What is security of payment?
Security of payment legislation exists in each jurisdiction in Australia and is available for contractors doing work or supplying goods in the construction industry (apart from owner-occupier residential developments). It is designed to rapidly inject cash-flow for creditors and quickly determine any disputes that may arise between parties.
In NSW, contractors can include:
- Contractors carrying out construction work
- Suppliers of goods such as materials and equipment
- Interior designers
Each regime is similar with some subtle differences between them, especially in relation to due dates.
There are benefits for creditors in NSW, for example, debtors who have not served a payment schedule after receiving a payment claim invoice by the supplier are unable to dispute the debt – sections 15(4) and 20(2A) of the Building and Construction Industry Security of Payment Act 1999 (NSW) (the ‘Act’)
The legislation also allows creditors to serve a notice on principal contractors to withhold payment to the contracting debtor until an adjudication application is determined – section 26A of the Act.