The Security of Payment Process in 4 Steps

The Building and Construction Industry Security of Payment Act 1999 (NSW) or the Security of Payment Act (NSW) allows you to claim payment for construction work performed – without unnecessary delay.

Step 1. All you need to do is send a Payment Claim to the Respondent, i.e., the person who is bound to pay you for construction work performed.

Step 2. This would trigger a period of 10 business days (or such period as provided in your construction contract) within which the Respondent would need to send you a Payment Schedule, which contains the amount they propose to pay (“Scheduled Amount”) in lieu of the amount you claimed in your Payment Schedule.

If they don’t send a Payment Schedule, they would have to pay the full amount of your claim. The due date for this payment will be found in your construction contract.

Step 3. By the end of the 10-day period, you may expect one of 4 scenarios to happen:

Step 4. Enforce payment. In scenarios 2, 3, and 4, you have the following options for enforcing your payment claim:

Adjudication
Litigation
Suspension of Works

Why Adjudication

Of the three remedies enumerated above, Adjudication would be the most effective and convenient, and also the least costly. 

Lodging an Adjudication Application

When and how to lodge an Adjudication Application would depend on the reason you’re electing to undergo Adjudication.

If Respondent doesn't serve a Payment Schedule, and doesn't pay your claimed amount when due

1. Before you can proceed to Adjudication, you need to give the Respondent a second chance to send a Payment Schedule.

2. This second & final chance should be embodied in a “section 17(2) Notice”

3. Quick facts about the section 17(2) Notice:

4. In this scenario, the matter will not necessarily head straight to adjudication.

If: The Respondent pays the full amount of your claim within 5 business days from receipt of the Section 17(2) Notice,

Then: You’re done! No need for adjudication since they’ve already paid the full amount of your claim

If: The Respondent serves a Payment Schedule within 5 business days from receipt of the Section 17(2) Notice,

Then:

  1. a) if you agree with their proposed amount, then no need for adjudication (unless they don’t pay said amount)
  2. b) if you don’t agree with their proposed amount, then you may proceed to adjudication, with the Respondent having a right to participate by filing an Adjudication Response

If: The Respondent does not serve a Payment Schedule, nor pays the full amount of your claim,

Then: You can proceed to adjudication, but they at this point, have lost their right to file an Adjudication Response

Note that in the above cases, Application for Adjudication must be done within 10 business days from the date of expiry of the section.17(2) notice.

If Respondent serves a Payment Schedule, but doesn’t pay the scheduled amount

In this case, you have 20 business days from receipt of the Payment Schedule to apply for Adjudication.

If Respondent doesn't serve a Payment Schedule, and the scheduled amount is less than the claimed amount

In this case, you have 10 business days from receipt of the Payment Schedule to apply for Adjudication.

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.