{{ propApi.closeIcon }}
Our industry
Our industry $vuetify.icons.faArrowRight
Housing industry insights Economics Data & forecasts Tailored research and analysis Advocacy & policy Advocacy Policy priorities Position statements Submissions News and inspiration Industry news Member alerts Media releases HOUSING Online
Business support
Business support $vuetify.icons.faArrowRight
Become an apprentice host Hire an apprentice Why host a HIA apprentice? Apprentice partner program Builder & manufacturer program Industry insurance Construction legal expenses insurance Construction works insurance Home warranty insurance Tradies & tool insurance Member perks Toyota vehicles The Good Guys Commercial Fuel savings See all Planning & safety solutions Building & planning services Safe Work Method Statements (SWMS) Solutions for your business Contracts Online Advertise jobs Trusted support & guidance Contracts & compliance support Industrial relations
Resources & advice
Resources & advice $vuetify.icons.faArrowRight
Building it right Building codes Australian standards Getting it right on site See all Building materials & products Concrete, bricks & walls Getting products approved Use the right products for the job See all Managing your business Dealing with contracts Handling disputes Managing your employees See all Managing your safety Safety rules Working with silica See all Building your business Growing your business Maintaining your business See all Other subjects Getting approval to build Sustainable homes See all
Careers & learning
Careers & learning $vuetify.icons.faArrowRight
A rewarding career Become an apprentice Apprenticeships on offer Frequently asked questions Study with us Find a course to suit you Qualification courses Learning on demand A job in the industry Get your builder's licence Continuing Professional Development (CPD) Find jobs
HIA community
HIA community $vuetify.icons.faArrowRight
Join HIA Sign me up How do I become a member? What's in it for me? Mates rates Get involved Become an award judge Join a committee Partner with us Our initiatives HIA Building Women GreenSmart Kitchen, bathroom and design hub Get to know us Our members Our people Our partners Support for you Charitable Foundation Mental health program
Awards & events
Awards & events $vuetify.icons.faArrowRight
Awards Awards program People & Business Awards GreenSmart Australian Housing Awards Awards winners Regional Award winners Australian Housing Award winners 2024 Australian Home of the Year Enter online Industry events Events in the next month Economic outlook National Conference Events calendar
HIA shop
HIA shop $vuetify.icons.faArrowRight
Most popular products National Construction Code Vol 1 & 2 Waterproofing wet areas AS 3740:2021 HIA Guide to Waterproofing HIA Guide to NCC Livable Housing Provisions Top categories Building codes & standards Contracts & documents Guides & manuals Safety products Signage For your business Contracts Online Digital Australian Standards Digital Resource Library Forecasts & data
About Contact Newsroom
$vuetify.icons.faMapMarker Set my location Use the field below to update your location
Change location
{{propApi.text}} {{region}} Change location
{{propApi.successMessage}} {{region}} Change location

$vuetify.icons.faPhone1300 650 620

Security of payments

This policy relates to potential legal mechanisms to protect sub-contractors from the risk of not being paid, due to a head contractor or builder becoming insolvent.

HIA's Position Statement

  1. Freedom of contract and limited government intervention
  2. To ensure the efficient operation of the market for all businesses operating in the residential construction industry, HIA supports the general principle that parties should be free to contract and agree upon their own terms and conditions, including the terms and conditions of payment.

  3. Security of payment
  4. Any government intervention in the form of security of payment laws must be limited, focusing on facilitating prompt cash-flow and the timely payment of progress claims between all parties to construction contracts, including client to builder.

    Security of payment laws should cover all building work contracts, including payments by domestic clients to builders. If a party in a contract chain is subject to a mandatory or implied condition or right under legislation, that condition or right, as a matter of commercial risk management, must be reflected throughout the entire contract chain.

  5. Right to payment
  6. HIA supports the needs of parties to construction contracts to be paid for the work that they perform in a timely manner and in accordance with the contract. Where a payment is genuinely disputed, HIA supports the implementation of systems that enable the fast and cost effective determination of such disputes. Contractual dispute resolution mechanisms, such as mediation, expert determination, arbitration and adjudication should be preferable to mandatory statutory mechanisms.

  7. Implied rights
  8. HIA opposes implied legislative rights (such as statutory construction trusts, statutory rights to suspend works and statutory liens) supplanting contractual relationships.

    Only where the contract is silent or inadequate should HIA support the operation of implied contractual rights for the making of progress claims, the assessment of progress claims and payment of progress claims.

  9. Progress payments
  10. HIA supports progress payment rights being implied into a contract and not being stated as a separate statutory right. HIA opposes any implied time limit for the payment of claims. Such matters should be left to the parties to negotiate.

    HIA does not support 'paid when paid' or 'paid if paid' clauses. Such clauses attempt to pass the risk of the owner not paying on to the subcontractor, even though the principal contractor/builder as general contractor is in a better position to manage and monitor risk of non-payment than are its subcontractors.

  11. Construction trusts and retentions

    HIA opposes any type of deemed or construction trust for the residential building industry, including for deemed trusts arising on the insolvency of the principal for retentions. Statutory construction trusts are unfair, impractical and inequitable:

    • Increasing costs and red tape in the industry
    • Disrupting normal commercial relationships
    • Unreasonably restricting the ability of a builder to use money received from progress payments in a flexible manner, depriving them of working capital.

    Retentions are monies held to secure performance of the contract and not moneys yet earned by the subcontractor.

    HIA supports an amendment to section 556 of the Corporations Act to extend priority to subcontractors (as well as employees) in the event of the insolvency of the principal contractor/builder.

  12. Caveats
  13. HIA supports the right of the builder to lodge a caveat over the property of the owner in all cases. Where there is a restriction on the right to lodge a caveat over domestic building work, HIA supports the right to caveat being allowed immediately on the commencement of adjudication proceedings.

  14. HIA's rapid adjudication principles

    • HIA is supportive, in principle, of a rapid adjudication scheme to assist in achieving the timely and cost-effective resolution of payment disputes, thereby assisting in prompt cash-flow through to a contracting business.
    • HIA's support for rapid adjudication is subject to that model covering all contracts in the residential building industry, including payments from clients to builders.
    • Claimants should not have an excessive time period to commence adjudication proceedings. HIA supports a maximum time period of 90 days for parties to issue a payment claim under rapid adjudication laws. The right to adjudication should be lost unless the claimant makes a claim within a 20 working day time limit (or other short time period) from a triggering event.
    • Rapid adjudication laws and rules should be user friendly and easy to understand. Claimants and respondents should be able to prepare their own paperwork and this be acceptable to an adjudicator.
    • HIA supports the ability of a claimant to register and enforce an adjudicated outcome through the Courts as a judgment and subject to the court rules. Claimants should not have additional right to other litigants. HIA does not support the respondent being given the option of giving security in lieu of payment or the claimant having additional rights to suspend works.
    • HIA does not support any model that allows for central record keeping of adjudications. Adjudicated outcomes are matters for the parties and should not be misused by the regulator for unrelated purposes such as licensing.
    • HIA supports the right of appeal from an adjudicator's decision on errors of law and breaches of natural justice.

  15. Training, education and awareness
  16. HIA supports greater education for subcontractors and trade contractors including training in business skills and commercial risk management so they have a greater understanding of their rights and obligations and are in a better position to respond to adverse circumstances.

Policy endorsed by HIA National Policy Congress: May 2013; Amended 2016; Re-endorsed 2021

Share with your network:
More articles on:
{{ tag.label }} {{ tag.label }} $vuetify.icons.faTimes
Find the latest expert advice, guides and much more!
HIA Advocacy
View all $vuetify.icons.faArrowRight
31 May
Illegal Logging Prohibition Amendment Bill 2024

HIA prepared a submission to the Illegal Logging Prohibition Amendment (Strengthening Measures to Prevent Illegal Timber Trade) Bill 2024.

31 May
Building Bill 2024 - Consumer Protection (NSW)

HIA responded to the Consultation Paper on the Building Bill 2024 – Consumer protections for home building work (Paper) issued by the Building Commission in April 2024.

24 May
Jurisdiction of the Federal Safety Commissioner

Are your interested in tendering for federally funded government building work? Use HIA’s flowchart to help you determine if you are required to comply with the Federal Work Health and Safety accreditation scheme.

22 May
BCITF 2024 Statutory Review

Housing Industry Association (HIA) submission to the 2024 Statutory Review of the Building and Construction Industry Training Fund and Levy Collection Act 1990. Attracting, training, and retaining skilled workers is fundamental to the ability of the residential building industry to deliver the homes Australia needs.

22 May
Water supply development servicing plan NSW

HIA provided a submission to the City of Coffs Harbour Council (CCHC) on the update of the CCHC Development Servicing Plan Water Supply (DSP).

20 May
Statutory review of Civil Law (Sale of Residential Property) Act 2003 (ACT)

HIA took the opportunity to respond to the review of laws protecting off‐the‐plan home buyers from unfair contract cancellations.