Essential Payment Claim: Protect Your Business

What Is a Payment Claim Under the Building and Construction Industry Security of Payment Act 1999 (NSW)?

If you work in building and construction and have not been paid for completed work or supplied goods, a payment claim under the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOPA) may help you enforce your right to be receive payment. Understanding how to properly claim payment through the SOP Act can protect your business from cash flow issues and payment disputes.

Understanding Payment Claims in Construction

A payment claim is a formal written demand for payment made under SOPA. It can be issued by contractors, subcontractors, or suppliers who have carried out construction work or provided related goods and services in building and construction projects.

Payment claims serve as the foundation of NSW’s construction payment framework, providing statutory rights that override contractual payment terms when properly executed.

What Must a Payment Claim Include?

To ensure your payment claim is legally valid and enforceable, it must include specific elements:

Written format: All claims must be documented in writing
Work identification: Clearly identify the construction work or goods/services supplied with sufficient detail
Amount specification: State the exact amount you are seeking to claim payment for
Legislative reference: Explicitly state that the claim is made under the Building and Construction Industry Security of Payment Act 1999

These requirements ensure transparency and provide the recipient with clear information about what payment is being claimed and under which legal authority. Failure to meet these requirements can invalidate your entire claim.

Extra Requirements for Head Contractors

Head contractors in building and construction projects face additional obligations when making a payment claim. They must include a ‘Supporting Statement’ declaring that all subcontractors have been paid for their work. This requirement prevents head contractors from claiming payment while owing money to subcontractors, protecting the entire construction supply chain. Without this statement, the claim is invalid.

When Can You Make a Payment Claim?

Reference Date Requirements

Claims can only be made from designated “reference dates” specified in your building contract. When contracts don’t establish these dates, monthly claim periods typically apply.

Time Limitations

You must serve the payment claim within 12 months of completing the work or supplying the goods. This limitation protects all parties by ensuring claims are made promptly.

Proper Service

Ensuring correct service to the appropriate party is crucial. Maintain proof of delivery, as this documentation can be vital if the matter proceeds to adjudication and you need building dispute lawyers to assist with the process.

Importance of Making a Claim

A valid payment claim triggers strict timelines for the respondent to reply or pay. When parties fail to respond appropriately or dispute the payment within required timeframes, claimants may be entitled to:

Adjudication proceedings: Fast-track dispute resolution through the Security of Payment Act process
Work suspension rights: Legal authority to suspend construction work until payment issues are resolved
Payment recovery: Streamlined mechanisms to recover outstanding amounts

These provisions create powerful incentives for prompt payment in building and construction projects.

Common Payment Claim Mistakes to Avoid

Understanding frequent errors helps ensure your claim succeeds:

Insufficient detail in work descriptions
Incorrect service to wrong parties
Missing reference dates or late submissions
Incomplete Supporting Statements for head contractors

Need Help Drafting a Payment Claim?

The Security of Payment Act establishes detailed procedural requirements for valid claims. Construction lawyers can ensure your submission meets all statutory obligations while advising on the best strategy for your specific situation.

If challenges arise or adjudication becomes necessary, legal support proves invaluable in navigating the dispute resolution process.

At Citilawyers, we assist builders, contractors, and suppliers across NSW with preparing valid payment claims and navigating subsequent steps when disputes arise.