Benefits of NSW Security Of Payment Act

Claimant - NSW
Building and Construction Industry Security of Payment Act (1999) (the Act)

Quick Links:
What does the Act do?
What sorts of things are covered by the Act?
In the Act 'Construction work' is defined as:
In the Act ‘Construction related goods and services’ are defined as:
Will this Act get my money?
What is a Payment Claim?
How do I serve a Payment Claim?
What happens after I serve a Payment Claim?
What is a Payment Schedule?
What do I do if I receive a Payment Schedule which indicates I am going to be paid less than I have claimed?
What do I do if I did not receive a Payment Schedule?
What do I do if I received a Payment Schedule but did not get paid the amount indicated?
How do I make an Adjudication Application?
How does the adjudication process work?
Does the Respondent get to respond to my Adjudication Application?
OK I have won the adjudication but I did not get paid what do I do?
Can I contact the Respondent’s client to have my money secured?
Does the Act allow me to suspend work?
I have been owed this money for a long time what can I do?
At what point should I get a professional involved?


 

What does the Act do?

The NSW Security Of Payment Act creates a statutory entitlement for you ( the Claimant ) to be paid for construction work that you have carried out or construction related goods and services that you have supplied to your client ( the Respondent ).

By the provision of a Payment Claim and having it adjudicated under the Act.

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What sorts of things are covered by the Act?

The Security Of Payment Act covers ‘Construction Work’ which is basically all building and related trades, if you are a tradesman or a builder working for anybody other than a resident home owner the Act is there for you to get your money.

The Act also covers ‘Construction related goods and services’, if you are a supplier (such as a wholesaler or equipment hirer) or person who provides services (such as a designer) if supplying or working for anybody other than a resident home owner the Act is there for you to get your money.

Note : the Act does not cover mining work.

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In the Act ‘Construction work’ is defined as:

(a)   the construction, alteration, repair, restoration, maintenance, extension, demolition or dismantling of buildings or structures forming, or to form, part of land (whether permanent or not),
(b)   the construction, alteration, repair, restoration, maintenance, extension, demolition or dismantling of any works forming, or to form, part of land, including walls, roadworks, power-lines, telecommunication apparatus, aircraft runways, docks and harbours, railways, inland waterways, pipelines, reservoirs, water mains, wells, sewers, industrial plant and installations for purposes of land drainage or coast protection,
(c)   the installation in any building, structure or works of fittings forming, or to form, part of land, including heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply, fire protection, security and communications systems,
(d)   the external or internal cleaning of buildings, structures and works, so far as it is carried out in the course of their construction, alteration, repair, restoration, maintenance or extension,
(e)   any operation which forms an integral part of, or is preparatory to or is for rendering complete, work of the kind referred to in paragraph (a), (b) or (c), including:
(i)   site clearance, earth-moving, excavation, tunnelling and boring, and
(ii)  the laying of foundations, and
(iii) the erection, maintenance or dismantling of scaffolding, and
(iv) the prefabrication of components to form part of any building, structure or works, whether carried out on-site or off-site, and
(v)  site restoration, landscaping and the provision of roadways and other access works,
(f)   the painting or decorating of the internal or external surfaces of any building, structure or works.

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In the Act ‘Construction related goods and services’ are defined as:

(a)   goods of the following kind:
(i)   materials and components to form part of any building, structure or work arising from construction work,
(ii)  plant or materials (whether supplied by sale, hire or otherwise) for use in connection with the carrying out of construction work,
(b)   services of the following kind:
(i)   the provision of labour to carry out construction work,
(ii)  architectural, design, surveying or quantity surveying services in relation to construction work,
(iii) building, engineering, interior or exterior decoration or landscape advisory services in relation to construction work.

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Will this Act get my money?

The short answer is yes.

The longer answer is that it gives you the best chance of getting your money.
The keys to getting your money are:

(a)   Being able to identify your debtor (Respondent);
(b)   Knowing as much about them as possible such as where they bank and how to contact them; and
(c)   The Respondent’s ability to pay.

If you have all of these things you have placed yourself in the best position possible to get your money.

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What is a Payment Claim?

A Payment Claim is the document that establishes the Claimant’s entitlement under the Security Of Payment Act.

A Payment Claim must:

(a)   Identify the construction work (or related goods and services) to which the progress payment relates;
(b)   Indicate the amount of the progress payment that the Claimant claims to be due (the ‘claimed amount’); and
(c)   State that it is made under the Building and Construction Industry Security of Payment Act (1999).

A Payment Claim requires all of these 3 items or it is not a Payment Claim.

A Payment Claim does not have to be a Tax Invoice.

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How do I serve a Payment Claim?

A Payment Claim can be served by post, fax, email or hand-delivery.

Fax is the best way (as long as your fax machine provides a fax transmission log).

Email is acceptable if you can get a delivery / read receipt.

Courier is also alright if you can get a receipt.

While the various forms of post are legitimate methods of service it can be hard to prove that your Payment Claim was served.

The key is you need to be able to prove that the Payment Claim was served.

Note : The construction contract will also provide guidelines with respect to the service of documents.

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What happens after I serve a Payment Claim?

The Respondent has 10 business days to provide a Payment Schedule.

Day 1 is the business day after the Respondent receives the Payment Claim. Business days are not weekends, public holidays, or any days between 27th & 31st December.

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What is a Payment Schedule?

A Payment Schedule is a document that indicates what the Claimant is to be paid by the Respondent.

A Payment Schedule must:

(a)   Identify the Payment Claim to which it relates; 
(b)   Indicate the amount of the progress payment that the Respondent proposes to make (the ‘scheduled amount’); and
(c)   If the Respondent proposes to pay less than the claimed amount state it’s reasons for withholding payment.

A Payment Schedule requires all of these 3 items or it is not a Payment Schedule.

A Payment Schedule can be served by post, fax, email or hand-delivery.

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What do I do if I receive a Payment Schedule which indicates I am going to be paid less than I have claimed?

You have 10 business days to have your Payment Claim adjudicated under the Security Of Payment Act by lodging an Adjudication Application.

Day 1 is the business day after the Respondent has provided the payment schedule. Business days are not weekends, public holidays, or any days between 27th and 31st December.

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What do I do if I did not receive a Payment Schedule?

You need to wait until your Payment Claim has not been paid and then serve a notice under Section 17 (2) of the Security Of Payment Act.

This notice advises the Respondent that:

(a)   You intend having your Payment Claim adjudicated; and
(b)   They have 5 business days to provide a Payment Schedule.

Then at the end of the 5 business days you have 10 business days to lodge an Adjudication Application.

Note : You only have 20 business days after the due date for payment of your Payment Claim to lodge your notice under Section 17 (2) of the Act.

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What do I do if I received a Payment Schedule but did not get paid the amount indicated?

You have 20 business days after the due date for payment to have your entitlement adjudicated under the Security Of Payment Act by lodging an Adjudication Application.

Day 1 is the business day after the Respondent was due to pay the Payment Claim. Business days are not weekends, public holidays, or any days between 27th & 31st December.

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How do I make an Adjudication Application?

You will need to prepare a document that convinces an Adjudicator that the Respondent’s reasons for withholding payment are not correct and that you are entitled to the claimed amount.

Your Adjudication Application must be lodged with an Authorized Nominating Authority (ANA). Some of these are listed on the useful information and links page. You must serve a copy of the Adjudication Application on Respondent at the same time you lodge your Adjudication Application on the ANA.

Remember in most circumstances you only have 10 business days to lodge your Adjudication Application.

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How does the adjudication process work?

Adjudication under the Security Of Payment Act is not like a court.

Normally you will not see or speak to the Adjudicator. All of the submissions are made in writing.

The Adjudicator has nominally 14 business days after you have commenced the adjudication process to provide their Determination.

5 business days later you are entitled to be paid the adjudicated amount.

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Does the Respondent get to respond to my Adjudication Application?

Yes.

If the Respondent has provided a Payment Schedule they are entitled to submit an Adjudication Response.

The Respondent is not entitled to include reasons for withholding payment that were not included in their Payment Schedule.

The Adjudicator should ignore any new reasons for withholding payment.

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OK I have won the adjudication but I did not get paid what do I do?

You need to wait for 5 days after the Adjudicator has provided their Determination. Then if you have not been paid you can obtain an Adjudication Certificate from the ANA.

The Adjudication Certificate can then be taken to a court and action commenced to obtain your money.

There is no further requirement to prove that you are entitled to the adjudicated amount.

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Can I contact the Respondent’s client to have my money secured?

Yes.

When you serve your Adjudication Application on the ANA and the Respondent you need to serve a copy on the Respondent’s client (the Principal Contractor). This needs to be accompanied by a prescribed form called a ‘Payment Withholding Request’.

At that time the Principal Contractor is obligated to retain the amount that has been claimed out of money that will be paid to the Respondent.

The Principal Contractor is obligated to retain the money until:

(a)   The Adjudication Application is withdrawn; 
(b)   You are paid by the Respondent;
(c)   You serve the Principal Contractor a notice under the Contractors Debts Act 1997; or
(d)   20 days after a copy of the Adjudicator’s Determination is provided to the Principal Contractor.

When you receive the Adjudication Determination from the Adjudicator you have 5 days to provide a copy to the Principal Contractor.

Your actions will either create a situation where the Respondent is forced into paying you or sets up an entitlement under the Contractors Debts Act 1997.

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Does the Act allow me to suspend work?

Yes.

If you have not been:

(a)   Provided a Payment Schedule;
(b)   Paid the scheduled amount; or
(c)   Paid the adjudicated amount;

You can issue a ‘Notice of Intention to Suspend’ under the Security Of Payment Act.

2 business days after that notice is issued you may suspend work. If you are paid you must recommence work within 3 business days.

It is strongly recommended that further advice is sought before suspending work.

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I have been owed this money for a long time what can I do?

You only have 12 months from when you last carried out work to lodge a Payment Claim.

If you are asking this question you need to discuss this with somebody because this period is subject to certain definitions.

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At what point should I get a professional involved?

Only you can decide when you need help.

However, the Security Of Payment Act has been in force in NSW since 1999. During that time Respondents and their advisors have learnt a few tricks that may trap or trick inexperienced Claimants in NSW.

If you want to concentrate on taking your company forward you may be better off engaging somebody to rectify the issues of the past; while providing advice on avoiding these problems in the future.

You are a businessperson who makes money building or supplying things; focus on that and get somebody else to clean up this mess.

If you intend to stop work or approaching the Principal Contractor it is highly recommended that you seek assistance.

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If you do nothing it is most likely that you will be paid nothing.

 

 

 

 

 

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