14 July 2011

Amendments to the BCISPA
From 28 February 2011, amendments to the Building and Construction Industry Security of Payment Act 1999 (BCISPA) commenced permitting subcontractors to require payments made by principal contractors to non-paying contractors to be withheld until the dispute is settled.

An Example of How it Works
A builder (principal contractor) engages a contractor (respondent) to perform an aspect of work on a building site. The respondent engages a sub-contractor (claimant) to perform part of that work. The claimant performs $10,000 worth of work and issues a progress claim to the respondent pursuant to section 8 of the Act which remains unpaid. About the same time the respondent issues a progress claim to the builder.

If the claimant subsequently serves a payment claim on the respondent pursuant to section 13 and the respondent gives the claimant a payment schedule for less than the claimed amount, the claimant can immediately apply to an adjudicator pursuant to section 17 of the Act to have the payment claim adjudicated.

This aspect of the legislation is unchanged however the amendment provides that whilst making the adjudication application, the claimant may give a payment withholding request (PWR) to the principal contractor.

Impact of the Amendment
Upon receipt of the PWR, the principal contractor must retain the sum requested to be withheld, in this case $10,000, from monies due or becoming due to the respondent from the principal contractor. The result being that the respondent is unable to access or use money which is under dispute with the claimant.

A claimant wishing to serve a PWR on a principal contractor must fill out the PWR form and a statutory declaration swearing that the amount of money claimed is owed by the respondent. The PWR form supported by the declaration and a copy of the adjudication application when sent to the principal contractor constitute a valid PWR. Once the adjudication determination has been made, the claimant must provide a copy of the determination to the principal contractor within 5 business days.