NSW Security of Payment reforms—amending Regulation and penalties29 May 2019
The NSW Government has released proposed amendments to the Building and Construction Industry Security of Payment Regulation 2008 (NSW) (Regulation) for public consultation until 21 June 2019. It is intended that the Building and Construction Industry Security of Payment Amendment Regulation 2019 (NSW) (Amendment Regulation) will commence alongside the Building and Construction Industry Security of Payment Amendment Act 2018 (NSW) (Amendment Act). The intended timeframe for the commencement of the Amendment Act and the Amendment Regulation is three months after the Amendment Regulation is created. The timeframe for finalisation of the Amendment Regulation is “mid-year”. The major amendments contained in the Amendment Act are summarised here.
The Amendment Act removes the Building and Construction Industry Security of Payment Act 1999 (NSW) (Act) exemption of contracts for residential building work for a person who intends to reside in the premises from the application of the Act. This exemption is reinstated by the Amendment Regulation so that the exemption will continue to apply.
Penalties and offences
The Amendment Act makes substantial changes to the Act regarding penalties and offences.
Increases to existing penalties for corporations in relation to supporting statements
Under the Amendment Act, increased penalties have been imposed on head contractor corporations that serve a payment claim without a supporting statement or serve a supporting statement knowing that it is false or misleading. The maximum penalty for these offences has increased from 200 penalty units to 1,000 penalty units. The current value of a penalty unit is $110.
New offences created
The Amendment Act adds a new Part 3A to the Act, containing new investigation and enforcement powers relating to information gathering as well as entry to premises. These powers are given to authorised officers appointed under Part 3A or investigators under the Fair Trading Act 1997 (NSW). Offences are created in relation to the exercise of these powers, which provide for maximum penalties of between 40 and 500 penalty units for corporations and 20 to 100 penalty units for individuals—depending on the offence.
Part 3A of the Amendment Act also creates an offence for directors and individuals concerned in the management of corporations, where the corporation has committed an offence under the Act or the Regulation (Corporate Offence) and the director or individual has been involved in the commission of the Corporate Offence. The maximum penalty for the director or the individual is the same as the maximum penalty for an individual who commits the Corporate Offence.
Part 3A of the Amendment Act and the Amendment Regulation creates an offence for directors and individuals concerned in the management of corporations (Executive Liability Offence) where the corporation has committed an offence under the Act relating to supporting statements or under the Regulation relating to the retention money trust accounts. The offence requires the director or individual to have known, or been recklessly indifferent to, the Executive Liability Offence being committed by the corporation and to have failed to take all reasonable steps to prevent the Executive Liability Offence being committed. The maximum penalty for the director or the individual is 200 penalty units.