Security of Payment South Australia
It's been on and off for years, but it is now certain that security of payment legislation is coming to the construction industry in South Australia.
Following a flurry of last minute amendments, the Building and Construction Industry Security of Payment Bill 2009 has finally passed all stages in Parliament. It is now set to become law from a date to be proclaimed in 2010. The commencement date has not been fixed and it might not be until the second half of 2010.
Who and what does it apply to?
The Act will affect virtually all participants in the commercial construction industry whether they are owners, developers, head contractors, subcontractors, suppliers or consultants.
It applies to all contracts for construction work and for the supply of any goods and services related to that work.
Certain activities are excluded from the Act including, most notably, construction contracts for the carrying out of domestic building work where the party for whom the work is done lives in, or proposes to live in, the premises.
What are the changes?
The legislation introduces very significant changes to ensure that a person who undertakes construction work, or who supplies related goods and services under a construction contract, is entitled to receive, and is able to recover, progress payments. It seeks to do this by:
- giving a party a statutory right to progress payment under a construction contract;
- abolishing "pay when paid" provisions in construction contracts, and
- providing for rapid adjudication of payment claims and payment following adjudication.
Whilst the provisions of the Act are relatively straightforward they are also prescriptive and unforgiving. It is vital that industry participants understand the legislation and its ramifications for the way they do business.
Critical questions
- Will the Act apply to your contracts?
- Will the Act apply to contracts entered into before the commencement date?
- What is meant by "pay when paid" provisions?
- What are the default provisions in the Act relating to progress payments and how do you prevent them applying to your contract?
- How do you make a payment claim under the Act and what are the consequences of doing this?
- How do you dispute a payment claim made under the Act and what happens if you fail to follow the correct procedure?
- Who can apply for statutory adjudication of payment disputes and what does this involve?
Lynch Meyer's construction team has an unrivalled understanding of this new legislation. We have been preparing for its introduction for some time. Let us talk to you directly about what it means for your business and how you can prepare yourself for its introduction. Please call your regular contact at Lynch Meyer or our head of construction, Michael Hutton.
Lynch Meyer seminars
We will be holding seminars in early 2010 on Security of Payment. Clients will be advised of the dates.
