Key Differences Between the NSW & ACT Security of Payment Acts

This is a brief report on the main differences

Between

The NSW Building and Construction Industry Security of Payment Act (the NSW Act)

and

The Building and Construction Industry (Security of Payment) Act 2009 (the ACT Act)

1. OVERVIEW

1. The NSW Act and the ACT Act are similar security of payment Acts, both based on the ‘East Coast Model’.
2. This report mainly focuses on the differences between the two Acts and if they are identical, no mention of the function is made.
3. Noting that the NSW Act was amended on 21 October 2019 and not all the differences in the amendments are included such as s 17 A of the NSW Act which now provides that adjudication applications can be withdrawn.

2. DIFFERENCES BETWEEN THE ACTS

a. Service of the Adjudication Application

4. The main operational difference between the Acts relates to the service of the adjudication application on the respondent which is carried out by:
1. The claimant pursuant to s 17(5) of the NSW Act; and.
2. The Adjudicator pursuant to s 21(2) of the ACT Act.

b. Endorsement of payment claim

5. Another significant difference between the Acts is provided in relation to payment claims having to ‘state’ that they were made under the security of payment Act.
6. S 15(2)(c) of the ACT Act requires that payment claims must ‘state’ that they are made under Act.
7. Whereas under the NSW Act, payment claims related to contracts entered into¹:
1. Prior to 22 April 2014, were required to ‘state’ that the payment claim was made under the Act.
2. Between 23 April 2014 and 20 October 2019 were not required to ‘state’ that they were made under the Act (unless the construction contract was connected with an exempt residential construction contract).
3. After 20 October 2019 are required to ‘state’ that they were made under the Act.

c. Judicial Review

8. Another significant difference between the Acts is provided in s 43 of the ACT Act, ‘Judicial review of adjudication decision’ that expressly entitles a party to appeal an adjudication decision to the Supreme Court on any question of law arising out of an adjudicator’s decision where either party consent, or with leave of the Supreme Court. However, a Supreme Court must not grant leave to appeal unless²:
1. It considers that the determination of the question of law concerned could substantially affect the rights of one or more parties to the adjudication decision;
2. There has been a manifest error of law on the face of the adjudication decision; or
3. There is strong evidence that the determination of a question may be likely to add substantially to the certainty of the law.

d. Determination of question of law by the Supreme Court

9. Another significant difference between the Acts is provided in s 44 of the ACT Act, ‘Judicial review of adjudication decision’ that provides that the Supreme Court may determine a question of law arising from an application made by any of the parties to an adjudication decision with the consent of the:
1. Adjudicator who made the decision; or
2. Parties to the decision.
10. The Supreme Court must not consider a question of law under s 44 (1) (a) of the ACT Act, unless it is satisfied that:
1. The determination of the question might produce substantial savings in costs to the parties; and
2. The question of law is one in respect of which leave to appeal would be likely to be granted under s 43 (4).

e. Eligibility of Adjudicators

11. The ACT Act provides that adjudicators must:
1. Have successfully completed a relevant training course³; and
2. Not be employed by or represent a building and construction industry organisation, such as HIA or MBA⁴.
12. The NSW Act does not have these express provisions.

f. Slight variation on definitions

i. Construction work and related goods and services

13. The NSW Act ‘defines’ ‘construction work’ and lists some items of work⁵.
14. The ACT Act provides similar ‘meanings’ to construction work, lists some items of work and includes some examples⁶.
15. The NSW Act and the ACT Act identify construction related goods and services is a similar way⁷.

ii. The claimed amount

16. The ACT Act requires the claimant to ‘state’ the claimed amount⁸. While the NSW Act requires the claimant to ‘indicate’ the claimed amount⁹.

iii. The scheduled amount

17. The ACT Act requires the respondent to ‘state’ the scheduled amount¹⁰. While the NSW Act requires the respondent to ‘indicate’ the scheduled amount¹¹.

g. Reference dates and submission of payment claims

18. S 10 of the ACT Act provides that on and from each ‘reference date’ a claimant is entitled to a progress payment.
19. A reference date is the date stated in the contract for the submission of a payment claim or the last day of the named month in which construction work was carried out and the last day of each subsequent named month¹².
20. Whereas under the NSW Act, payment claims related to contracts entered into:
1. Prior to 21 October 2019 have the same provisions as the ACT Act; and
2. After 21 October 2019, ‘reference dates’ have been abolished and claimants are entitled to submit payment claims¹³:
1. On the last day of the named month in which construction work was carried out and the last day of each subsequent named month;
2. If the contract provides for an earlier submission than the last day of the month in accordance with the contract; and
3. On and from the date of termination of the contract.

h. Due date for payment

21. S 13 of the ACT Act provides that the due date for payment of a progress claims is:
1. The day when the payment becomes payable under the contract; or
2. If the contract does not set a day—10 business days after a payment claim is made.
22. Whereas under the NSW Act, payment claims related to contracts entered into:
1. Prior to 23 April 2014 have the same provisions as the ACT Act;
2. Between 23 April 2014 and 20 October 2019:
1. When a claimant is a ‘Head Contractor’ working for a ‘Principal’¹⁴:
1. 15 business days after a payment claim is made; or:
2. An earlier date as provided in accordance with the terms of the contract.
2. When a claimant is subcontractor¹⁵:
1. 30 business days after a payment claim is made; or
2. An earlier date as provided in accordance with the terms of the contract.
3. After 20 October 2019:
1. When a claimant is a ‘Head Contractor’ working for a ‘Principal¹⁶:
1. 15 business days after a payment claim is made; or
2. An earlier date as provided in accordance with the terms of the contract.
2. When a claimant is subcontractor¹⁷:
1. 20 business days after a payment claim is made; or
2. An earlier date as provided in accordance with the terms of the contract.

i. Timing of Submissions

i. Payment claims

23. The timing of the submission of payment claims is identical in both Acts in that payment claims can be made by the later of the period indicated in the contract or within 12 months of when the construction work was last carried out¹⁸.

ii. Payment schedules

24. The timing of the submission of payment schedules in response to the payment claim is identical in both Acts in that payment schedules are to be provided within 10 business days after the payment claim was received¹⁹ or an earlier time if provided by the construction contract.

iii. Adjudication applications

25. The timing of the submission of adjudication applications in response to payment schedules is identical in both Acts in that payment schedules are to be provided 10 business days after the payment claim was received²⁰ or an earlier time if provided by the construction contract.
26. The timing of the submission of adjudication applications when there is no payment schedule provided in response to the payment claim is similar in both Acts in that the adjudication application must be made:
1. After the provision of a notice which allows the respondent 5 business days to provide a payment schedule²¹:
2. Under the NSW Act within 10 business days after the 5-business day period to provide the payment schedule has elapsed²²:
3. Under the ACT Act the earlier of 10 business days after:
1. the 5-business day period to provide the payment schedule has elapsed²³; or
2. When the payment schedule was received²⁴.
Noting that the notice pursuant to s19(2) or s17(2) must be served within 20 business days of the due date for payment²⁵ in both Acts.
27. The timing of the submission of adjudication applications where the scheduled amount has not been paid by the due date for payment is identical in both Acts in that the adjudication application must be made within 20 business days of the due date for payment²⁶.

iv. Adjudication responses

28. The period for the respondent to provide an adjudication response is different in that:
1. Under the NSW Act the adjudication response is due the later of 5 business days after a copy of the adjudication application was served on the respondent or 2 business days after the respondent is notified of the adjudicator’s acceptance of the application²⁷; while
2. Under the ACT Act the adjudication response is due the later of 7 business days after a copy of the adjudication application was served on the respondent or 5 business days after the respondent is notified of the adjudicator’s acceptance of the application²⁸.
29. Under the ACT Act, a copy of the adjudication response must be provided to the claimant no later than 2 business days after the response is given to the adjudicator²⁹.
30. While under the NSW Act, there is an obligation to serve a copy of the adjudication response on the claimant, however no period for this is specified³⁰.

v. Determinations (decisions)

31. Under the NSW Act adjudicators provide ‘determinations’³¹.
32. Whereas under the ACT Act, adjudicators provide ‘decisions’³².
33. The period for the adjudicator to make their determination (decision) is:
1. Under the NSW Act, for contracts entered into:
1. Prior to 20 October 2019, 10 business days after the adjudicator has accepted the adjudication application³³.
2. After 20 October 2019:
1. If the respondent is entitled to provide an adjudication response, the earlier of 10 business days after when the adjudication response:
1. Is received³⁴; or
2. Should have been received³⁵.
2. If the respondent is not entitled to provide an adjudication response, 10 business days after the parties receive a copy of the adjudicator’s acceptance³⁶.
2. Under the ACT Act:
1. If the respondent is entitled to provide an adjudication response, the earlier of 10 business days after when the adjudication response:
1. Is received³⁷; or
2. Should have been received³⁸.
2. If the respondent is not entitled to provide an adjudication response, 10 business days after the respondent receives a copy of the adjudication application³⁹.
34. Both Acts require the claimant and the respondent to agree to additional time to provide the determination (decision)⁴⁰.

j. Service of notices

35. Both Acts allow for the service of notices (documents) by personal delivery, post, or email, noting that the ACT Act operates in conjunction with the Legislation Act 2001 (ACT)⁴¹.
36. The NSW expressly allowed the service of notices by facsimile up until 23 April 2014⁴², when the provision was removed.
37. Under the ACT Act, notices can be served by facsimile⁴³

3. CONCLUSION

38. From an adjudicator’s perspective, the ACT Act and the NSW Act are quite similar with the main difference being the requirement for the adjudicator to serve the adjudication application on the respondent.