It’s been a year of reviews and reports for the Security of Payment Act in many states. Contractors Debt Recovery takes a look at what has changed.

New South Wales

On April 21st the Act’s amendments came into effect following the findings of the Collins Inquiry published in January this year. This is only a basic list of changes for contracts entered into after 21/4/2014:

The default due date for Payment is no longer 10 business days. If you are a Head Contractor it is 15 business days. For subcontractors engaged in residential contracts working for say a builder on a house, it is 10 business days, and for everyone else it is now 30 business days! So make sure you agree in writing on a shorter period than that or you’ll be stuck with that: 6 weeks! This change [in my humble opinion] is madness.

Head Contractors will need to submit their payment claims with a ‘Supporting Statement’ that says everyone under them has been paid. This statement replaces the Stat Dec. Only now this is required by the Act and a claim cannot be submitted unless it has such a statement.
A Payment Claim does not need to refer to the Act anymore. So long as it contains a price and a description of the work, it is a valid Payment Claim under the Act.

There is more coming soon:

Retentions will be managed under a Trust Scheme administered by the Small Business Commissioner. This is already law but the logistics are being completed and may be in operation next year. But basically looks like retentions will have to be submitted the the Commissioner in Trust so if your client goes under, the money is still there!

Construction Trust Accounts: The government is trialling using Trust accounts on some government projects to see if Trust Accounts can be used so that even if a party in the contractual chain goes under, the money due to those contractors below is still there in a Trust account ready to be paid.
The Act is being completely reviewed in 2015 and some of these other changes may be introduced then.

Western Australia

WA has a bizarre and unrealistic version of the Act that I hear is being reviewed to bring it in line with that of the eastern states. But no formal changes are pending. However I believe one of the changes considered is changing the strict 28 day period to submit an adjudication application out to 12 months to make claim.

Currently you have either 28 days from the due date for payment or 14 days after receiving a Notice of Dispute to lodge an application. So guys there is no time to faff about! You need to get int here as soon as a claim is overdue! There are no second chances at all.

This is a really clunky Act and it is no wonder that it is hardly used compared to other states. That said, we have recovered some good money with it.

South Australia, Tasmania, ACT

There are no changes to the act in these states as it is only a few years in, but wake up guys! You guys must be rolling in it because you’re not using the Act anywhere near what you should. Especially Tasmanian contractors. Tassie is the only state where you can use the Act in relation to residential work done for homeowners!!!

Other state contractors dream about that!…… but are you using it? Nope. Of course maybe all Tasmanian homeowners pay in full and on time all the time…yes I’m sure that explains it.

Victoria

Nothing new in the garden state but remember YOU HAVE 3 MONTHS FROM WHEN YOU LAST CARRIED OUT WORK TO MAKE YOUR CLAIM… so if you are still trying to get paid for work you completed in early March… you are about to run out of time! For more info on this aspect of the Act call our office.

Queensland

The sunshine state also got a review of its Act this year. And the outcome is essentially that the Act stays as it is. BUT there are some changes THAT ARE REALLY REALLY IMPORTANT that will come into effect in September this year:

Authorised Nominating Authorities will no longer appoint adjudicators. Instead a special registry will be established within the QBCC, and it will appoint the adjudicator. Nominating Authorities will continue to provide the adminstrative support and be the logistical point of contact.
The length of time after completion of work in which a Payment Claim can be made HAS BEEN REDUCED from 12 months to 6 months! (So stop wafting around begging for your money and do something!)

Claims will now be categorised. Claims over $750,000 or for latent Conditions or Time-related issues are now called ‘Large or Complex’ Claims, and the time that a respondent has to serve a Payment Schedule for such a claim has been increased from 10 to 15 business days. Times for an Adjudciation response has also been increased from 5 to 10 business days. So looks like this will add at least 2 weeks to the process.

If claims are not “Large or Complex” then all the current timings stay in place.

There will be no Business Days from the 3 business day period before Christmas and then the first 10 business days of the following new year. So this prevents claims being served in the usual shutdown period.

Best til Last….. Up til now if a Respondent didn’t include all reasons for non-payment in a Payment Schedule then they could not be brought up in the Response. Now they can! A respondent will now be able to add new reasons in its response, and the claimant will have a right of reply. As is the case now in Victoria, this will only make adjudication more expensive as there will now be two submissions each time.

Northern Territory

Act?…. What Act?
Yes I feel for the Northern subbies. Your version of the Act is as clunky as that in WA, with one exception. In NT you can lodge a matter for adjudication within 90 days of the payment dispute arising.

But this Act has been poorly promoted and almost no one using it. We are running matters in NT now and look forward to helping more NT contractors this year!