Changes to New South Wales Security of Payment

Once again, we are seeing a transition in the security for payments space. This time in New South Wales.
The amendments to the Building and Construction Industry Security of Payment Act 1999 (NSW) (Act) commenced on 21 October 2019 but do not affect contracts entered into prior to 21 October 2019.

The abolishment of the requirement that a reference date has arisen

The amendments have cut out all of the confusion surrounding the reference date regime. Now, rather than having to wait for a reference date to arise under the contract, claimants can serve a payment claim on and from the last day of the month in which the construction work was carried out (or related goods and services where first supplied). From thereon in, the claimant may make any further claims on and from the last day each subsequent month.
If, however, the contract provides for an earlier date for lodgement of a payment claim, a claimant may lodge a payment claim on that date

Reintroduction of endorsement

Unlike Queensland which recently removed the requirement, New South Wales have re-introduced the requirement that valid payment claims must expressly state that they are made under the Act.

Payment claims after termination

Similar to the amendments made in Queensland, if a contract is terminated, a claimant now has a statutory entitlement to serve a payment claim on and from the date of termination of the construction contract.

Reduction in the due date for payment

Subcontractors are now entitled to payment 20 days from the date of the payment claim, as opposed to 30 days. There is no reduction to the time for payment of 15 business days after a payment claim made by a head contractor to a principal.

Withdrawal of an Adjudication Application

The amendments provide that an applicant can now withdraw an adjudication application at any time after its lodgement but before the appointment of an adjudicator. If the adjudicator has been appointed (and the application has not been determined), the claimant will not be able to withdraw the adjudication application if the respondent objects to the withdrawal and the adjudicator considers it to be in the interests of justice to uphold the objection and proceed with the determination of the adjudication application.
The severing of the adjudication determination
Rather than the whole of the determination being invalid if a jurisdictional error is made by the adjudicator (as per the ruling in Multiplex Constructions Pty Ltd v Luikens & Anor [2003] NSWSC 1140), the Supreme Court of New South Wales now has the power to sever and set aside any part of an adjudication determination that it deems to have been affected by the jurisdictional error.

Corporations in liquidation

Overruling recent case law (Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd (in liquidation) [2019] NSWCA 11), a claimant corporation in liquidation is now prevented from taking steps to recover payments under the Act.