Introduction to Security of Payment and Adjudication in NSW

The NSW Building and Construction Industry Security of Payment Act 1999 (the Act) recognises that prompt payment is vital to the stability and efficiency of the building and construction industry. It was unanimously adopted by Parliament to assist industry parties be paid promptly for work performed. Through this Act, government recognises that it is unacceptable for the party liable to pay for construction work or related goods or services (the respondent) to manufacture a false reason to deny or delay payment. In other situations, the Act also provides the claimant with the means to prevent respondents stringing out the time for payment with promises of future work if only the claimant waits a bit longer.

The Act applies to:

• Any construction contract;
• A construction contract that is written or oral;
• A construction contract that is partly written and partly oral;
• A construction contract that says it is to be governed by a law of a State or Territory outside of NSW but the work is carried out in NSW;
• From 1 March 2021, owner occupier construction contracts.

The Act creates a statutory dispute resolution process (adjudication) that allows a party alleging they are owed monies (the claimant) under a construction contract to promptly obtain payment from the respondent, based on an assessment of the merits of the claim by an appropriately qualified and independent adjudicator. Adjudicate Today is approved by government to nominate the adjudicator to determine payment disputes and conduct training and mentoring programs for adjudicators.

The adjudication process is simple and rapid. Adjudicators must make their determination within 10 business days (unless the parties agree to extend the time) from date of receipt of any adjudication response or when it was due. If the respondent’s reasons for not paying don’t pass the adjudicators independent assessment, the respondent is generally liable to pay the progress claim, interest and the adjudication fees. If a respondent does not comply with an adjudication determination, the claimant may obtain from Adjudicate Today an adjudication certificate for lodgement at the appropriate court which registers it as a judgment debt. For most claims referred to adjudication, a lawyer should not be necessary.

In order to commence a claim under the Act, there must be a written Payment Claim made against a party to a construction contract (either written or oral) in relation to construction work or the supply of related goods and services for construction work in NSW.

Time frames under the Act are all important. Claimants must take different actions based on whether a respondent serves or fails to serve a written response to the payment claim (the Act calls this the payment schedule) within defined times. Failure by the claimant to follow the strict requirements of the Act will cause an adjudication application to fail.

The information and flowcharts we publish on this website clearly describe how parties should proceed in preparing and responding to payment claims, what steps should be taken based on the actions of the other party and other steps required by the Act. In addition, our trained staff are available to answer questions about how the Act works and what parties need to do to comply with it. We provide this information for free and without obligation. If parties proceed to adjudication, the adjudicator pays us a service fee from his/her fees to cover our costs. Neither party is asked to pay the adjudicator's fee until after the determination is provided to Adjudicate Today.

If you are not familiar with our website, we suggest you read “Navigating this website” below. Otherwise let’s get started.

Let's go to the NSW flowchart

Navigating this website

There are two simple ways to navigate this NSW based website:

1. Click here to go to our interactive flowchart. Clicking once in any flowchart box provides details of that step in the process;

and/or

2. Use the menu on the left hand side of the page "Start; Schedule Served; Schedule Not Served; Adjudication Process; Application Forms; and Resources;". We recommend you commence by clicking on a menu item under Start as it provides necessary information which is crucial for commencing proceedings under the Act.

The adjudication process may seem difficult when first encountered. Actually it is not. When an important term used by the Act is first encountered in the text, it is highlighted in blue. Passing the mouse over the term causes a grey box to "pop-up" with a simple explanation of the term.

We explain each step under the Act in a simple manner by using our unique flowchart. The flowchart is interactive. This means that when you click on a box in the flowchart you receive much more information on a new web-page. The simplest way to return from the information web-page to the flowchart is to click on the back arrow key located on the top left of all browsers.

Let's go to the NSW flowchart or Download the flowchart to print