC will appoint, grade and review all adjudicators and can impose conditions on their registration.
- The SBC must keep a record of all adjudication determinations and may publish them online provided the determination does not identify the parties or location.
Master Builders SA will make a submission on behalf of members.
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