Building and Construction Industry Security of Payment Act 1999 No 46
26B Obligation of principal contractor to retain money owed to respondent
(1) A principal contractor who has been served with a payment withholding request must retain, out of money owed to the respondent, the amount of money to which the payment claim relates (or the amount owed by the principal contractor to the respondent if that amount is less than the amount to which the payment claim relates).(2) The amount is only required to be retained out of money that is or becomes payable by the principal contractor to the respondent for work carried out or materials supplied by the respondent to the principal contractor as part of or incidental to the work or materials that the respondent engaged the claimant to carry out or supply.(3) The obligation to retain money under this section remains in force only until whichever of the following happens first—(a) the adjudication application for the payment claim is withdrawn and the claimant does not make a new adjudication application in accordance with section 26,(a1) the adjudicator fails to determine the adjudication application in accordance with section 21 and the claimant does not make a new adjudication application in accordance with section 26,(b) the respondent pays to the claimant the amount claimed to be due under the payment claim,(c) the claimant serves a notice of claim on the principal contractor for the purposes of section 6 of the Contractors Debts Act 1997 in respect of the payment claim,(d) a period of 20 business days elapses after a copy of the adjudicator’s determination of the adjudication application is served on the principal contractor.(4) A part payment of the amount claimed to be due under the payment claim removes the obligation under this section to retain money to the extent of the payment.(5) When the claimant’s adjudication application is determined, the claimant must serve a copy of the adjudicator’s determination on the principal contractor within 5 business days after the adjudicator’s determination is served on the claimant.Maximum penalty—50 penalty units in the case of a corporation or 10 penalty units in the case of an individual.