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Building & Construction

Unintended Consequences for Building Subcontractors

  Construction Contracts made after 21 April 2014 All rights under the Security of Payment laws from the service of a valid Payment Claim. However, only a single Payment Claim may be issued in relation to each Reference Date. Subcontractors that were not previously familiar with the security of payment laws and who did not us...

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High Court settles argument about when a Payment Claim can be validly issued

In a decision of great relevance to members of the building and construction industry, the High Court has provided some certainty in relation to when a valid Payment Claim may be issued under a construction contract and put to rest a debate that has gone on for some time in light of various legislative amendments and Judgments of lower Courts...

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Service of Payment Claims by Email

CAN it be done? SHOULD it be done? With the increasing use of emails for communications, it is becoming commonplace for businesses to send tax invoices to clients via email for payment. If the tax invoice relates to work performed under a construction contract, your business may have rights to prompt payment under the Building and Con...

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Common Misconceptions about Contracting in the Building & Construction Industry.

...what to do to avoid getting caught out. When I ask clients whether a written contract was in place or whether variations had been documented, too often I receive the following response "no there was no contract, we just agreed to it" or "I didn't think it was necessary it was a small job".   Firstly...

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Security of Payment Guide




Don't get caught out or miss the opportunity to use the Security of Payment Laws when you need them most.

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Introduction to Security of Payment Laws


Most business owners in the building industry are aware of the Building & Construction Industry Security of Payment Act 1999 (NSW) (or interstate equivalents) but readily admit that they do not have a proper understanding of how they operate.

These laws are unlike any other law and can be the source of significant rights as well as severe adverse consequences for most businesses in the building industry. These laws should not be taken lightly nor should the potential benefits be overlooked by small or medium businesses.

Security of Payment Laws create statutory rights that existing despite the terms of a Construction Contract. These rights relate to:

  • the right to recover payment of a progress claim through the Courts as an indisputable Statutory Debt where the other party fails to provide a Payment Schedule in time,
  • the prompt and cost effective Determination of disputed progress claims by an independent Adjudicator,
  • the Maximum Time Limits for Due Dates for payment of progress claims,
  • the entitlement to Interest on overdue progress claims,
  • the obtaining of payments directly from a Principal Contractor, and
  • the Suspending of work without liability.


Importantly, all rights flow from the service of a valid Payment Claim and strict compliance with the Act is necessary in terms of both the issue of valid Payment Claims and time limits.

Following the recent amendments of the Act, the issue most relevant to determining whether a Payment Claim is valid is the evaluation of the Reference Date to which it relates.

We have prepared this Security of Payment Guide to help Contractors, Subcontractors, Suppliers, Consultants and Developers in the building industry gain a better understanding of how the security of payment regime works and when and why to seek our professional help.


What's in the Guide


Our comprehensive Security of Payment Guide answers the following questions and more:

  • When does the Security of Payment Act apply?
  • How does the security of payment regime work?
  • What is a Statutory Right to Payment?
  • When is a Tax Invoice a Valid Payment Claim?
  • What if my Tax invoice was not a valid Payment Claim?
  • What is a Reference Date?
  • How can a Payment Claim be Served?
  • What is a Payment Schedule?
  • How does the Payment Withholding Request system work?


Our Security of Payment Guide is an essential tool for every business owner in the building industry.


Why Serve Valid Payment Claims?


When you serve a valid Payment Claim you will:

  • have an indisputable statutory right to payment, where the other party does not respond with a Payment Schedule within the allowed time, and
  • be entitled to have any dispute raised in a Payment Schedule determined by an independent Adjudicator within 10 business days of lodging an Adjudication Application.


Conversely, if you receive a valid Payment Claim and do not respond with a Payment Schedule within the allowed time, you will be:

  • prohibited from raising any Cross Claim or Defence in relation to any matter arising under the Construction Contract in proceedings brought against you for recovery of the amount claimed, and
  • prohibited from filing any Response to an Adjudication Application lodged in relation to the Payment Claim.


The following Enforcement Flow Sheets form part of the Guide and will give you an overview of how the Act works and why it is important to serve valid Payment Claims:

Non-Valid Payment Claim: Enforcement Flow Sheet

Valid Payment Claim: Enforcement Flow Sheet

Are you willing to bet that your invoices are valid Payment Claims under the security of payments legislation?

If getting paid for your hard work is important to your business why take any chances on not being able to rely on the security of payment regime when you need to.

In practice, where a Statutory Right to Payment exists, Court proceedings are rarely necessary, and in most cases a well drafted legal demand will swiftly turn a reluctant payer into a willing and anxious payer.



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