The New South Wales government has announced that the latest round of security of payment reforms will commence on 21 October 2019. Those likely to have the greatest impact on civil contractors, include:
- Subcontractors must be paid within 20 business days from when their claim is made instead of 30 business days. The obvious impact is cash flow for civil contractors. Failure to pay on time is not an offence, so does not attract personal liability for a fine or for the unpaid amount.
- Bringing back the requirement for payment claims to state they are made under the Act
- Increased penalties for corporations. Penalties have increased across the board for failure to comply with requirements of the Act. As an example, the penalty for failure by a head contractor to provide a supporting statement or to knowingly provide a false or misleading supporting statement has increased from $22,000 to $110,000.
- Exposure to personal liability for executives knowingly involved in offences by corporations. The maximum penalties for executives knowingly involved in corporate offences is the same as the maximum penalty for corporations.
- Executive liability for offences relating to supporting statements and trust accounts. For executive liability offences, if the company has committed the offence, an executive will be liable too (maximum $22,000 penalty), if they are knowingly involved or recklessly indifferent and fail to take reasonable steps to stop it. Reasonable steps are actions by the executive toward:
- assessing compliance with the provision creating the offence;
- staff training to enable compliance;
- ensuring equipment, systems and process are appropriate;
- creating and maintaining appropriate corporate culture.
- Adjudication determinations may be overturned “in part” for jurisdictional error. This change will reduce the incidence of adjudication determinations being appealed in the Supreme Court on grounds of jurisdictional error.
- Enforcement officers with rights of entry and to seize documents.
- Enforcement officers can issue penalty notices. Enforcement officers will be able to issue on the spot penalty notices where it appears to the officer that the person has committed a penalty notice offence.
Penalty notice offences include failure by a head contractor to provide a supporting statement, failure to comply with administrative requirements in relation to payment withholding requests, and failures to comply with regulations relating to retention trust accounts.
The amount payable for penalty notice offences is specified in the regulation and is less than the maximum penalty if proceedings are commenced. For example, the maximum penalty for failure by a head contractor to provide a supporting statement is $11,000 for a corporation if a penalty notice is issued, but $110,000 for a prosecution.
You can find a copy of the Amendment Act here and the amendment regulation here.
To ensure your business is “SOP Ready” before 21 October, we have prepared a checklist to help you get organised. Click here to download our Civil contractor SOP ready checklist.
For further information on any of the issues raised in this alert please contact a member of our team below on +61 2 9016 0141:
Marcus McCarthy email@example.com
Simon Fosterling firstname.lastname@example.org
Kelvin Keane email@example.com
This publication covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. It is intended for information purposes only and should not be regarded as legal advice. Further advice should be obtained before taking action on any issue dealt with in this publication.