Who can make claims under the Act?

Those who can make a claim under the Act include:

  • Contractors against principals / developers
  • Subcontractors against contractors
  • Suppliers against customers
  • Plant and equipment hirers against clients
  • Consultants against clients

Construction work and services can be claimed under the Act, even if the contract:

  • is not written
  • does not provide for progress payments
  • has only a single payment to be made when the work is completed.

How do I make a claim?

Your claim must be:

  • made at the time stated in your contract or, if there is no time stated, on the last day of the month
  • be in writing and addressed to the respondent
  • describe the construction work, related good or related services for which you are claiming
  • state the amount that you claim is due
  • include the words "This is a payment claim made under the Building and Construction Industry Security of Payment Act 1999 NSW", or a similar statement with that meaning, and
  • refer to work done in the past 12 months, only.

NB: You may want to include the above words on all your invoices for payment, to ensure all your claims are covered by the Act.

The claim may also include attachments containing:

  • statements detailing the extent of the work completed
  • completion certificates
  • delivery dockets
  • photographs, and
  • other applicable contract document requirements.

To make a claim you must:

  • establish the reference date for making your claim
  • decide how much you are entitled to be paid calculated to the reference date
  • on or after each reference date make a written payment claim and serve it on the party liable to make payment (the respondent). The claim will usually be a Tax Invoice
  • serve the claim by delivering, posting or faxing it to the respondent. The contract may provide for other methods of service, and
  • record the date of service (the date that the respondent receives the claim).

What can I claim for?

You can make a claim on the respondent for:

  • construction work you have done
  • construction material or plant you have provided
  • consulting services you have provided
  • interest on overdue progress payments
  • your losses and additional expenses due to work being deleted from your contract while you suspended work under the protection of the Act
  • cash security and retention monies, and
  • at the end of the contract, a claim under the Act can be made for the final payment

However, claims under the Act are claims for the interim payments, pending the resolution of your final entitlement under the contract. In separate proceedings, initiated by the respondent, it may be decided that amounts recovered by way of progress payments under the Act are more or less than the final entitlement and you may end up having to refund money, or being paid extra.

In cases where you are inclined to pursue a claim through expert determination, arbitration or litigation, it will still be worthwhile to pursue a payment claim under the Act before, or in parallel, with this other proceeding. This may help you receive an interim payment under the Act whilst you are waiting for the final determination of the other proceeding.

Does the Act apply to homeowners?

The Act does not apply to contracts with homeowners who live in, or intend to live in, the dwelling where the work is being carried out. These contracts remain controlled by the Home Building Act, 1989. For inquiries about the Home Building Act contact the Home Building Service of the Office of Fair Trading.

The Act does, though, cover all work, materials and plant supplied by subcontractors, consultants and suppliers to contractors who have contracts with such homeowners, and residential work involving investment properties, landlords, strata title bodies corporate, developers, builders, contractors, subcontractors, consultants and suppliers.

Can I resubmit a claim?

Only one claim can be made under the Act for each reference date. The reference date is either the date stated in the contract for making claims or, if there is no date, it is the last day of each month.

However, if you have already made a payment claim but not under the Act, you are still entitled to make a claim under the Act for the same reference date. There may not have been trust in the business relationship that led you to not use the Act, but when you have signs you may not be paid you can resort to using the Act to secure payment.

Moneys not paid in respect of a previous claim can be included in the next payment claim.

Usually, claims under the Act cannot be made more than one year after the work was last carried out or the goods or services were last supplied.

When should I receive payment?

The date by which you are entitled to be paid is the "due date for payment".

If the contract provides a date or period for payment of claims, then you are entitled to be paid by then.

If the contracts does not provide due dates for payment, then you are entitled to be paid 10 business days after you serve the payment claim on the respondent.

If you are not paid by the due date, you have a right to interest at the greater of the rate, if any, in the contract or the rate on Supreme Court judgements. That rate changes from time to time, but is usually around 10% per annum.

A "business day" under the Act is any day other than a Saturday, Sunday, public holiday and the days between Christmas and New Year.

How long do I have to wait for a response?

If the respondent is not willing to pay all that you have claimed, they have a maximum of 10 business days after you have submitted your claim to give you a payment schedule. This has to be a written statement of the amount that the respondent is willing to pay and the reasons for not paying any part of your claim.

If the respondent fails to serve you with a payment schedule before the end of that time, the Act requires the respondent to pay the whole amount of the payment claim.

What do I do if I get no response?

If by the 10th day after you have issued a claim, you do not receive a payment schedule from the respondent or no payment, you have the option of taking action in court, or using the adjudication process to recover monies due to you.

If you propose to use adjudication, you must notify the respondent of this within 20 days of the payment schedule being due (that is, within 30 days of your issuing the claim). The respondent must be given a period of 5 days within which to furnish a payment schedule to you. You may then make an application for adjudication (refer to the Applying for Adjudication section). You may also suspend work if not paid within 2 days of the notice to suspend.

What can I do if I disagree with a payment schedule?

If you receive a schedule that you disagree with, you may apply for adjudication (refer to the Applying for Adjudication section) within 10 days of receiving the schedule.