The Security of Payment Act (NSW) Explained
A plain-English guide to the Building and Construction Industry Security of Payment Act 1999 (NSW) - your right to progress payments and the fast adjudication process.
Cash flow is the lifeblood of any construction business. When a progress payment is withheld, it can put real pressure on a builder, contractor or subcontractor - sometimes threatening the survival of the business. The Building and Construction Industry Security of Payment Act 1999 (NSW) (often called “SOPA” or the “SOP Act”) exists to address exactly this problem.
What the Act does
The Act gives any person who carries out construction work, or supplies related goods and services, under a construction contract in New South Wales a statutory right to receive progress payments. Critically, this right applies regardless of whether the contract says anything about progress payments at all.
Just as importantly, the Act provides a fast, low-cost adjudication process for recovering payments that are in dispute. Instead of waiting months or years for a court to decide, an independent adjudicator can determine how much must be paid - usually within a matter of weeks.
Who can use the Act
The Act applies broadly across the construction industry, including:
- Head contractors claiming against principals
- Subcontractors claiming against head contractors
- Suppliers of related goods and services
- Consultants providing related professional services
There are some exclusions - for example, certain contracts with residential home owners and some types of work fall outside the regime. Whether your contract is covered is an important threshold question, and getting it wrong can be costly.
How the process works
At a high level, the process runs like this:
- Payment claim. The party seeking payment serves a payment claim on the other party.
- Payment schedule. The respondent may reply with a payment schedule stating how much (if anything) they propose to pay and why.
- Adjudication. If the claim is not paid in full, or no payment schedule is provided, the claimant can apply for adjudication.
- Determination. An adjudicator determines the amount payable, the due date and the rate of interest.
- Enforcement. A determination can be enforced as a debt, including by obtaining an adjudication certificate and filing it in court.
Why timing is everything
The single most important thing to understand about the Act is that it runs on strict timeframes. There are deadlines for serving a payment claim, for providing a payment schedule, and for lodging an adjudication application. Miss one, and you can lose significant rights - a respondent who fails to serve a payment schedule in time, for instance, may become liable for the full amount claimed.
Because the consequences are so severe and the deadlines so tight, it pays to get specialist advice early.
How we can help
We act for both claimants and respondents under the Act. We prepare and review payment claims and payment schedules, run adjudication applications and responses, and enforce determinations. If you are owed money - or have received a payment claim - talk to us about your Security of Payment options before any deadline passes.
Related service
Security of Payment Claims →Fast-track recovery of unpaid progress claims under the Building and Construction Industry Security of Payment Act 1999 (NSW).