Michael Heaton KC (2013) The Arbitrator & Mediator June, 85

Most construction contracts contain a clause requiring a statutory declaration that suppliers, subcontractors and workers have been paid. For instance, clause 43 of AS4300-1995 incorporating Amendment No. 1 (October 2000) is headed ‘Payment of Workers and Subcontractors’. It requires a statutory declaration that workers and subcontractors have been paid all monies due and payable to them. Clause 43.3 headed ‘Withholding of Payment’ provides that if the statutory declaration is not provided the principal may withhold payment until the statutory declaration is received by the superintendent. What happens if a statutory declaration is not provided? The answer appears different according to whether the contractual regime or the Security of Payment Acts regime is applicable. While a statutory declaration may be a condition precedent to payment of a progress claim under the contract, a review of cases in combination with analysis of the construction of the Security of Payment Acts reveals that a statutory declaration is not a condition precedent to a statutory payment claim. Thus two regimes can apply to the obtaining of a payment claim: one under the contract and the other under the Security of Payment Acts.

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Security of Payments – Differences along the Eastern Seaboard