About Us

Turnbull Bowles Lawyers is a specialist Sydney CBD legal practice providing practical and comprehensive legal

services to the Strata Industry and Building and Construction Sectors.

We are committed to providing our clients with excellence in legal services. Since our inception, we have established a

proven track record of successfully representing a wide range of Owners Corporations, Strata Managing Agents,

Community Associations, Builders, Developers, Sub-Contractors, and Individual Lot and Property Owners.

We are a division of Forbes Dowling Lawyers, a national legal practice that specialises in Commercial Litigation,

Insolvency, Debt Recovery and General Legal Services. Forbes Dowling Lawyers have branches in Sydney, Brisbane,

the Gold Coast, Melbourne, Adelaide and Affiliates throughout Australasia.

Building & Construction News

Introducing the new NSW Building and Construction Industry Security of Payment Amendment (Retention Money Trust Account) Regulation 2015

Background

The NSW Building and Construction Industry Security of Payment Amendment (Retention Money Trust Account) Regulation 2015 came into effect on 1 May 2015.

The effect of the amendment is to ultimately require head contractors to hold retention money under subcontracts in a trust account, which is to be a separate trust account. This will apply to construction projects with a value of at least $20 million.

The Regulation is a result of a recommendation that was submitted by Bruce Collins QC in his report "Inquiry into Construction Industry Insolvency in NSW" in November 2012 whereby a number of key stakeholders provided their input into this inquiry at the time. The effect of the Regulation is to create a new record keeping and reporting obligation for head contractors. The Regulation will impact on those subcontracts entered into by a head contractor, where the head contract was entered into after 1 May 2015. Who is Affected by the Changes set out in the Regulation

The Regulation applies to retention money held by a "head contractor", being the person who will carry out "construction work" or supply "related goods and services" for the principal under a construction contract. "Construction work" and "related goods and services" are defined in the NSW Building and Construction Industry Security of Payment Act 1999.

Summary of Key Changes 1. The Regulation applies to retention money held by a head contractor in relation to projects valued at over $20 million under a

construction contract with a principal entered into after 1 May 2015;

2. The $20 million threshold is calculated by reference to the amount of consideration payable under the head contract. If the value of the contract reaches the $20 million threshold by variations, then subsequent subcontracts entered into by the head contractor will be subject to the trust account requirements;

3. If the $20 million threshold is reached after entry into the head contract, then the trust account requirements under the Regulation do not apply to subcontracts entered into before the $20 million threshold was reached;

Building & Construction News continued……..

4. The retention money held by a head contractor must be held in trust for the subcontractor in a trust account with an "approved ADI", (an authorised deposit-taking institution), including banks, building societies and credit unions;

5. The head contractor may choose to establish the trust account for a particular subcontractor or a particular project by the

head contractor. The account name must include the name of the head contractor and the words "trust account". The head contractor must tell the deposit-taking institution that the purpose of the account is as a trust account pursuant to the Regulation;

6. The head contractor is required to advise the Chief Executive of the Office of Finance and Services of certain details relating to

the trust account;

7. A head contractor may only withdraw money from the trust account if one of the events are triggered: a. for the purpose of the payment of the money in accordance with the terms of the subcontract; b. as agreed to in writing between the head contractor and the subcontractor; or c. in accordance with an order issued by a Court or a Tribunal;

8. A head contractor may not use retention money held in a trust account to pay the head contractor's debts;

9. As part of the changes unless it is agreed, interest on retention money is also held on trust for the subcontractor;

10. It is now an offence to withdraw retention money from a trust account otherwise than by cheque or electronic funds transfer;

11. A head contractor is now required to keep records in relation to the retention money trust account including money paid in

and out of the trust account;

12. A head contractor is required to retain such records for at least three years once the account is closed;

13. The Chief Executive may request information from the head contractor, subcontractor or approved ADI and this extends to information concerning the value of the construction project;

14. A head contractor must now annually provide to the Chief Executive:

a. an annual review report; and b. a retention account statement;

15. The annual review report must be certified by a registered company auditor;

16. The retention account statement is required to be submitted in the form required by the Regulation and set out in the Regulation. Upon submitting this statement, a fee of $1,500.00 is to be paid to the Chief Executive.

Who is Excluded The changes will not affect contracts which do not fall within the broad compass of a "construction contract" pursuant to the requirements of the NSW Building and Construction Industry Security of Payment Act 1999. Future Impact and Going Forward It is highly recommended that head contractors familiarise themselves with the Regulation and now consider appropriate amendments to their subcontracts for those projects that will meet the $20 million threshold. It is also now likely that head contractors will consider insisting on other forms of security, such as bank guarantees, to avoid the trust account requirements. If a Head Contractor does not comply with the new requirements they face a fine being imposed at a time in the sum of $22,000.00. We can assist you in any Amendments to your Standard Contracts you may require.

For further information regarding this article, please contact our Senior Lawyer, Ms Pierrette Khoury on (02) 8272 1999.

Building & Construction Services

Our Lawyers can assist clients with the following:

Construction Contracts

Negotiating and drafting commercial and residential construction, project management, subcontracts, engineering and other construction related agreements;

Advice and Appeals pursuant to the Building and Construction Industry Security of Payment Act 1999;

Dispute resolution for issues arising during the course of construction projects.

Construction Disputes

Advising and acting for Owners Corporations, home owners, builders, developers and other parties regarding building defects claims;

Advising on proportionate liability issues;

Claims in negligence or for breach of contract against building professionals including Engineers, Architects, Principal Certifying Authorities and Construction and Design Contractors in residential building matters;

Recommending, managing and instructing experts to assess and report on building defects.

Strata & Community Title Law Services

We offer fixed fess for many services including drafting and registration of standard By-Laws with a 48 hour turnaround.

Our Lawyers can assist clients with the following:

Advice and representation in strata disputes and processes;

Drafting and registration of By-Laws;

Notices to Comply and Penalty Applications regarding breaches of By-Laws;

Advice and assistance regarding the interpretation, application and amendment of Strata Management Statements and Community Management Statements;

Attendance at Annual General Meetings, Extraordinary General Meetings and Executive Committee Meetings to provide advice, guidance and assistance;

Strata Subdivisions;

Easements;

Recovery action for unpaid strata levies;

General advice on Strata & Community title issues and Company Title issues;

Conversion from Company Title to Strata Title;

Building litigation;

Home Owner Warranty Insurance claims

General Services

Turnbull Bowles Lawyers is a division of Forbes Dowling Lawyers Pty Ltd and a subsidiary of a major Australian

Collections Firm, Australian Receivables Limited. Our clients enjoy the benefits of the much larger parent company’s

operating platform which includes sound governance, robust operating systems, high levels of compliance,

documented risk management procedures, superior security and quality management systems.

All these features combined provide clients with greater peace of mind and more compelling results. The group

provides a highly personalised, client specific and responsive service from talented, caring and successful practitioners

working with state of the art business systems and specialist knowledge in the areas of:

Commercial Litigation;

Business, Corporate & Commercial Law;

Property & Conveyancing;

Debt Recovery (with experts in the area of Strata and Local Government Rates Recovery);

Insolvency and Corporate Restructuring;

Building & Construction Law.

With branches and affiliates throughout Australasia, Turnbull Bowles Lawyers provides clients with a commercial and

pragmatic solution to any legal issue.