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Successful Security Of Payment Act NSW Claimants Know Exactly Who They Have Contracted With

The Security Of Payment Act NSW is kryptonite to respondents who won’t pay for building and construction work. But you must know exactly who the entity is that you have contracted with – do you know the full name of the person, or the company and its directors, that you have carried out work for?

Imagine walking into bank and asking for a loan for $100K or $1M…. and just telling them your first name….. what are the chances of them hand over the cash? ZERO!

The bank will want to know exactly who you are and what risk of any they may or may not be taking by exposing themselves to you for any sum of money let alone hundreds of thousands of dollars or millions of dollars.

So when you are about to carry out $10K or $100K or $1M worth of work you need to do the same.

What You Need To Know About Who You Are Working For

Get their full name is the place to start.

If it is an individual that you have been asked to do work for you must know their full name; ‘Trevor Richard Smith’; their ABN Number; their Drivers Licence Number, their street address as shown on their Drivers Licence. Check all of these out as best you can, for example ABN Lookup online, Contractor Licence Check online at Dept Of Fair Trading etc…

If it is a company that you have been asked to do work for you must know the exact complete name of that company; it’s ACN Number; its ABN Number; Do a $10.00 ASIC Company Search to find out the correct spelling of the company name; the names of Directors; that the company is still registered and not Under External Administration… etc

Security Of Payment Act NSW Claim Preparation

When you are seeking a determination at adjudication that you are entitled to be paid for the work that you have done it is of the utmost importance that the preparation of your payment claim has left no stone unturned.

Key Points of Security Of Payment Act NSW Claim Preparation

  • Contract Review
  • Clear & Comprehensive Understanding Of Work To Be Claimed
  • Formatting Of Payment Claim
  • Service Of Payment Claim
  • Monitoring & Follow Up

Contract Review

Your right to entitlement to make a claim under the Security Of Payment Act NSW flows from a construction contract.

A construction contract can be a simple oral agreement, a deal scribbled on the back of a beer coaster in a pub, a quotation and a purchase order, or a formal instrument of agreement (a thick wad of paper with lots of legal jargon !!!).

What ever form the construction contract takes it will essentially consist of these 5 things:

  • Offer (to carry out work or provide related goods or services)
  • Acceptance (of the offer)
  • Intention to be bound (by the arrangement, agreement, contract)
  • Consideration (work done, money paid)

For the purposes of the Security Of Payment Act NSW the terms of the construction contract are not crucial because the security of payment act legislation makes provision for both agreed terms and terms that haven’t been agreed or even considered.

For example; when can you make a claim, when is payment due, what is the value of the work, how to deal with variations, how to deal with defective and or incomplete works, etc… etc…

Preparing a payment claim under the NSW Security of Payment Act regime must consider all of the above.

Clear & Comprehensive Understanding Of Work To Be Claimed

The NSW security of payment act legislation makes provision for one claim per month and unless the construction contract says otherwise a monthly progress claim can only be served on or after the last day of the month.

This means that all work completed during the month of June can be claimed on or after the 30th of June.

It is crucial that the claim is for work that has actually been carried out, completed, and is defect free.

You cannot over claim or claim in advance and it is not helpful to your cashflow to under claim.

Keeping a daily written and photographic record of work carried out is perfect for when you get to the end of the month and you are preparing your claim.

Formatting Of A Payment Claim

The NSW Security Of Payment Act legislation is very strict on how a payment claim is to be formatted, or in others what it must include.

A payment claim must be addressed to the correct entity, the actual entity that you have contracted with. The name must appear in full and be accompanied by the ACN or ABN number.

A parent claim must clearly itemise all of the works being claimed and show how the amount being claimed for each item has been calculated.

Service Of The Payment Claim

Service of the payment claim can make or break a successful outcome. If a construction contract specifies and address for service this must be followed. Or if the contract is silent on this section 31 of the Building And Construction Industry Security Of Payment Act 1999 sets out how a claim must be served.

Monitoring & Follow Up

Once you have effected proper service of a payment claim under the Security Of Payment Act NSW you must monitor physical addresses and email addresses etc for a response from the respondent.

The Respondent has 10 business days to pay a payment claim in full or provide a valid payment schedule setting out reasons for non payment if the full amount of the payment claim isn’t going to be paid.

Once you receive a payment schedule you have 10 business days to lodge an adjudication application.

If you do not receive a payment schedule in the 10 business days and you do not receive full payment by the due date for payment you need to serve a notice under section 17(2) of the Building And Construction Industry Security Of Payment Act 1999 within 20 business days of the due date for payment. This notice gives the respondent a further 5 business days to pay in full or provide a payment schedule. If you do not receive full payment within the five days then you have 10 business days to apply for adjudication after you receive a payment schedule or if no payment schedule is received after the end of the 5 business day period.

Recovering An Adjudicated Amount

If an adjudicator has awarded you an amount of money in a determination made under the Security Of Payment Act NSW, known a the “Adjudicated Amount“, the respondent has 5 business days to pay.

If the respondent fails to pay the adjudicated amount you are entitled to enforce the determination.

In addition to the adjudicated amount the adjudicator would also have apportioned the adjudicator’s fees, and decided what the applicable interest rate is on overdue amounts.

For assistance with recovering the money that your are entitled to you will need to engage a commercial agent licenced by the NSW Department Of Fair Trading.

For the best result, using a commercial agent that specialises in debt recovery for the building and construction industry is an advantage.

For specialist debt recovery of an adjudicated amount find a specialist licenced commercial agent here.

Changes To Security Of Payment Act NSW For Residential Owner Occupiers

Building & Construction Contractors Can Now Make A Claim Under The Security Of Payment Act NSW Against Residential Home Owners

As of 1 March 2021 building and construction contractors in New South Wales can make a claim for their work under the Building And Construction Industry Security Of Payment Act 1999 (NSW) against owner occupiers for work carried out at the residence where the home owner resides or intends to reside.

To be precise, the Security Of Payment Act NSW now applies to building and construction contracts entered into on or after 1 March 2021.

This is a vital development for contractors dealing with disputes and slow payment, and non payment who have carried out building and construction work for people in the homes they reside in or intend to reside in.

There are some crucial steps and details to follow to ensure that your claim is validly made under the Building & Construction Industry Security Of Payment Act 1999 (NSW) so that you are successful at adjudication and we will help you navigate those steps and details to ensure you progress through the process with confidence.

For help start here

Amendments To SOPA NSW Commenced 21 October 2019

Key amendments to the Security Of Payment Act NSW come into effect for all NSW building & construction contracts entered into on or after 21 October 2019

What does this mean for you?

It certainly is good news for all claimants, and especially subcontractors.

The key amendments are:

Payment Terms – the maximum time for payment of a subcontractor’s payment claim has been reduced from 30 business days to 20 business days

Endorsement of Payment Claims – all claims for payment under the Security Of Payment Act NSW must now be endorsed as claims made under the Act. The endorsement must read as follows:

“This is a payment claim made under the Building and Construction Industry Security of Payment Act 1999”

Reference Dates – the concept of reference dates has been removed from the Act. A claimant now has a statutory entitlement to make a claim for construction work and or related goods and services once a month for a period of up to 12 months after the work was last carried out but only one claim is allowed after a contract has been terminated.

Adjudication – a court may sever part(s) of an adjudicator’s determination if it is affected by jurisdictional error(s) and make an order to enforce the valid remainder of the determination. An adjudicator now has 10 business days from receiving the respondent’s adjudication response to mahe their determination. A claimant may withdraw their adjudication application at anytime prior to their adjudication determination.

Penalties – peanlties for prescribed offences under the Act have been significantly increased, and directors now bear personal liability. Authorised offices can now issue penalty notices.

Security Of Payment Act NSW Updates

Watch this space to stay up to date with all of the Security Of Payment Act NSW News and Caselaw developments that affect your business.

The Security Of Payment Act NSW is state based legislation.

From time to time the legislative Assembly of the New South Wales Parliament will make changes to the either or both the legislation and or the regulations.
We will keep you updated as any changes occur.

In addition to changes to the Security of Payment Act NSW legislation and regulations, every so often there is new caselaw on how certain provisions of the Security Of Payment Act NSW should be interpreted.
We will keep you updated as new law is made and explain what it means to you.

Please don’t hesitate to make an enquiry at any time – we are here to serve you and help you make the most of the Security Of Payment Act NSW, the Building And Construction Industry Security Of Payment Act 1999 (NSW).