How to make a payment claim under the Security of Payment Act

The Security of Payment Act gives you a fast way to get paid for construction work, but only if you follow the steps. A claim that misses a requirement can be knocked out on a technicality. This guide walks through how to do it properly.

First, check the Act applies

The law is the Building and Construction Industry Security of Payment Act 1999 (NSW). It covers most construction work and related goods and services supplied under a construction contract in NSW. Some work is excluded, including certain residential building work for an owner-occupier, so check that your situation is covered before you rely on the Act. If you are unsure, ask us.

Step 1: Work out your reference date

A payment claim is made from a reference date. That is the date set in your contract for making a claim. If the contract does not set one, it is the last day of each month in which you did work. You can make one claim per reference date, and you can only claim for work carried out in the past 12 months.

Step 2: Prepare a valid payment claim

A valid payment claim must meet several requirements. Getting these right is what protects the claim.

• It must be in writing.
• It must identify the construction work or related goods and services it covers.
• It must state the amount claimed.
• It must be addressed to the right party and served the way the contract requires, or on or after the reference date.

If the contract relates to residential building work, a subcontractor's claim must also state that it is made under the Act. Keep a record of exactly when and how the claim was served, because the deadlines that follow run from the date it is received.

A practical tip from what we see go wrong. Describe the work clearly and attach the detail. A claim that just states a lump sum with no breakdown invites a dispute and is harder to enforce. Make it easy for the other side, and for an adjudicator, to see what the money is for.

Step 3: Wait for the payment schedule

Once served, the other party can respond with a payment schedule. This states what they propose to pay, and if it is less than you claimed, why.

They have a maximum of 10 business days to provide the schedule, unless the contract requires a shorter period. If they do not provide a schedule and do not pay, they become liable for the full claimed amount, and your options open up.

Step 4: Know when payment is due

Unless the contract sets an earlier date, payment is due within set periods after the claim. A head contractor claiming from the principal must be paid within 15 business days. A subcontractor must be paid within 20 business days, or within 10 business days for certain exempt residential work.

Step 5: If you are not paid, use adjudication

If you are not paid, or the schedule is for less than you claimed, you can apply for adjudication. An independent adjudicator decides how much is payable.

The timeframes are strict. You must apply within the window set by the Act, which depends on what happened with the payment schedule. Once your application is accepted, the respondent generally has 5 business days to lodge an adjudication response, and the adjudicator generally has 10 business days to make a determination, unless both sides agree to more time.

Because the deadlines are short and unforgiving, this is the point to get advice quickly rather than wait. A missed deadline can cost you the fast-track entirely and send you back to a slower court process.

Step 6: Enforce the determination

If the adjudicator decides in your favour and you are still not paid, you can obtain an adjudication certificate and file it as a judgment debt in court, then enforce it like any other judgment.

Frequently asked questions

How often can I make a payment claim? One claim per reference date, which is usually monthly if the contract does not say otherwise, and only for work done in the past 12 months.

What if they ignore my claim? If they do not serve a payment schedule and do not pay, they are liable for the full amount, and you can pursue it as a debt or through adjudication.

How long does adjudication take? It is designed to be fast. After acceptance, the response is generally due within 5 business days and the determination within 10 business days.

Do I need a lawyer to make a claim? Not strictly, but the requirements and deadlines are technical, and a claim knocked out on a technicality is a costly way to learn them. Advice early is worth it.

Keep reading

• Tradespeople
• Security of Payment Act NSW: how tradies get paid
• Client won't pay? Your options as a tradesperson in NSW

This article contains general information only and is not legal advice. For advice about your situation, please contact us. Liability limited by a scheme approved under Professional Standards Legislation.