Richard Watson, Principal

View Richard's Profile

Security of Payment Act

The Building & Construction Industry Security of Payment Act ensures that the party who has provided work, goods or services can enforce prompt payment from the company receiving those goods or services.

Claimants can use the Act to secure payment on account inexpensively and speedily without the need for extensive use of lawyers, court hearings, witnesses, cross examinations and all that is usually involved in arbitration or litigation. Within a matter of weeks, a claimant can now have a judgment for a progress payment on account, which compels the respondent to pay.

Previously, obtaining judgment in a building dispute was often a drawn out, costly process that sometimes drove the claimant into insolvency or gave time for respondents to become insolvent to avoid their payment obligations.

Some respondents had been trying to delay paying by placing the amount owing into trust accounts after an adjudication. This was forcing claimants into protracted arbitration and litigation to receive payment. The new amendments that came into operation on 3 March 2003 stopped this practice and with the Act no longer permitting respondents to use trust accounts in this way.

Active use of the Act will result in a considerable reduction in the number of disputes going to arbitration or court. A claimant can use the Act to obtain judgment for a payment on account before, or even during, arbitration or court proceedings over the claim irrespective of who initiated the proceedings.

Security of Payment Act - Objective

The objective of the Act is to ensure that any party that contracts to carry out construction work, or supply related goods or services, on projects for the private and public sectors in NSW is entitled to promptly receive all progress payments that are due, including final payments and retention monies.

The Act gives the claimant a statutory right to make progress payment claims and receive payment, even where the contract has no provision for progress payments. If the respondent claims to have reasons for not paying a claim, the respondent must set out the reasons in a payment schedule.

If, after 10 business days of being served with a payment claim, the respondent hasn’t provided the claimant with a payment schedule, the respondent becomes liable to pay the full amount claimed. The claimant is also entitled under the Act to recover in any court of competent jurisdiction, the unpaid portion of the amount claimed. The unpaid portion is a statutory debt, which the claimant is entitled to recover independently of and irrespective of the terms of the construction contract.

If the claimant disputes the reasons for withholding payment, as given by the respondent in the payment schedule, or if the respondent fails to pay the amount due by the due date, the claimant can apply to an Adjudicate Today for an independent adjudication of the amount to be paid.

Where the claimant disputes the payment schedule the claimant must apply for adjudication within 10 business days of receiving such a payment schedule.

Where the respondent has failed to pay the amount stated in the payment schedule by the due date, the claimant has 20 business days to apply for adjudication.

In the event of no payment schedule being provided and the respondent has failed to pay the full claimed amount by the due date, the claimant must advise the respondent that they will be proceeding to adjudication within 20 business days of the due date for payment. The respondent then only has 5 business days to respond with a payment schedule before the claimant is entitled to pursue an adjudication.

Within 10 business days of accepting an adjudication application, an adjudicator has to provide a written decision on the amount due, unless both the claimant and the respondent agree to a different timeframe.

When an adjudicator has determined the amount due, the Act provides an expedited means of obtaining a court judgment for payment of the amount due. The claimant only has to obtain an Adjudication Certificate from Adjudicate Today and lodge that with a court, together with an affidavit of the amount still unpaid. Judgment is granted automatically by the court, that is, without the need for a summons or a hearing.

The respondent cannot challenge the adjudicator’s determination in court, if the process has been carried out in accordance with the provisions of the Act. Adjudication is an expedited determination based on unsworn submissions, not a determination based upon sworn testimony. Inevitably, some adjudicators will make mistakes, but there is no appeal from an adjudicator's determination. A mistaken decision, as distinct from a decision that is made without jurisdiction, is still enforceable. The respondent who is dissatisfied with the adjudicator's decision has the option of suing separately for repayment of any alleged overpayment.

The Act clearly specifies that the courts must strike out any cross-claim for damages for breach of contract or any other cross-claim. To join a claim for the statutory debt with a cross-claim is similar to chalk and cheese - they are totally different matters. The first claim is for an interim payment. The cross claim is for a final determination of liability. Proceedings for payment of the statutory debt are separate proceedings and must not be joined with proceedings for final determination of issues. Similarly, claims for payment of the statutory debt cannot be stayed pending a final determination of issues between the parties.

Claimants also no longer have to initiate separate action under the Contractors Debt Act 1997 to secure a debt from their respondent’s principal. All debts under the enhanced Act are also debts under the Contractors Debt Act 1997, providing quick and direct recourse to respondents’ principals to secure payment of the debt.

Further Protection and Updates

The Act includes other protection to claimants such as a right to suspend work and be paid for any losses and expenses if sacked because of the suspension, and to claim a lien over unfixed plant and materials to settle any debts established under the Act. Respondents also cannot claim or sue for liquidated damages because of a suspension of work under the Act. The Act bars “pay when paid” and “paid if paid” clauses and overturns them even if they are included in the contract. All forms of contracts are covered - written and oral. It also provides a minimum rate of interest on late progress payments. The claimant and the respondent share equally the fees payable to the Adjudicate Today and the adjudicator, unless the adjudicator decides otherwise.

To take advantage of the Act, a claimant will have to ensure that their payment claims include the words: “This is a payment claim made under the Building and Construction Industry Security of Payment Act 1999 NSW” or words to that effect. On consideration of their situation, all claimants may want to include these words on all their invoices for payment to ensure all their claims are covered by the Act. If you make a claim for payment and you have not included these words, you can submit a new invoice with the words included and make use of the rights the Act extends to you.

The Act will again be reviewed by early 2004 to ensure that the Act is working the way the Government intended it should.

Security & Payment Act | Building & Construction Law | Watson & Watson Lawyers | Practicing Law Specialists | Sydney, Australia

Please note that our provision of any telephone advice to you is only a general discussion to assist as to whether you wish to instruct us. Telephone discussions should not be construed as legal advice and are not to be relied upon. Legal advice which you can rely on can only be properly provided by us to you at or following an initial conference. We are not responsible for any action you may take or fail to take based upon the provision of our telephone advice to you. If you wish to arrange a conference, please contact us.

Online enquiry form

Watson & Watson are always available to provide expert legal advice and answer any questions you may have.

Name:	*
Email:	*
Phone:	*

Please send me advice on:

Building & Construction Law
Family Law
Commercial Litigation
Conveyancing
Criminal Law
Insolvency/Bankruptcy
Wills & Probate

Comments:

Recent Cases

Building and Construction Industry Security of Payment Act - 30/09/2010

Adjudicator’s decision is now able to be challenged for jurisdictional error in the Supreme Court. The Supreme Court, Court of Appeal in September 2010 held that a decision of an adjudicator...

Testimonials

7/11/2011

Many thanks for all your support in securing our unit. We very much appreciate your help. Kind Regards.
- M & C, Hills District

1/11/2011

Absolutely fabulous Lelien, we are definitely keen on this strategy. Very happy with your process so far. Many thanks again.
- R.E, Sydney

9/10/2011

"Thank you for your email and effort to help me... I do not know what I would have done without you."
- K.S, Byron Bay

2/10/2011

"Thanks for yesterday, great advice and some more clarity in my mind on how we will be proceeding."
- P.B, Sydney

29/09/2011

"Richard. Many thanks. We are very appreciative of the professional assistance given to us in relation to our claim for defective building works. With your professional help we were able to come to a satisfactory resolution to our long standing problem"
- J.H, Gosford

20/09/2011

"Many thanks for all the work & effort you have done to help us secure our unit. We very much appreciate the time you have taken."
- M.C, Sydney

22/07/2011

"I am personally grateful for the effort put into this by all concerned. I do believe the issues have been thoroughly aired and we can now finalise the matter."
- J.T, Sydney

18/07/2011

"To Chris Jefferies,
We wish to thank you for the efficiency you have displayed in the Conciliation Conference and for settling the matter for us."
- Holden Barlow Solicitors, Perth

28/06/2011

"Thanks again for all your help. You've been an absolute delight to deal with."
-B.M, Sydney

3/06/2011

"Dennis, Thank you for your advice and taking my case in this matter. Peter has spoken so highly of you."
- S.Y, Sydney

26/05/2011

"Dear Dennis,
Wonderful news!
Thank you kindly for your great work, I am so very pleased and thrilled with the result.
My life is so much brighter and we can stay here in Australia.
All my family are grateful and so happy."
- L.S, Sydney

25/05/2011

"I would also like to acknowledge all Dennis' expertise and hard work."
- P.L, Sydney

17/05/2011

"Just to say a big thank you for today! I am delighted with the result."
- J.M, Eastern Suburbs

11/05/2011

"Dennis,

I am writing to send my deepest thanks for yesterday's outcome. Your efforts in pressing the case have been nothing short of magnificent.

I have been (in part) of a mind set that defeat and rejection was to be my soul mate on this issue. But yesterday's fine transition from nothing to something is such an incredibley happy outcome. Your considered opinitions, general care and legwork, as a commmiteed and compassionate advocate will stick as a life long memory. I feel extremely fortunate and proud of what has been achieved.

I understand too, with the joy comes the responsibility. The message of dilligence is not lost and is branded into the forefront of my mind.

Yours in sincere thanks."
- D.G, Sydney

11/05/2011

"Excellent! Progress. The ball is in your court. Congratulations."
- M.D, Sydney

4/05/2011

"Despite trying very hard to come to amicable agreement we found ourselves in the dreadful position of constant intimidation correspondence from the solicitors of the buildings who undertook residential renovations. As a result I instructed Richard Watson to act in the matter. It turned out that having a firm of solicitors highly experienced and qualified in the very complex area of building law proved essential and indeed saved the day. This together with their kindness and open and honest frankness made something that was looking impossible into a great success."
- M.N, Eastern Suburbs

21/04/2011

"The letters to the solicitors on the other side are perfect. Please send it."
- C.F, Lower North Shore

20/04/2011

"Thank you very much for you have done job for me!"
-S.L Parramatta

31/03/2011

"We greatly appreciate the efficiency and also the time to see us the Tuesday night before we exchanged contracts. We moved in on the weekend and are very happy."
- PB-H, Lower North Shore

29/03/2011

"I appreciate the professional assistance given."
- D.D, South West Suburbs

4/03/2011

"You have been wonderful and worth every penny."
- P.H, Canada

4/03/2011

"I'd just like to say a big thank you!
I appreciate your help and patience throughout."
- J.F, Eastern Suburbs

21/01/2011

"Thank you, thank you, thank you."
- Z.H, Sydney City

1/12/2010

"I found myself in a difficult situation and was fortunate to engage Richard Watson of Watson & Watson. Richard helped explain the options and alternatives available to me and the likely outcomes having regard to all matters to be taken into account. Richard helped me come to a very satisfactory resolution of the matters and as a result I have been able to secure accommodation for myself and children in the local district in a relatively short period of time. In addition to the advice as to the various alternatives, options and likely outcomes I found Richard caring.

Throughout when things were difficult Richard was a steady influence so that I could achieve the optimum outcome for all concerned. I recommend Watson & Watson for any other person in similar circumstances. "
-S.J.G Cremorne

1/11/2010

"Just would to wish you a very Merry Christmas. I will never forget your kindness and generosity - and strength at times I feel you worked with the mighty Lord - quite testifying!
I have so much gained from the experience in many ways."
Best Wishes and Many Regards,
-R.L

1/08/2010

"Hi Richard ,
This is just a brief note of thanks for taking care of me through this horrible situation.
I know you are a pro but for those of us that are faced with the reality... it's scary & sad. "
Best Regards,
-D.T

1/08/2010

"I was in a position that I had exchanged on the purchase of a property and I had agreement from my ex for funding the purchase, however, after I exchanged to purchase, my ex changed his verbal agreement. I came to Watson & Watson as my daughter had received a very good outcome with understanding. Watson & Watson in a very short period of time achieved a cost effective settlement which allowed me to complete my purchase. Their experience relating to various alternatives gave me other alternatives and allowed me to conclude the finalization of the property matter with my ex and the purchase of the property in a very short period of time and to my utmost satisfaction."
-K.S Leura

1/07/2010

"Watson & Watson have performed exceptionally in a cost effective manner for the Bank for in excess of 20 years and never recovered less than expectations. Their work is professional, cost effective and always above expectations. In all my years with Watson & Watson the Bank has only lost one case and that was the first case in which I was at the Bank instructing another solicitor for the Bank and Watson & Watson acted for the customer against the Bank, our solicitor lost, Watson & Watson acting for the customer against the Bank WON."

"I have been instructing legal firms in relation to litigation and recovery actions for the Bank for more than 20 years. Richard Watson and his team are result driven. The costs on a case by case basis is significantly less than other firms which I instruct from time to time on behalf of the Bank."
-H.B Bank Sydney

1/06/2010

"Dear Richard,,
Many thanks for all that you have done.
It is been a fantastic result."
Thank you
Best Wishes"
-R.L Surry Hills

31/05/2010

"My family bought property in the 1950's and registered it in the name of my brother. My brother assumed ownership of the property. Nothing was done until Richard Watson became involved and the matter was settled with a substantial payment to me, more than doubling my ample wealth."
-L.S Canberra

1/05/2010

"I was concerned as to the costs of the process. Watson & Watson are focused on results and means by which I could provide information required which assisted in a cost effective resolution. Watson & Watson assisted in identifying the issues, alternatives and options and what was the best way to resolution."
-R.B

1/02/2010

"I went to two other solicitors and then Watson & Watson before making a decision. Watson & Watson raised issues that other solicitors had not thought of. Richard Watson explained clearly issues relating to spousal maintenance that may arise now and in the future and a method of protection from future claims. Not only did Watson & Watson deal with the immediate needs but took steps relating to protection in the future and advice in relation to estate and other matters following the break up of my relationship. I have recommended Watson & Watson for others int he unfortunate position of break up of their relationship."
-A.L Pymble

+ Read more testimonials