CALCULATING DUE DATES FOR PAYMENT UNDER THE NSW SECURITY OF PAYMENT ACT – POST AMENDMENTS COMMENCING 21 OCTOBER 2019

The NSW Building and Construction Industry Security of Payment Act 1999 (the Act) has from 1 March 2021 been extended to progress claims made to a Principal under an Owner Occupier Construction Contract (OOCC) – previously known as an exempt residential construction contract - meaning a construction contract for residential building work on any premises or part of the premises where the contracting party (the principal) resides or proposes to reside in. e.g. a home owner engaging a builder to build their home.

This impacts the due date for payment under some construction contracts.

The due date for payment is the date on which a payment claim becomes due and payable in accordance with the terms of the contract, or a maximum time set by the Act.

Calculating the due date for payment correctly is important because, if there is a payment dispute, certain rights and obligations are calculated from that date. These include:

• If a payment schedule is served and the claimant not paid the scheduled amount by the due date for payment, then the claimant:
  1. has 20 business days from the due date for payment to prepare and serve the adjudication application; and
  2. may suspend work on giving 2 business days’ notice.
• If a payment schedule is not served and the claimant is not paid the claimed amount by the due date for payment, then the claimant:
  1. has 20 business days from the due date for payment to prepare and serve the second opportunity notice under section 17(2); and
  2. may suspend work on giving 2 business days’ notice;
  3. has 10 business days from expiry of the notice under section 17(2) (a measure of the validity of the notice is the correct calculation of the due date for payment) to prepare and serve the adjudication application; and
  4. the claimant may serve a payment withholding request on the principal after making an adjudication application. The date from which an adjudication application can be made is referrable to the date of expiry of the section 17(2) notice.

There are specific maximum deadlines for payment (the due date for payment) depending on the nature of the contract. Correctly answering the questions in the flowchart below allows calculation of the due date for payment.