Last Updated on 06/03/2026 by Damin Murdock
Since the major amendments to the Building and Construction Industry Security of Payment Act 1999 (NSW) (the Act) took effect, the landscape of construction cash flow has shifted from “voluntary compliance” to a “mandatory regime.” For head contractors and subcontractors, these changes removed the need for specific legal phrasing on invoices but introduced severe penalties for administrative failures. In this article, we discuss how to navigate Strict Deadlines and the “Supporting Statement” Trap.
1. The Death of the “Section 13” Endorsement
Previously, a builder had to explicitly state on an invoice that it was “a payment claim made under the Act.” Without this magic phrase, the claim fell outside the Act’s protections.
The New Reality: Now, any invoice for construction work is automatically deemed a payment claim under the Act (unless it relates to specific exempt residential work).
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The Risk: Respondents can no longer ignore “informal” invoices. If you receive a claim and fail to provide a Payment Schedule within 10 business days, you become liable for the full amount, regardless of whether the invoice mentioned the Act or not.
2. Tiered Payment Deadlines: 15 vs. 30 Days
The legislation introduced a “split” in maximum payment times to protect different levels of the supply chain. Unless the contract provides for an earlier date, the statutory maximums are:
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Principal to Head Contractor: Payable within 15 business days of the claim.
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Head Contractor to Subcontractor: Payable within 30 business days of the claim.
Applied Legal Judgment: In many recent disputes, parties have attempted to use “pay-when-paid” logic to delay these dates. Courts have consistently struck these down, affirming that these statutory dates are the “outer limit” and cannot be extended by private contract.
3. The Supporting Statement: A $22,000 Administrative Landmine
Perhaps the most significant change is the requirement for Supporting Statements. A head contractor cannot serve a valid payment claim on a principal unless it is accompanied by a statement declaring that all subcontractors have been paid what is due to them.
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The Penalty for Falsehood: If a head contractor provides a false supporting statement, they face penalties of up to 200 penalty units ($22,000) and/or three months in prison.
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The Adjudication Trap: If a head contractor serves a payment claim without the supporting statement, the claim is technically invalid. This means any subsequent adjudication based on that claim could be found void for jurisdictional error.
Practical Tips for Construction Administrative Compliance
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Assume Every Invoice is a Claim: Treat every piece of paper requesting money as a formal claim. Missing a Payment Schedule window because an invoice “didn’t look like a legal document” is a common and expensive mistake.
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Audit Subcontractor Payments Monthly: Before signing a Supporting Statement, ensure your accounts team has verified that all subcontractor amounts “due and payable” have actually been cleared.
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Contractual Priority: Remember that the Act sets the maximum time. If your contract says 7 days, you must pay in 7 days. If your contract says 45 days, the Act overrides it and moves it back to 15 or 30 days.
How Leo Lawyers Can Help
The NSW Security of Payment regime is a “technicality-driven” system. At Leo Lawyers, we provide the applied legal judgment to ensure your payment claims are valid and your payment schedules are served on time.
Feel free to contact Damin Murdock at Leo Lawyers via our website, on (02) 8201 0051 or at office@leolawyers.com.au. Further, if you liked this article, please subscribe to our newsletter via our Website, and subscribe to our YouTube, LinkedIn, Facebook and Instagram. If you liked this article or video, please also give us a favourable Google Review.
DISCLAIMER: This is not legal advice and is general information only. You should not rely upon the information contained in this article, and if you require specific legal advice, please contact us.
Damin Murdock (J.D | LL.M | BACS - Finance) is a seasoned commercial lawyer with over 17 years of experience, recognised as a trusted legal advisor and courtroom advocate who has built a formidable reputation for delivering strategic legal solutions across corporate, commercial, construction, and technology law. He has held senior leadership positions, including director of a national Australian law firm, principal lawyer of MurdockCheng Legal Practice, and Chief Legal Officer of Lawpath, Australia's largest legal technology platform. Throughout his career, Damin has personally advised more than 2,000 startups and SMEs, earning over 300 five-star reviews from satisfied clients who value his clear communication, commercial pragmatism, and in-depth legal knowledge. As an established legal thought leader, he has hosted over 100 webinars and legal videos that have attracted tens of thousands of views, reinforcing his trusted authority in both legal and business communities."
