The Legislature are preparing for surgery - in the 20 odd years since its inception, the Security of payment laws have ruptured and spread like a tumour throughout the various state jurisdictions causing confusion and inefficiencies.
The ‘Murray Report’ of December 2017 made 86 recommendations to improve security of payment, including that Australia should implement a nationally consistent legislative model because of confusion and inefficiencies.
In QLD the government commenced its new Building Industry Fairness (Security of Payment) Act 2017 (Qld) (BIF Act) on 17 December 2018).
Meanwhile the New South Wales Government proposed further changes to its security of payment regime under the Building and Construction Industry Security of Payment Amendment Bill 2018 (NSW) (NSW Bill).
Some time ago, in an effort to encourage subcontractors to use the Security of Payment regime, the NSW government decided to remove the requirement to endorse payment claims as being made under Security of Payment Act. The thought behind that was that head contractors were ‘refusing’ to hire ‘litigious’ subcontractors. Removing the need for subcontractors to endorse their payment claims supposedly addressed that bias.
Despite emphasis that the changes are to provide greater payment protection for subcontractors, in a strange turnaround, the NSW government has reintroduced the requirement for subcontractors to endorse their payment claims.
Other proposed reforms under the NSW Bill:
Other proposed reforms under the NSW Bill include creating an entitlement for claimants to make:
a payment claim at least once per month;
reducing the maximum time period for head contractors to pay subcontractors after receiving a payment claim from 30 business days to 20 business days;
and creating the right for final payment claim after a contract is terminated.
Watch out! the sheriff of Nottingham has the right to enter your castle at any time
If you operate from your home you might like to be aware draconian incursions on your civil liberty are on the horizon with the NSW government increasing the compliance and enforcement powers of NSW Fair Trading so that an “authorised officer” can physically enter premises (yes even your home), and inspect documents - without a search warrant.
Be very careful what you do and say
The current penalty of up to 3 months imprisonment remain.
Current fines are proposed to increase to from 200 penalty units to 1000 penalty units (which equates to $110,000) for serving a payment claim without a supporting statement which declares all subcontractors have been paid and providing a supporting statement knowing that the statement is false or misleading.
What the?
If you are in NSW, we recommend you keep your ear to the ground and invest in debtors insolvency insurance now because it appears liquidators will be explicitly excluded from serving payment claims or taking any action to enforce a payment claim.
What now for QLD?
It is clear that in the throws of the COVID19/corona Virus, the Commission will certainly move to tighten existing laws.
This publication considers legal and technical issues in a general way. It is not intended to be legal advice. Any legal advice is qualified on the basis that the reader should immediately confirm the information relied upon with Merlo Law. We look forward to being of assistance.
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