What is the Building and Construction Industry Security of Payment Act?

The security of payment legislation in Australia is used help parties who has carried out construction works or supplied related goods and services to assist in the recovery of outhandling payments for what work or supplies they have provided.  Each state and territory has their own slightly different legislation, but all are based on the New South Wales Act.

The New South Wales Act is the Building and Construction Industry Security of Payment Act 1999 (NSW) (Act) and it applies to anyone who has agreed to perform construction works or provide related goods and services.  The Act applies to construction contracts that are formal written documents but also even informal arrangements (such as by text message or telephone call) where one party agrees to perform works for the other.

The Act creates a statutory entitlement to a monthly progress payment.  This is a right that is separate to any right you have in your contract.  It also creates the forum, known as Adjudication, where disputes over that statutory entitlement are heard.

In comparison to litigating a matter in court, the process under the Act is a far a quicker method to obtain an outcome (which can be enforced) if there is a dispute over a progress payment.  Using the Act takes approximately 6 – 10 weeks start to finish.  Typical building and construction disputes in Court will take 12 months or longer before you achieve an outcome.

Parties that are able to claim under the Act, known as Claimants are generally compromised of the following:

  • Contractors and Subcontractors that are carrying out construction work/suppling goods & services or building materials;
  • Contractors and Subcontractors that are carrying work related to construction work including architectural, engineering, contract administration, and project management services.

Adjudication allows a Claimant who believes that they are owed money under a construction contract, to promptly obtain payment from the respondent, based on an assessment of their claim to be decided by a qualified and independent adjudicator. Claimants use the Act securing payment without the need for extensive (and expensive) court hearings.

To commence a claim under the Act and proceed with the adjudication process, there must be a written valid payment claim made against a party to a construction contract for outstanding monies due.

If receiving a claim from a subcontractor, the “Respondent” must issue a valid payment schedule within 10 business days (unless the Contract provides for a shorter period) explaining why they are not paying the claimed amount.  The consequences of not issuing a payment schedule can be significant.

If the Claimant is dissatisfied with the Respondent’s response, they can then file for Adjudication.

When using the Act, strict timelines apply and parties should consider obtaining legal advice to ensure they complying with the technicalities of the process under the Act as failure to comply may have serious financial consequences.


Contact our Building & Construction Law Team for any queries regarding the Building and Construction Industry Security of Payment Act 1999 (NSW).


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