A valid NSW payment claim needs the right timing, content and service

The Building and Construction Industry Security of Payment Act 1999 (NSW) (the Act) gives contractors and subcontractors some of the fastest debt-recovery machinery available to them, but the machine only starts if the payment claim is valid. Validity disputes are where respondents win without ever arguing the merits, and where claimants lose months of cashflow to defects that take minutes to avoid.

This is the practitioner's checklist, current for contracts entered into on or after 21 October 2019 (the post-amendment regime; older contracts still run on reference dates: see our note on Southern Han).

The entitlement belongs to a person who has undertaken to carry out construction work (or supply related goods and services) under a construction contract, written or oral, and who is or claims to be entitled to a progress payment (ss 7(1), 8(1), 13(1)). The claim is served on the person liable to pay.

Validity fights at this threshold often involve whether there is a “construction contract” at all, or whether the arrangement falls within an exclusion such as s 7(2)(c). Informal development arrangements are dangerous territory on both counts (see Kwik Flo Pty Ltd v SE Ware Street Dev Pty Ltd [2026] NSWCA 9).

For post-October 2019 contracts, a payment claim may be served on and from the last day of the named month in which the work was first carried out, and on and from the last day of each subsequent month (s 13(1A)), or from an earlier date if the contract provides one (s 13(1B)). On termination, a claim may be served on and from the date of termination (s 13(1C)).

Three limits sit around that entitlement:

• One claim per named month for work in that month (s 13(5), a default the contract can vary), though a claim can include amounts from previous months and re-claim previously claimed amounts (s 13(6)). Serving two claims for the same month invites a validity attack on the second.
• The long-stop: a claim must be served within the period allowed by the contract or 12 months after the work was last carried out, whichever is later (s 13(4)).
• Service means actual service.The clock consequences run from when the claim actually arrives (uploaded to the contractual platform, capable of retrieval), and a contractual clause deeming later receipt cannot extend the respondent's 10-business-day window under s 14(4)(b)(ii) (Roberts Co (NSW) Pty Ltd v Sharvain Facades Pty Ltd (Administrators Appointed) [2025] NSWCA 161 at [36] to [37], [52] to [53]).

A valid claim must (s 13(2)):

1. Identify the construction work (or goods and services) to which it relates. The standard is reasonable identification: enough for the respondent to understand what is being claimed and assess it (Clarence Street Pty Ltd v Isis Projects Pty Ltd(2005) 64 NSWLR 448; [2005] NSWCA 391 at [28] to [31]). Sloppy identification is a frequently argued defect; a claim summary tied to the contract's payment schedule structure, with supporting detail attached, answers it.
2. Indicate the claimed amount.
3. State that it is made under the Act.The endorsement was reinstated for post-October 2019 contracts (s 13(2)(c)). The safe form of words: “This is a payment claim made under the Building and Construction Industry Security of Payment Act 1999 (NSW).” Put it on the face of the claim, not buried in a covering email.

A head contractor must not serve a payment claim on the principal unless it is accompanied by a supporting statement in the approved form, declaring that all subcontractors have been paid amounts due and payable (s 13(7)). Two things practitioners get wrong about it:

• Omission is an offence, not an invalidity. In TFM Epping Land Pty Ltd v Decon Australia Pty Ltd [2020] NSWCA 93, the Court of Appeal held a non-compliant supporting statement does not invalidate the payment claim; the sanction is penal (and the penalties are real: up to 1,000 penalty units for a corporation, with a separate offence for knowingly false statements under s 13(8)).
• It is still not optional. Compliance discipline matters both because of the penalty exposure and because a respondent will happily run the argument and force you to litigate TFM Epping before paying.

A valid claim puts the respondent to an election with a fuse of at most 10 business days (shorter if the contract requires): provide a payment schedule under s 14, or become liable for the full claimed amount (s 14(4)), recoverable as a debt, with the respondent barred from raising contract defences or cross-claims in the recovery proceedings (s 15(4)(b)). And remember the Act's own calendar: “business day” excludes weekends, public holidays and 27 to 31 December (s 4). (Sch 1 of the Fair Trading and Building Legislation Amendment Act 2026(NSW), not yet commenced, will rename these “working days” without changing the excluded days.)

1. 01

   Run a pre-service validity audit, every claim. Sixty seconds against the checklist: month entitlement, one-claim rule, endorsement on the face, work identified against the contract structure, amount stated, supporting statement attached (head contracts), service method per the contract. Make it a standing agenda item in the monthly claim cycle.

2. 02

   Build the claim for the adjudication you hope to avoid. A claim that identifies work clearly, with substantiation attached, does double duty: it answers the s 13(2)(a) attack and it becomes the spine of any adjudication application that follows.

3. 03

   Control the service evidence. Serve by every contractually permitted method, capture the transmission record, and diarise the respondent's 10-business-day schedule deadline from the actual service date, including for claims served after hours or on weekends.

1. 01

   Don't manufacture validity problems with multiple claims. Where a claim needs correcting, consider whether the contract permits a further claim in that month (s 13(5)); if not, include the corrected amounts in the next month's claim (s 13(6)) rather than serving a second claim in the same month. Section 13(5) arguments are a gift to respondents.

2. 02

   Know which regime the contract lives under. Pre-21 October 2019 contracts still require a reference date (Southern Han Breakfast Point Pty Ltd (in liq) v Lewence Construction Pty Ltd [2016] HCA 52). The analysis above does not transplant backwards.

3. 03

   Endorsement in the covering email only. Put the “made under the Act” statement on the face of the claim, not buried in a covering email.

4. 04

   Treating the supporting statement as optional. Omission does not invalidate the claim, but it is an offence, and a respondent may still run the argument.

Before serving each payment claim:

• Confirm the contract was entered into on or after 21 October 2019; if not, find the reference date.
• Confirm the month entitlement: the last day of the named month has arrived, or an earlier contract date applies (s 13(1A), (1B)).
• Check no other claim has been served for work in the same named month, unless the contract allows it (s 13(5)).
• Check the work was last carried out within 12 months, or within the longer contract period (s 13(4)).
• Identify the work against the contract's payment schedule structure, with supporting detail attached (s 13(2)(a)).
• State the claimed amount (s 13(2)(b)).
• Put the “made under the Act” statement on the face of the claim (s 13(2)(c)).
• Head contracts: attach the supporting statement in the approved form (s 13(7)).
• Serve on the person liable to pay, by every contractually permitted method, and keep the transmission record.
• Diarise the respondent's schedule deadline from the actual service date, counting business days under s 4.

Get advice before serving if it is unclear whether the arrangement is a construction contract or falls within an exclusion such as s 7(2)(c), whether the contract was entered into before or after 21 October 2019, or whether a further claim can be served in a month that already has one. Get it as soon as a respondent says a claim is invalid.