Security of Payment in NSW: What Every Builder and Subcontractor Needs to Know

In the construction industry, delayed or unpaid invoices can cripple cash flow and stall progress. Fortunately, New South Wales builders, subcontractors, and suppliers have powerful rights under the Building and Construction Industry Security of Payment Act 1999 (NSW).

This Act allows you to recover unpaid payments quickly — without needing to launch court proceedings.

This guide explains:

• How the Security of Payment Act works
• How to issue or respond to a payment claim
• What adjudication involves
• How to enforce a determination
• How to avoid common legal mistakes

Whether you’re submitting a claim or defending one, understanding the process can protect your rights and your business.

What Is the Security of Payment Act in NSW?

The Security of Payment Act 1999 (NSW) ensures that any party who carries out construction work or supplies related goods and services under a contract has the right to receive progress payments.

It applies to:

• Contractors and subcontractors
• Consultants (e.g. engineers, architects)
• Material and equipment suppliers

When Can I Use the Act to Get Paid?

You can make a payment claim under the Act if you have a (written or oral) contract for construction work or the supply of related goods and services, as defined in the Act. Claims can be made monthly or at intervals agreed in the contract.

Examples of when to use it:

• You’ve issued an invoice but received no response
• The head contractor disputes the amount owing
• You’ve only received partial payment
• There’s no payment schedule provided within 10 business days

How to Make a Valid Payment Claim (Step-by-Step)

• Serve a valid payment claim:
  • Clearly identify the construction work or goods/services supplied
  • State the claimed amount
  • Include this sentence: “This is a payment claim made under the Building and Construction Industry Security of Payment Act 1999 (NSW).”
• Serve the claim on time:
  • Within the timeframe allowed under your contract OR
  • Within 12 months of completing the work or the related goods and services were last supplied.
• Keep records:
  • Retain dated proof of delivery (e.g. email read receipts, registered post)
  • Always follow up in writing

What Happens If They Don’t Respond or Pay?

If the respondent fails to:

• Pay the claimed amount by the due date, or
• Issue a valid payment schedule within 10 business days,

…you are entitled to apply for adjudication.

Understanding Adjudication: Fast Dispute Resolution

Adjudication is a legal process that allows you to resolve the dispute quickly — usually within 10 to 15 business days.

• Apply for adjudication through an Authorised Nominating Authority (ANA)
• Submit your application within strict timeframes (usually 10–20 business days depending on the circumstances)
• An adjudicator is appointed and reviews both parties’ submissions
• A determination is made — the adjudicator decides how much (if any) is payable

How Do I Enforce a Determination If I Still Don’t Get Paid?

Even after a favourable decision, some respondents still don’t pay. If that happens, you can:

• File the adjudicator’s determination (adjudication certificate) in the Local, District, or Supreme Court of NSW, depending on the quantum of the debt and the monetary jurisdiction of the relevant court
• Take enforcement action, such as:
  • Garnishee orders
  • Seizure of assets
  • Statutory demand (if the debtor is a company)

What If I Receive a Payment Claim? (Defending a Claim)

If you receive a payment claim, don’t ignore it — doing so could make you automatically liable for the full amount, even if you disagree with the claim.

• Issue a payment schedule within 10 business days
• Clearly state:
  • The amount you intend to pay
  • Reasons for withholding any amount
• Seek legal advice if the claim seems inflated or invalid

5 Common Mistakes Builders & Subcontractors Make (and How to Avoid Them)

1. Failing to reference the Act on claims: Always include the required wording on your invoices to make them enforceable under the Security of Payment Act.
2. Missing timeframes: Make sure you track all deadlines and document every step of the process to protect your rights.
3. Not seeking advice early: Getting legal advice when issuing or responding to a payment claim can prevent disputes from escalating to adjudication.
4. Assuming verbal contracts aren’t covered: The Act applies even if the contract is verbal, so don’t assume you’re excluded from its protections.
5. Ignoring a payment claim : Always respond with a payment schedule, even if you dispute the claim, to avoid being automatically liable for the full amount.

How a Construction Lawyer Can Help

A experienced security of payment lawyer in NSW can help you:

• Draft valid payment claims or payment schedules
• Respond to disputed claims or unjustified deductions
• Prepare adjudication submissions professionally
• Enforce a determination through court
• Strengthen your contracts to avoid future disputes

Whether you’re a subcontractor, builder, or developer — legal advice early in the process can make all the difference.

Need Help with a Construction Payment Dispute?

If you’re chasing unpaid invoices or defending a payment claim, our experienced construction lawyers in NSW can step in quickly and help you resolve the dispute efficiently.

• Fast review of your claim or response
• Advice on the best strategy to recover or defend payment
• Fixed-fee adjudication support where applicable

Contact us today for clear, practical legal advice — and get back to doing what you do best.

This information is general in nature and does not constitute legal advice. For advice specific to your circumstances, consult a qualified legal practitioner.