Proceedings, 21st Pacific Rim Real Estate Society (PRRES) Annual Conference

The purpose of this paper is to give a background to the security of payment problem in the New South Wales construction industry and the problem of insolvency giving rise to the Building and Construction Industry Security of Payment Amendment Act 2013 (NSW) (‘2013 Amendment Act’). The paper explains and analyses the operation of the 2013 Amendment Act and considers the implications for construction industry stakeholders inNSW and for adjudicators. A review of the relevant literature was undertaken on the security of payment problem in the NSW construction industry and the problem of insolvency giving rise to the 2013 Amendment Act. The research focused on the NSW Government’s independent inquiry into construction industry insolvency in NSW (‘the Collins Inquiry’), which considered what legislative response (if any) could be taken to minimisethe incidence and impact of insolvency in the construction industry. The Collins Inquiry reported that to protect subcontractors in the event of insolvency of the party whose obligation it is to pay them, the Government should amend the NSW Act to provide for statutory construction trusts. The study found that the Amendment Act is likely to make it more difficult than ever for subcontractors to obtain prompt payment for their work and thatthe amendments introduced are likely to have little (if any) positive impression on minimising the financial impact of insolvency on subcontractors in the NSW construction industry. This analysis of the 2013 Amendment Act may be of interest in international jurisdictions where statutory adjudication for the construction industry has been introduced or is being contemplated