The money has stopped. The clock has not.

Building contract disputes are about money and time: what has been claimed, who caused the delay, and whether the contract still stands. We act for the builder, the contractor and the developer — the party claiming payment, or the party being told to accept a set-off. We do not act for homeowners or owners corporations bringing claims.

Security of payment

The Building and Construction Industry Security of Payment Act 1999 (NSW) gives a person who has undertaken to carry out construction work under a construction contract a statutory entitlement to progress payments, and a fast process for recovering them. It runs on business days and does not forgive a diary slip.

• 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 one on the principal must also provide a supporting statement declaring that all subcontractors have been paid what is due to them.
• The respondent then has a short statutory window after the claim is served to reply with a payment schedule — and the contract may cut it shorter still. How long you actually have is the first thing to establish, and it is not something to take off a web page. It must identify the claim, indicate the amount the respondent proposes to pay, and give reasons for any shortfall.
• Where no payment schedule is served and the claimed amount is not paid, the claimant can recover it as a debt in court or apply for adjudication. 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.
• An adjudication application runs on its own short timetable; the adjudicator determines the amount payable, and an adjudication certificate can then be filed as a judgment for a debt.

The Act does not reach every job. A construction contract for residential building work on any part of premises the other party resides in, or proposes to reside in, sits outside it — so an owner–occupier dispute is a contract and warranty claim, not a security of payment claim. Adjudication settles what is payable on an interim basis only; it does not finally determine the parties' rights.

The security of payment clock

Each step below opens a window, and the window closes whether or not anyone is watching it. The counts are in business days, and the Act's definition of one excludes more than weekends. There is an exclusion over the Christmas period in particular, which is why claims get served in the week before it.

1. 01 Payment claim served

   Must identify the construction work, state the amount claimed, and say it is made under the Act. A head contractor serving on a principal must also give a supporting statement that subcontractors have been paid.

2. 02 Payment schedule due

   The respondent has a short window to reply — shorter still, if the contract says so. The schedule must identify the claim, state what the respondent proposes to pay, and give reasons for any shortfall.

   A schedule was served, for less

   The claimant can apply for adjudication. The respondent's adjudication response cannot raise any reason that was not already in the schedule.

   No schedule was served

   The claimed amount becomes recoverable as a debt, or the claimant can give notice of intention to adjudicate. In debt proceedings on this footing the respondent cannot cross-claim or defend on the contract.

3. ADJ Adjudication

   An adjudicator determines the amount payable on its own short timetable. The determination is an interim answer about cash flow, not a final determination of the parties' rights.

4. JDG Adjudication certificate

   Filed as a judgment for a debt. Setting it aside is a separate and much narrower exercise than arguing the underlying claim.

Which contract are you actually on?

Most residential and commercial building work in New South Wales is done on a standard form rather than a bespoke contract, and the form decides how the argument runs. The three you are most likely to be holding:

• HIA contracts — the Housing Industry Association suite, the most common forms in NSW residential building. Their variation, extension of time and progress payment machinery has its own notice requirements and its own timing.
• MBA contracts — the Master Builders Association forms, widely used on residential and small commercial work, with a different approach again to delay and defects.
• ABIC contracts — the Australian Building Industry Contracts suite, administered by an architect, common on architect-designed residential and commercial projects. The architect's role in certifying claims and granting extensions changes who you have to persuade.

Whichever form applies, the same trap recurs: the contract's own notice provisions are usually stricter than the Act's, and the entitlement is lost by missing the contractual deadline long before any statutory one bites.

Practical completion and the defects liability period

Practical completion is the hinge date in a building contract. It usually starts the defects liability period, ends the entitlement to liquidated damages, releases part of any retention or security, and starts time running for some claims. Whether it has been reached is a question of fact against the contract's definition — and it is very often the real dispute wearing a different name.

The defects liability period that follows is not a limit on the owner's rights. It is a period during which the builder generally has both the obligation and the right to return and rectify — which matters, because an owner who engages someone else to do the work instead may have difficulty recovering the cost.

Variations and directions

Variation claims are often lost on process rather than merit. Most contracts require a variation to be directed or approved in writing before the work is carried out, and where the contract price for residential building work exceeds the prescribed threshold the Home Building Act 1989 (NSW) requires the contract itself to be in writing, dated and signed. Where the paperwork did not keep pace with the site, the questions become whether the work was directed at all, whether the principal's own conduct answers the written-direction requirement, and how the contract says a variation is to be valued.

Delay, extensions of time and liquidated damages

Extension of time clauses commonly make written notice, within a stated number of days of the delaying event, a condition of the entitlement. Miss it and the claim can be gone even where the delay was the principal's doing. Liquidated damages run the other way: recoverable at the agreed rate without proof of actual loss, but a rate out of all proportion to the legitimate interest the clause protects can be attacked as a penalty — and where the principal has caused delay the contract's extension of time machinery does not cover, the regime can fail.

Termination

Termination is the step most likely to turn a recoverable dispute into an unrecoverable one. A contractual right to terminate turns on a show cause or default notice in a prescribed form, served in a prescribed way, with a prescribed period to remedy. Purporting to terminate without that right can itself be repudiation, exposing the terminating party to a claim for the other side's loss.

Since the High Court's decision in Mann v Paterson Constructions (2019), a builder who terminates on the owner's repudiation and claims the reasonable value of the work rather than suing on the contract faces a narrower claim than the older cases suggested: it is generally capped by the contract price, and it is unavailable for work where a right to payment had already accrued. Before you issue a termination notice — or accept one — know which of those two things you are doing.