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BUILDING INDUSTRY FAIRNESS (SECURITY OF PAYMENT) ACT 2017 - SECT 130
Use of security for benefit of subcontractor if contractor accepts liability for all claims
130 Use of security for benefit of subcontractor if contractor accepts
liability for all claims
(1) This section applies if— (a) a subcontractor gives a notice of claim to
a person under section 122 because the person is obliged to pay money to a
contractor under a contract; and
(b) the subcontractor gives a copy of the
notice of claim to the contractor under section 123 ; and
(c) in the
contractor’s response to the claim under section 128 , the contractor
accepts liability to pay the amount claimed; and
(d) the unsatisfied amount
for the contract is more than the retained amount for the contract.
(2) The
holder of a security for the contract must— (a) retain the security until
the court in which the subcontractor’s claim is heard makes an order under
section 132 about enforcing the subcontractor’s charge over the security; or
(b) instead of retaining the security— (i) if the security is held as an
amount of money—pay the amount, up to the difference amount for the
contract, to the subcontractor or subcontractors to whom the acceptance of
liability relates; or
(ii) if the security is not held as an amount of money
but may be converted into an amount of money—convert the security, wholly or
partly, into an amount of money and pay the amount, up to the
difference amount for the contract, to the subcontractor or subcontractors to
whom the acceptance of liability relates.
(3) If the holder of the security
does not comply with subsection (2) , the holder is personally liable to pay
to a subcontractor the amount of the subcontractor’s claim to the extent
that the security would have been capable under this chapter, if the holder
had complied with the subsection, of satisfying the claim.
(4) A payment of
an amount under subsection (2) (b) discharges the holder of the security of
all further liability for the amount paid and of the costs of any proceeding
in relation to the amount paid.
(5) Subsections (2) and (3) do not stop the
holder of the security from exercising an entitlement to use the security for
securing the performance of the contract, including by keeping control of the
security until the security would be required to be surrendered, wholly or
partly, if this section did not apply.
(6) A provision of the contract, or of
another arrangement, about the security, including a provision of the security
itself, and including a provision providing for the surrender, wholly or
partly, of the security, is of no effect to the extent it purports— (a) to
stop the holder of the security from complying with subsection (2) ; or
(b)
to operate to the detriment of a person if the holder complies with subsection
(2) .
(7) In this section—
"difference amount" , for a contract, means the amount by which the
unsatisfied amount for the contract is more than the retained amount for the
contract.
"retained amount" , for a contract, means the total of— (a) all amounts a
person is retaining under section 126 (2) for the contract; and
(b) all
amounts a person has paid into court under section 126 (4) for the contract;
and
(c) all amounts the holder of a security for the contract has paid to a
subcontractor under subsection (2) (b) in relation to the security.
"unsatisfied amount" , for a contract, means the total of all amounts of
claims for the contract for which a notice of claim has been given, other than
amounts that have been— (a) satisfied by payment under section 129 (2) or
(3) ; or
(b) the subject of a notice of claim that has been withdrawn.
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