Building & Construction Update: NSW & QLD

On 4 December 2014, Mark Secivanovic and Feda Dabbagh from our Sydney Litigation team and barrister Francois Salama presented an evening seminar on recent changes in the NSW building and construction industry, including changes under the Home Building Amendment Act (“Home Building Act”), and recent changes to the Building and Construction Security of Payments Act (“Security of Payments Act”).
The main changes under the Home Building Act are:

• the requirement to pay a 10% deposit for all contracts for residential building work (even those over $20,000); 
• structural defects are now classed as “major defects” and include “major elements of a building”; and 
• builders can claim a defence where statutory warranties are breached if they have received instructions from another professional. 

Changes to the Security of Payments Act are primarily directed at promoting timely payment of subcontractors. Mandatory deadlines for making prompt progress payments have been introduced, and “principal”, “head contractor” and “subcontractors” have been defined, so that parties may identify the timeframes applicable to their contract. As part of the changes, payment claims no longer need to be stated as being made under the legislation. That means a payment claim, whether or not in the form prescribed under the contract, can still be the subject of an adjudication application or court action.
It is now mandatory to serve a payment claim with a supporting statement and a head contractor can be fined and face imprisonment for providing a false supporting statement.
The changes should also result in a smoother adjudication process as new evidence or material cannot be introduced once a payment schedule has been given. For recipients of a payment claim, this means a lot more care needs to be taken when providing a payment schedule in response to the claim.

Changes to the Building and Construction Industry Payments Act took effect on 15 December 2014. The changes in NSW and Queensland are immensely different.
By way of example, unlike the NSW amendments, in Queensland it remains a pre condition to a valid payment claim that it state it is a payment claim made under the Act. As a result of the recent Queensland amendments, payment claims are now categorised as standard or complex payment claims (ie complex being a claim over $750,000). These new Queensland amendments also resulted in new timeframes imposed on contracts entered into after 15 December 2014. Different timeframes will now apply for responding to payment claims and for issuing final payment claims depending on whether the payment claim is complex. Given the significant differences between the States, it is highly recommended you seek advice if you are in this industry.
All members of the building and construction industry should be aware of these reforms, which will significantly change the process in building and construction projects and raise a number of issues of which industry members should be aware. Our teams in Sydney and Brisbane have extensive knowledge and expertise in the building and construction industry and are always available to provide advice.