Plain English Guide to Making a Claim under the Building & Construction Industry Security of Payment Act 1999 (NSW)
If you are a party to a construction contract or supply related goods and services under one, then the Building & Construction Industry Security of Payment Act 1999 (NSW) ("the Act") is relevant to you.head contractor must not serve a payment claim on the principal unless the claim is accompanied by a supporting statement that indicates that it relates to that payment claim ("supporting statement" means a statement that is in the form prescribed by the regulations and (without limitation) that includes a declaration to the effect that all subcontractors, if any, have been paid all amounts that have become due and payable in relation to the construction work concerned). You will have committed an offence if a supporting statement is not provided or it is knowingly false or misleading;
It gives you the right, even if your contract does not, to make Payment Claims and provides strict time limits for responding to those claims. In fact, if you understand the Act and its uses, it can be a means of fast tracking your way to payment.
The following Plain English Guide outlines the Act and how you can make it work for you.
Fast Track to Payment
What does the Act do?
The Act gives you rights additional to those you have under your construction contract. It aims to assist your cash flow by providing a quick way to deal with claims for payment.
The party who makes a claim under the Act is called the Claimant, and the party who receives a Claim against them under the Act is called the Respondent.
Those who can make a claim under the Act include:
Does the Act apply to my contract?
The Act applies to all contracts, whether written or not, for construction work carried out or for related goods / services supplied in NSW.
It does not apply to:
What is ‘construction work’?
The definition is wide and includes:
What are "related goods & services"?
The following ‘goods’ are covered:
The following ‘services’ are covered:
Your right to make Payment Claims
If you make a payment claim under the Act you are called the Claimant. Your debtor is called the Respondent.
How do I make a progress claim?
prepare a separate document or by simply issuing your tax invoice;
it must be in writing and addressed to the Respondent;
it must state the amount you claim is due;
it should be served as per your construction contract or if nothing is stated, then by delivering, posting or faxing it to the Respondent. Record the date the Respondent receives it;
A head contractor must not serve a payment claim on the principal unless the claim is accompanied by a supporting statement that indicates that it relates to that payment claim ("supporting statement" means a statement that is in the form prescribed by the regulations and (without limitation) that includes a declaration to the effect that all subcontractors, if any, have been paid all amounts that have become due and payable in relation to the construction work concerned). You will have committed an offence if a supporting statement is not provided or it is knowingly false or misleading;
A progress payment becomes due and payable in accordance with the terms stated in your contract, or if not stated, the Act says it’s 15 business days after delivery of the payment claim for a payment being made by a Principal to a Head Contractor, and 30 business days for a payment being made to a subcontractor, whichever time is earlier.
What can the Respondent do?
The Respondent can dispute the claim, by serving on you a Payment Schedule within time for payment.
The Payment Schedule needs to:
identify the payment claim it relates to;
state what amount, if any, the Respondent proposes to pay (the ‘scheduled amount’);
If the scheduled amount is less than the amount claimed, then explain why.
be served within the time stipulated in the contract, and if not, within 10 business days after the payment claim is served, whichever is the earlier.
If the Respondent has NOT served a payment schedule or paid by the due date, you can:
If the Respondent serves a payment schedule but for less than the amount claimed, you can either:
1. Accept the reasons given
You can accept the reasons and wait for payment of the scheduled amount by the due date.
If no payment of the scheduled amount is made, you can either sue or apply for Adjudication.
2. Dispute the reasons given
If you dispute the Schedule you have the option of applying for Adjudication.
Adjudication is conducted by an independent person who decides the amount, if any, that is due in respect of the progress claim. Only you, as a Claimant, can start this process.
If you decide to pursue this action then you will need to provide relevant notice to the respondent of your intentions.
Notice of intention to seek adjudication -
If your Respondent failed to serve a Payment Schedule on you;
Notice of intention to suspend work -
If a right to suspend construction work is exercised under the Act:
How to apply for Adjudication
The application to refer a dispute for adjudication must:
(a) where the scheduled amount in the payment schedule is less than the payment claim amount - within 10 business days after you received the payment schedule
(b) where the Respondent fails to pay any part of the scheduled amount when due - within 20 business days after the due date for payment
(c) where the Respondent does not provide a payment schedule and fails to pay any part of the amount by the due date - within 10 business days after the end of the 5 business day period the respondent had been given to provide a payment schedule in your section 17(2)(b) notice.
The ANA will then choose an adjudicator and you and the Respondent will receive a notice from him/her accepting the application.
If the respondent had provided a payment schedule within time, then they can lodge a submission with the adjudicator.
How long does the adjudicator get to make a determination?
To ensure your success in making a claim for payment, you should always:
How can Coleman Greig help you?
Coleman Greig’s experienced commercial lawyers can assist you with:
Drafting effective building contracts
Negotiating disputes and payment claims
Advice regarding the Building & Construction Industry Security of Payment Act 1999
Representation in Court
Disclaimer: The information provided above is a general summary and is not intended to be nor should it be relied upon as a substitute for legal or other professional advice.