How to Make a Payment Claim Under the Security of Payment Act

A payment claim is the document that starts the Security of Payment process in New South Wales. Get it right and you have a powerful, fast route to recovering what you are owed. Get it wrong and your claim may be invalid. This guide explains what a valid payment claim needs.

What is a payment claim?

A payment claim is a written claim for a progress payment served under the Building and Construction Industry Security of Payment Act 1999 (NSW). It is the trigger for the statutory regime: once a valid claim is served, the clock starts running on the respondent’s obligation to pay or to serve a payment schedule.

What a valid payment claim must include

To be valid, a payment claim must:

• Identify the construction work (or related goods and services) to which the claim relates, with enough detail for the respondent to understand it.
• State the claimed amount that is payable.
• Be served on the right person - the party liable to pay under the construction contract.

While the Act no longer requires a specific endorsement stating that the claim is made under the Act, it remains good practice to make clear that the document is a payment claim.

When you can serve a payment claim

You can generally serve a payment claim on and from the “reference date” - the date determined under your contract, or under the Act if the contract is silent. Usually this means you can claim monthly. There are also rules about how many claims you can make and the final claim after work is complete or terminated.

The deadlines that matter

After a valid payment claim is served:

1. The respondent has a limited time to serve a payment schedule in response.
2. If they do not, they generally become liable to pay the full claimed amount.
3. If they serve a schedule for less than the claimed amount, you can apply for adjudication - but again, only within the prescribed time.

These timeframes are strict. A day late can mean the difference between recovering your money and losing the right to use the Act for that claim.

Common mistakes to avoid

• Serving the claim on the wrong entity
• Failing to adequately identify the work claimed
• Missing the reference date rules
• Letting adjudication deadlines pass

Get it right the first time

A defective payment claim can undermine an otherwise strong position. We regularly prepare payment claims for builders, contractors and subcontractors, and we can review a claim before you serve it. Learn more about our Security of Payment service, or read our overview of the Security of Payment Act.