On 1 September 2020, the Building and Construction Industry Security of Payment Regulation 2020 commenced (2020 Regulation) repealing the 2008 Regulation.
The 2020 Regulation will provide the legislative support and administrative detail for the operation of the Building and Construction Industry Security of Payment Act 1999 (NSW) (Act) as provided by the amendments which commenced on 21 October 2019. These amendments came about to address poor payment practices and the high incidence of insolvencies in the building and construction industry and also, to facilitate prompt payment, preserve cash flow and resolve disputes quickly and efficiently.
The 2020 Regulation is not retrospective and will not apply to contracts entered into prior to its commencement date.
Key reforms of the 2020 Regulation include:
- removing the annual reporting requirements for trust accounts to NSW Fair Trading,
- introducing a requirement for head contractors to keep a ledger for retention money held in relation to each subcontractor and provide the subcontractor with a copy of a ledger at least once every 3 months or longer period of 6 months if agreed in writing, and also to provide trust account records to subcontractors if their money is held in trust,
- supporting statements are only required for subcontractors or suppliers directly engaged by the head contractor,
- removing owner occupier construction contracts as a prescribed class of construction contract to which the Act does not apply, and
- introducing qualifications and eligibility requirements for adjudicators to improve the quality of adjudication determinations under the Act. The eligibility requirements include either a degree or diploma in a relevant specified field with at least 5 years’ experience, or at least 10 years’ experience in a relevant specified field. The continuing professional development requirements for adjudicators will commence on 1 September 2021.
Of particular note, the project value threshold (value of the head contractor’s contract with the principal) for retention money trust account requirements will not be reduced from $20 million to $10 million as previously foreshadowed. The existing threshold will remain. Perhaps, given the current climate, it was considered too much of an administrative burden on head contractors who are already dealing with the pressures of delivering projects during Covid. A copy of the 2020 Regulation is here.
If you would like to discuss or would like any more information, please contact us at email@example.com or (02) 9248 3450.
If you would like to receive our regular newsletters, please click here.