{{ propApi.closeIcon }}
Our industry
Our industry $vuetify.icons.faArrowRight
Economic research & forecasting Economics Housing outlook Tailored market research Economic reports & data Inspiring Australia's building professionals Business & digital Products & innovation Projects HOUSING Online The only place to get your industry news Media releases Member alerts Submissions See all
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 Planning & safety solutions Building & planning services How can safety solutions help you? Independent site inspections Solutions for your business Contracts Online HIA Tradepass HIA SafeScan Advertise jobs Trusted support & guidance Contracts & compliance support Professional services Industrial relations Member savings Toyota vehicles Fuel savings Handy pay See all
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 Falls from heights Safety rules Working with silica See all Building your business Growing your business Maintaining your business See all Other subjects COVID-19 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 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 2023 Australian Home of the Year Enter online Industry events Events in the next month Economic outlook National Conference Events calendar
HIA products
HIA products $vuetify.icons.faArrowRight
Shop @ HIA Digital Australian Standards Contracts Online Shipping & delivery Purchasing T&Cs See all Products Purchase NCC 2022 Building codes & standards Economic reports Hard copy contracts Guides & manuals
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
22 Feb
Inquiry into the Help to Buy Bill and Help to Buy Consequential Provisions Bill 2023

HIA provided a submission into the Help to Buy Bill 2023 and the Help to Buy (Consequential Provisions) Bill 2023, herein referred to as the Help to Buy Bills.

22 Feb
2024-2025 Northern Territory Pre-Budget Submission

HIA submitted the Northern Territory pre-budget submission to the NT Chief Minister.

21 Feb
Future of local government review

On 20 January 2024 HIA made a submission to the Tasmanian Government on the Future of Local Government Final Report.

20 Feb
Proposed amendments to the Directors Determinations on bushfire hazard areas

On 19 January 2024 HIA made a submission to the Tasmanian Government on proposed amendments to the Director's Determinations on bushfire hazard areas.

09 Feb
Senate Inquiry into Superannuation Objective Bill 2023

HIA provided a submission for the Inquiry into the Superannuation (Objective) Bill 2023.

08 Feb
Climate-related financial disclosure legislation exposure draft

HIA submitted a response on the Climate-related Financial Disclosure legislation following the release of the exposure draft.