Security of Payment Act: A quick rundown

Under the Building and Construction Industry Security of Payment Act 1999 (NSW), a.k.a. Security of Payment Act (NSW), you may claim progress payments by simply serving a Payment Claim on the person who owes you (let’s call them the “Respondent”).

The Respondent may then either pay your claimed amount on the due date (in your construction contract), or serve you a Payment Schedule, if they propose to pay a different (usually, lesser) amount. 

How Can Payment Be Enforced?

If you disagree with their proposed payment amount (“scheduled payment,”), or if they refuse to pay the amount they promised, or if they neither serve a Payment Schedule nor pay your claimed amount, you need not worry.

The Security of Payment Act (NSW) gives you options for enforcing payment. These are:

Adjudication
Litigation
Suspension of Works

Adjudication

Adjudication may be resorted to in any of the following instances:
1. When the Respondent serves a Payment Schedule, and the Scheduled Amount is less than your Claimed Amount
2. When the Respondent serves a Payment Schedule, but does not pay the Scheduled Amount when it’s due;
3. When the Respondent does not serve a Payment Schedule at all, and does not pay the Claimed Amount;

IMPORTANT! : Adjudication Timelines

There are strict deadlines you need to adhere to, if you want to enforce your claim via adjudication.

In other words, in the third scenario:

Litigation

You may also opt to bring the collection case to court instead of going through adjudication. This would take longer and entail a greater expense, though.

Suspension of Works

Another option you have, if you don’t want to commence adjudication or enforcement proceedings in court, is to send Respondent a 2 day Notice that you are suspending the works, until they pay the amount you’re owed.

How We Can Help

Contracts Specialist has over 10 years experience in debt recovery and Security of Payment. Should you wish to learn more about how to enforce your claim under the Act, or should you require assistance in facilitating your payment claims, feel free to give us a call. Your first consult is free.