Overview
If you’re a contractor or subcontractor who has carried out construction work or provided related goods and services in NSW, you have a powerful pathway to debt recovery through the security of payment act in your jurisdiction. We set out below the process in NSW, which is largely similar across all states.
Adjudication under SOPA
To effectively recover the debt under SOPA, you need to follow SOPA’s strict rules about timing, procedure, and the content of your claim. If this process is followed, it can be extremely difficult for the debtor to resist payment of your claim.
Step 1: Check that you have a valid construction contract
Under SOPA, a construction contract includes not only formal written contracts but also oral agreements and other arrangements under which one party undertakes to carry out construction work or supply related goods and services for another, such as a purchase order for supply or an arrangement to provide certain services.
Step 2: Serve a valid payment claim within the required timeframe
You must serve a payment claim on the person who, under the construction contract, is or may be liable to make the payment. Under SOPA, you must serve a payment claim either within the timeframe set by the contract or within 12 months after the last work or supply, whichever period is longer.
Unless the contract says something different, you can only send one payment claim per calendar month, and that claim can only cover the work done (or promised to be done), or goods/services supplied (or promised to be supplied), in that month.
The earliest date a payment claim can be made is the last day of the month in which work was first carried out (or goods/services first supplied), unless the contract allows an earlier date (For example, if an invoice covers work done in May but is served on 25 June, it may still count as a May payment claim which can be made on or from 31 May 2025).
You may:
- combine multiple progress payments in one claim,
- repeat amounts already claimed, and
- claim in a later month for work or goods provided in an earlier month
Claims within 12 months
The Act states that payment claims must only be served within 12 months of work being carried out. Always be aware of your last day on site and calendarize 12 months thereafter. If you return to site, generally speaking, the clock starts again.
Note: Only one payment claim after termination of contract
SOPA allows contractors to serve one final payment claim after a construction contract is terminated. Be very careful that your final payment claim includes everything you want included and is well drafted.
Note: Extra rules for head contractors
A head contractor can only serve a payment claim on the principal if it includes a truthful supporting statement in the approved form, confirming that subcontractors have been paid. Providing a false or missing statement is a serious offence and can attract heavy fines or even imprisonment.
Step 3: What must be included in a valid payment claim
A payment claim under SOPA must include three key elements:
- It must clearly identify the construction work (or related goods and services) to which the claim relates.
- It must specify the amount of the progress payment being claimed.
- It must state that the claim is made under the Act. Recommended wording is: “This is a Payment Claim made under the Building and Construction Industry Security of Payment Act 1999 (NSW).”
An ordinary invoice might happen to amount to a payment claim if it contains the required information. If you intend for an invoice to operate as a valid payment claim, it must meet SOPA’s requirements.
Step 4: Wait until due date for payment before adjudication application
| Type of Contract / Party | When Payment Becomes Due |
| Principal → Head Contractor (non-exempt residential) | 15 business days after a payment claim is made, unless the contract provides an earlier date. |
| Head Contractor → Subcontractor (non-exempt residential) | 20 business days after a payment claim is made, unless the contract provides an earlier date. |
Step 5: Notice of intention to apply for adjudication
The respondent must provide a payment schedule by the earlier of the time required by the construction contract / 10 business days after the payment claim is served. If the respondent misses that and fails to pay by the due date for payment, you can issue a “section 17” written notice of your intention to apply for adjudication (must be within 20 business days after the due date for payment), and the respondent then has a second-chance window of 5 business days from receiving that notice to give a payment schedule. If the respondent serves a payment schedule, then an ordinary adjudication process plays out. If the respondent fails to provide a payment schedule, it cannot serve a response in the adjudication.
Another option to explore if no payment schedule is to take the payment claim to court to enforce the amount claimed as a statutory debt. Note that you cannot do this after you have served a notice to adjudicate. You must choose one over the other.
Step 6: Make a valid adjudication application
An adjudication application:
- Must be in writing.
- Must be made to an authorised nominating authority chosen by you.
- Time limits:
- If based on a payment schedule showing less than claimed → within 10 business days of receiving the schedule.
- If based on a failure to pay the scheduled amount → within 20 business days after the due date for payment.
- If based on no schedule and no payment → within 10 business days after the 5-day notice period given to the respondent.
- Must identify the payment claim and the payment schedule (if there is one).
- Must be accompanied by any application fee set by the nominating authority.
- The application fee must not exceed the amount (if any) set by the Minister.
- Must be served on the respondent (a copy of the application must be given to them).
- The authorised nominating authority must refer the application to an eligible adjudicator as soon as practicable.
- May include any submissions you wish to add in support of the application.
Step 7: Adjudication Determination
After you submit the adjudication application (and serve a copy on the respondent), the authorised nominating authority must promptly refer it to an eligible adjudicator, who will then accept or decline the appointment.
The respondent has 5 business days after receiving the application, or 2 business days after being notified of the adjudicator’s acceptance (whichever is later), to serve their adjudication response (only if they have provided you with their payment schedule in time). During this stage, the adjudicator may also request further submissions, convene a conference, or seek expert advice if required.
The adjudicator will then consider the payment claim, the payment schedule, the adjudication application, the adjudication response (if any), and any further material requested.
The adjudicator must determine the application within 10 business days after the respondent lodges a response, or if no response is lodged, after the time for lodging a response expires (or, if no response is permitted, after notice of the adjudicator’s acceptance is served on both parties), unless the parties agree to extend the time.
In making the decision, the adjudicator must determine the amount (if any) payable to you, when it is due, and any applicable interest rate. The adjudicator is limited to considering the Act, the construction contract, the payment claim and supporting submissions, the payment schedule and supporting submissions, and any inspection results.
The decision must:
- be in writing,
- provide reasons (unless both parties request otherwise), and
- be served on both parties.
Any values of work or goods previously determined must be carried forward unless shown to have changed. The adjudicator may also correct clerical errors, slips, miscalculations, mistaken descriptions, or defects of form.
Step 8: If the respondent does not pay the adjudicated amount or interest due and payable on time
A respondent has 5 business days from the release of the Adjudication Determination to pay the amount.
If this does not happen, you can request an adjudication certificate from the authorised nominating authority and can also give notice of suspension of further work or supply (even if work is already complete, the suspension right exists). The adjudication certificate will record you, the respondent, the adjudicated amount, and the payment due date, and it can also include unpaid interest or the respondent’s unpaid share of adjudication fees, which then form part of the adjudicated amount.
Step 9: Enforcement of Certificate
The adjudication certificate can be filed in court as a judgment debt, supported by an affidavit confirming non-payment. If part of the amount has been paid, judgment is entered only for the balance.
You then have the right to enforce the debt as a judgment debt and there are powerful tools for recovery available.
Who pays your legal fees
Under SOPA, an adjudicator cannot order one party to pay the other party’s legal costs.
The adjudicator can only decide:
- the adjudicated amount,
- the due date,
- interest, and
- how the adjudicator’s own fees and expenses are split between the parties.
Stay on paying the adjudicated amount
While SOPA usually requires “pay now, argue later,” courts can grant a stay in special circumstances, such as in residential contracts where homeowners risk severe hardship. In the recent case, Black Label Developments Pty Ltd v McMenemy [2025] NSWCA 114, the Court of Appeal upheld a stay of enforcement of an adjudication certificate under SOPA, because the homeowners had raised serious claims of duress and unconscionable conduct in relation to a deed of variation, and immediate enforcement could have catastrophic consequences (such as losing their home) if later proven valid.
We note this is an extreme case, and generally payment of adjudicated amounts is strictly enforceable.
Advice & Support
For advice regarding contract disputes and statutory duty of cate matters, we encourage you to connect CTI Lawyers to get specific guidance and expert assistance on this matter. They are highly knowledgeable in these areas and will be able to provide you with the necessary support.
As specialised construction lawyers, CTI Lawyers helps navigate the complex minefields of payment recovery, contracting, legislative requirements and more. We assist with all construction contract and dispute related matters, from contract review and drafting to debt recovery through adjudication and court. CTI Lawyers also frequently assists clients with defending claims brought against them in tribunals or the Local, District and Supreme Courts.
This summary is a guide only and is not legal advice. If you require assistance or further clarification, contact CTI Lawyers on 02 9021 9699 or submit your enquiry here.