Security of Payment: Imprisonment for Non-Compliance?

Security of Payment: Imprisonment for Non-Compliance?

Dramatic changes to the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOPA) will come into effect this Monday, 21 April 2014. The consequences of these amendments are far-reaching and may be rolled out in a number of states if they prove to be effective in addressing concerns held in the industry.

Key changes

  1. There is now a statutory entitlement to payment for subcontractors within 30 business days, anything longer than this in a building contract is void under the SOPA. You will, therefore, need to ensure that your contracts reflect this amendment.
  2. In contrast to subcontractors, a progress claim submitted to a head contractor will now need to be paid in 15 business days.
  3. Perhaps one of the most significant amendments will be found in section 13 of the SOPA. This will require a supporting statement to be given to the Principal by a head contractor submitting a payment claim. This will include a statement that subcontractors have been paid what is due and payable at the date of giving the statement. If false information is provided under this supporting statement, the fine can be up to $22,000.00 and/or a three-month imprisonment. Clearly, this is a very significant amendment which aims to deal with a perception that a number of false or misleading statements were being given in the industry previously in relation to this issue.
  4. Contractors also no longer need to state that a payment claim is ‘a payment claim under the Building and Construction Security of Payment Act‘. This is automatic.

More information

ProcurePoint in New South Wales has published a number of ‘fact sheets’ which can be viewed at