A payment claim has been served. The reply is the whole argument.
Security of payment is a cash-flow statute: it decides who holds the money while the contract argument is worked out, not who is right about the contract. Almost everything turns on two documents and the business days between them.
In short
- A payment claim must identify the construction work, indicate the amount claimed, and state that it is made under the Act. A head contractor serving a claim on a principal must also give a supporting statement about subcontractor payments.
- A payment schedule must identify the claim, state the amount the respondent proposes to pay, and give reasons for any shortfall. It is due 10 business days after the claim is served, or sooner where the contract requires it.
- Reasons for withholding payment that are left out of the payment schedule generally cannot be raised in an adjudication response. The schedule fixes the argument.
- Where no payment schedule is served and the claimed amount is not paid, the claimant can recover it as a debt in proceedings where the respondent cannot cross-claim or defend on the contract, or can proceed to adjudication after giving notice.
- The Act defines a business day for itself — it takes out more than weekends, including part of the Christmas period — and adjudication decides cash flow on an interim basis rather than finally deciding what the parties are entitled to under the contract.
Security of payment is a cash-flow statute: it decides who holds the money while the contract argument is worked out, on a timetable that does not forgive a diary slip. For the builder serving claims and the contractor or developer receiving them, everything turns on two documents and the business days between them.
What makes a payment claim a payment claim
Under the Building and Construction Industry Security of Payment Act 1999 (NSW), a person who has undertaken to carry out construction work, or to supply related goods and services, under a construction contract is entitled to progress payments. To engage the Act’s machinery, the document served must identify the work to which the payment relates, indicate the amount claimed, and state that it is made under the Act.
The description has to let the respondent answer the claim item by item: a one-line invoice on a large job invites an argument about whether a valid claim was served at all.
There are limits on when a claim may be served and how often. The Act has been amended more than once, generally with effect only for contracts entered into after each commencement, so establish which version governs your contract.
The head contractor’s supporting statement
A head contractor serving a payment claim on a principal must also give a supporting statement in the approved form, declaring that all subcontractors have been paid what has become due and payable for the work covered by the claim. Serving a claim without one is an offence, as is a declaration known to be false in a material particular — and someone has to sign it knowing what the subcontract ledger actually says that day.
A business day is not just a weekday. The Act carries its own definition, and it takes out weekends, public holidays and a stretch of the Christmas period — which is precisely why claims get served in the week before it. Check the definition in the Act against your dates rather than counting off a calendar.
What a payment schedule has to say
A respondent who does not intend to pay the claimed amount in full must reply with a payment schedule, and the window is short: 10 business days after the claim is served, or the shorter period the contract requires, whichever expires first. The schedule must identify the payment claim, indicate the amount the respondent proposes to pay, and where that scheduled amount is less than the amount claimed, say why — including, where payment is being withheld, the reasons for withholding it.
Draft it as though it were a pleading, because in practical terms it is. A respondent’s adjudication response must not include reasons for withholding payment that were not included in the payment schedule. A set-off identified a fortnight later, a defect found after the adjudicator was appointed, a liquidated damages entitlement nobody thought to mention on the day — if it is not in the schedule, it generally cannot be run.
The sequence, and where the windows open
Each step opens a window and closes it again whether or not anyone is watching. Which window a claimant gets depends on what the respondent did at step two.
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Payment claim served
Identifies the work, indicates the amount, states that it is made under the Act; a head contractor serving a principal also gives the supporting statement.
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Payment schedule due
10 business days after service, or the shorter contractual period, whichever expires first. Miss it and the respondent becomes liable for the claimed amount in full.
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The due date for payment
The Act fixes when a progress payment becomes due, and the period differs for a principal paying a head contractor and a head contractor paying a subcontractor. An earlier contractual date prevails.
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Adjudication application
Made to an authorised nominating authority. The window depends on step two: a schedule for less, a scheduled amount unpaid, or no schedule at all — and where none was served, notice of an intention to adjudicate comes first, reopening a brief chance to schedule.
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Response, determination, judgment
The respondent may lodge a response, but not one raising reasons that were not in the schedule. The adjudicator determines the amount payable and when it fell due, and the certificate can be filed in a court as a judgment for a debt.
What happens if no schedule is served
This is the expensive branch. Where a respondent serves no payment schedule in time and does not pay the claimed amount by the due date, the claimant may recover it as a debt in court, or proceed to adjudication after giving notice. In debt proceedings on that footing the respondent is not entitled to bring a cross-claim or to raise a defence in relation to matters arising under the construction contract: the defects, the back charges, the delay, none of it is heard. A scheduled amount left unpaid carries its own separate right of recovery, so scheduling a figure to buy quiet is rarely cheap.
Adjudication decides cash flow, not rights
An adjudicator’s determination is an interim answer about who holds the money. It does not finally determine the parties’ rights, which can still be determined in the ordinary way afterwards, with an adjustment for what has already been paid. A builder who wins an adjudication has cash flow, not a verdict.
Review is correspondingly hard. In Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (2018) the High Court held that a determination cannot be reviewed for an error of law on the face of the record that does not go to jurisdiction. Jurisdictional error is a separate question; being wrong on the merits is not.
If a claim has just landed on your desk
- Record the date of service and the method. Every window runs from it.
- Check the contract before the Act: it may require the schedule sooner.
- Put every reason for paying less into the schedule — set-offs, back charges, liquidated damages, defective work, unapproved variations. Not the strongest three.
Payment claims sit inside wider arguments about variations, delay and set-off — our page on building contract disputes deals with how those interact. If a claim or a schedule has been served, establish the date of service first, and what the contract says about the reply second.
Questions we are asked about payment claims.
We missed the deadline for the payment schedule. What are our options?
It depends on what has happened since. Where no schedule was served and the claimed amount was not paid by the due date, the claimant can sue for it as a debt — in proceedings where you cannot cross-claim or raise a defence in relation to matters arising under the construction contract — or give notice of an intention to adjudicate, which generally reopens a brief further opportunity to schedule. That further window is short, and a claimant in this position may also give notice of an intention to suspend work.
Can we serve a payment schedule for nil?
Yes, a scheduled amount can be nil. What matters is that the schedule identifies the payment claim, indicates the amount proposed to be paid, and gives reasons for the shortfall — including the reasons for withholding payment. A nil schedule with no reasons, or with reasons expressed so generally that nobody could work out the dispute from them, is the version that causes trouble later.
Does the Act apply to a home renovation we are doing for an owner-occupier?
Usually not. The Act does not apply to a construction contract for residential building work, within the meaning of the Home Building Act 1989 (NSW), on such part of any premises as the party for whom the work is carried out resides in or proposes to reside in. That job runs on the contract and the Home Building Act instead, so recovery is a contract claim rather than an adjudication.
The adjudicator accepted the other side’s figures. Can we appeal?
There is no merits appeal. In Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (2018) the High Court held that a determination is not open to review for an error of law on the face of the record that does not go to jurisdiction, so disagreeing with the adjudicator’s arithmetic leads nowhere. Jurisdictional error is a separate question. The determination is interim in any event, and the underlying entitlement can still be determined in the ordinary way.
Tell us what's happened.
Tell us the date the claim was served, what the contract says about the reply, and what has been paid — you’ll get a straight answer about which window you are in and what has to happen next.
Information on this site is general in nature and is not legal advice, and may have been overtaken by a change in the law. Contacting us does not create a solicitor–client relationship.