15 Apr 2014

NSW Government releases form of supporting statement to accompany SOP Act payment claims

On 11 April 2014 the NSW Government released the form of the supporting statement which will be required to accompany all payment claims made under the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOP Act).

The requirement to provide a supporting statement was introduced last year by the Building and Construction Industry Security of Payment Amendment Act 2013 (NSW) (the Amendment Act). However, it was only last Friday, with the making of the Building and Construction Industry Security of Payment Amendment (Supporting Statement) Regulation 2014 (NSW), that the form of the supporting statement was released to the industry. The template for a supporting statement is available in Schedule 1 of the regulation.

Importantly, the template requires separate identification by head contractors in a supporting statement of:

  • subcontractors paid all amounts due and payable; and
  • subcontractors for which an amount is in dispute and has not been paid.

Both the Amendment Act and Regulation will commence on Monday, 21 April 2014. The amendments will only apply to contracts entered into on or after 21 April 2014.

The other major changes that will come into effect on 21 April 2014 are:

  • Mandatory payment time-frames: Progress payments must be made 15 business days after a payment claim is submitted by a head contractor to a principal and 30 business days for a claim submitted by a subcontractor to a head contractor. It is essential that contract administrators put in place procedures to comply with the new payment regime. The new time-frames will apply even if your contracts provide for longer payment time-frames.
  • No requirement to endorse payment claim under the SOP Act: Payment claims in respect of contracts entered into on or after 21 April 2014 do not have to be endorsed as being made under the SOP Act for the provisions of the SOP Act to apply. Therefore, any claim for payment, whether or not in the form prescribed by the contract, could potentially be the subject of an adjudication application under the SOP Act. This means that principals and head contractors need to be attentive and respond to all claims for payment in an appropriately comprehensive manner.

Finally, we note that another key change foreshadowed in the Amendment Act will not come into force on 21 April 2014. The proposed requirement for trust accounts for retention money withheld from subcontractors is the subject of industry consultation and may still be some time away. Instead of using the express regulatory power provided by the Amendment Act, the Government is currently considering making a further amendment to the SOP Act to introduce a trust account scheme for retention payments.

A preliminary indication of the form that the scheme might take is given by the Consultation Paper released by the Government in November 2013.

For further information, construction industry participants may wish to consult a set of Industry Fact Sheets published by the NSW Department of Finance and Services on its ProcurePoint website.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.