Last Updated on 18/06/2025 by Damin Murdock

The Building and Construction Industry Security of Payment Act 1999 (NSW) (the Act) provides powerful statutory guidelines and requirements for contractors to secure timely progress payments for construction work. Section 13 of the Act prescribes essential requirements that a payment claim must meet to be considered valid and enforceable. Ensuring compliance with these requirements is critical to maintaining the effectiveness and enforceability of any payment claim made under the Act.

Purpose and Context

The purpose of the Act is to ensure the prompt recovery of progress payments. The legislation was enacted to combat the chronic issue of delayed payments in the construction industry by:

  • creating a statutory entitlement to progress payments;
  • requiring prompt responses via payment schedules; and
  • preventing the use of contract terms to avoid or delay payment.

Thus, the process is designed to ensure speed, certainty, and fairness in payment practices.

Section 13 of the Act: Essential Requirements

  1. Pursuant to Section 13(2) of the Act, a valid payment claim must include the following:
    • identification of construction work or related goods and services;
    • claimed amount; and
  • the payment claim must include a statement that it is made under the Act.
  1. Pursuant to Section 13(3) of the Act, the “claimed amount” must include an amount the respondent is liable to pay under Section 27(2A) of the Act, or an amount that is held under the construction contract by the respondent and that the claimant claims is due for release.
  2. Pursuant to Section 13(4) of the Act, a payment claim may be served only within the time period determined in the contract or the period of 12 months after the work to which the claim relates was last carried out, whichever is the later. 

Identification of Construction Work

The level of details required in identifying construction work was clarified in case law. In Leighton Contractors Pty Limited v Campbelltown Catholic Club Limited [2003] NSWSC 1103, it established that the claim must contain sufficient specificity to enable the respondent (typically the homeowner, proprietor or head contractor) to understand what is being claimed and to formulate a meaningful response in the form of a payment schedule. This requirement reinforces the Act’s objective of avoiding unjustified delays and enabling proper and timely dispute resolution. In Isis Projects v Clarence Street [2004] NSWSC 714, the Court pointed out that even a single line item description may be acceptable if it can adequately identify the works. 

Timing and Reference Dates

Section 13(4) of the Act outlines the time period when the payment claim may be served. In Owners of Strata Plan 80458 v TQM Design & Construct Pty Ltd [2018] NSWSC 1304, this case further emphasised that the builder who claims the payment may serve only one payment claim per reference date, and submitting multiple claims for the same reference date or attempting to circumvent this requirement can render claims invalid.

The “reference date” is either as specified in the construction contract, or if not specified, the last day of each month in which construction work is carried out as held in Nazero Group Pty Limited v Top Quality Construction Pty Limited [2015] NSWSC 232.

Key Considerations for Claimants

  1. Practical Implications
  • Clarity is key: claims must be clear and unambiguous, with sufficient information accompanying the claim to permit a detailed payment schedule response.
  • Consistency is not compliance: the fact that a respondent has previously accepted a poorly detailed claim does not guarantee enforceability of a similar future claim.
  1. Limitations
  • Contractual requirements: additional contractual clauses regarding evidence or format may apply and must be observed.
  • No duplication: submitting more than one claim for the same reference date is strictly prohibited.
  1. Risk Factors
  • A claim with insufficient identification of the work may be deemed invalid.
  • Non-compliance with Section 13 requirements can result in the inability to enforce the claim.
  • For exempt residential construction contracts, failure to include the requisite statutory statement invalidates the claim under s13(2)(c).

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 social media accounts.

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.

 

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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."