What is a reference date?
Section 8(2) of the Building and Construction Industry (Security of Payment) Act 1999 (NSW) (Act) defines a reference date as follows:
- A date contained in the contract on which a party can make a claim for a progress payment (e.g. the 15th day of each month); or
- If the contract is silent on this point, the last day of the named month in which the construction work was first carried out
(e.g. if the contractor started construction work in August, the reference date is the last date of August, and the last date of each subsequent month).
What is the significance of a reference date?
- The existence of a reference date is a condition precedent to a claimant’s right to serve a Payment Claim
The recent decision in Impero Pacific Group Pty Ltd v Bonheur Holdings Pty Ltd
- In the past, where a Principal terminated a contract for convenience, Contractors were unable to submit a progress claim for works performed between the last accrued reference date under the contract and the date on which the Principal terminated the contract.
- In the recent decision of Impero Pacific Group Pty Ltd v Bonheur Holdings Pty Ltd  NSWSC 286, this position was overturned.
The Court held that:
- If a Principal terminated a contract for convenience, it will enliven a fresh reference date and therefore allow a Contractor to claim for works performed.
- However, both Contractors and Principals should note that once the Building and Construction Industry Security of Payment Amendment Act 2018 (NSW) comes into force, termination of the construction contract by whatever means will entitle the Contractor to a progress claim for work done up to the date of termination.
- Until the amendments to the Act come into force, the decision in Impero provides a safeguard to Contractor’s rights to payment for works performed.