Business & Commercial

Security of Payment Act

Electrical and communications contractors experiencing a pay dispute can utilise the NSW Building and Construction Industry Payment Act 1999 for a swift and fair settlement of any payment dispute in the construction industry.

The Act provides a statutory entitlement to adjudication of disputes over payment claims for work done and for materials supplied. The adjudication process is outside the courts and there is a speedy enforcement of payment following a determination in favour of the claimant without the need to undertake costly and extended legal proceedings.

The key features of the Act are:

• Bars 'pay when paid' and 'paid if paid' clauses and overturns them even if they are included in the contract.
• Provides a statutory right to payment for any party that contracts to carry out construction work or supply-related goods or services on projects for the private and public sectors in NSW. It also gives an entitlement to receive all payments that are due, including final payments and retention monies.
• Applies to all contracts (written or oral) for construction work or supply of related goods and services at all levels in the contracting chain, with the exception of contracts with homeowners who live in, or intend to live in, the dwelling where the work is being carried out. The Act does however apply to all contracts between subcontractors, consultants and suppliers to contractors carrying out work for such homeowners. All other residential work involving residential investment properties, landlords, strata title bodies corporate, developers, builders, contractors, subcontractors, consultants and suppliers is also covered by the Act.
• Gives the claimant a statutory right to make progress payment claims and receive payment, even where the contract has no provision for progress payments.
• Allows claimants to secure payment on account inexpensively and speedily without the need for extensive use of lawyers, court hearings, witnesses, cross-examinations and all that is usually involved in arbitration or litigation.
• Provides that in a matter of weeks, a claimant can have a judgement for a progress payment on account, which compels the respondent to pay.
• Can be used by a claimant to obtain judgment for a payment on account before, or even during, arbitration or court proceedings over the claim irrespective of who initiated the proceedings.
• Provides a minimum rate of interest on late progress payments.
• Provides that all debts under the Act are also debts under the Contractors Debts Act 1997, providing quick and direct recourse to respondents' principals to secure payment of a debt.
• Includes other protection to claimants such as a right to suspend work and be paid for any losses and expenses if sacked because of the suspension, and to claim a lien over the unfixed plant and materials to settle any debts established under the Act. Respondents also cannot claim or sue for liquidated damages because of a suspension of work under the Act.

Click here to download the Act and Regulations we well as the information booklet.

NECA provides advice to members on settling pay disputes under the Security of Payment Act. For further information contact the NECA office at .(JavaScript must be enabled to view this email address) or telephone (02) 9744 1099.