The security of payment regime in South Australia, known as the ‘BCISPA’, has been amended as of 1 May 2025. In particular, new exemptions now apply to construction contracts entered into with the State of South Australia. The exemptions have been introduced by way of the Building and Construction Industry Security of Payment (Exemption) Regulations 2025 (SA).
The exemptions apply to any construction contract entered into with the Crown (i.e., the State of South Australia) worth more than $4,000,000 (excluding GST). The exemptions also apply retrospectively to construction contracts entered into before 1 May 2025. Any new construction contracts with the Crown are also subject to the exemptions.
Here are the key changes you need to know about if you are currently undertaking construction work pursuant to a construction contract with the State of South Australia:
- if a contractor makes a payment claim, the State does not have to provide a payment schedule in response, nor does the State become liable to pay the amount claimed within 15 business days or the time required by the relevant construction contract by operation of the BCISPA. That is, the State is only subject to its contractual obligations;
- assuming a payment schedule is not provided by the State, the consequences under the BCISPA of the State failing to pay the amount claimed by the contractor do not apply, such as the right to make an adjudication application or bring a claim in debt;
- if a payment schedule is provided by the State:
- contractors will not be able to make an adjudication application; and
- whilst a contractor’s right to recover the amount claimed through a debt claim is preserved, the ordinary bar on the State bringing a cross-claim or raising a defence to that debt claim by operation of the BCISPA does not apply;
- contractors no longer have the ability to suspend construction works under the BCISPA in light of the State’s failure to pay the claimed amount; and
- head contractors are opened up to a risk that the entirety of the provisions of the BCISPA will apply to a payment claim received from a subcontractor, but will not apply to an upstream claim, thereby exposing head contractors to the operation of the BCISPA downstream.
For more information, please contact a member of King & Wood Mallesons’ Construction Dispute Resolution practice.
