Builders and trade contractors in Sydney front the cost of every job. They buy materials and pay wages long before the client pays a cent. When a head contractor or owner stalls, one gap in the paperwork can turn into a cash flow problem within weeks. Sydney law services that specialize in construction help at three stages: before you sign a contract, when you chase a payment, and when a disagreement heads toward a hearing. This guide covers each stage under current NSW rules.
Why the contract decides most outcomes
Most payment fights start with a vague contract. When the scope and the variation process are unclear, each side remembers the deal differently, and the argument drags on.
NSW law sets minimum standards for residential work. Any residential building job over $5,000, including GST, needs a written contract. Jobs over $20,000 need a full home building contract with a progress payment schedule, and the builder must give the owner a Home Building Compensation certificate before starting work or asking for payment. A builder cannot ask for a deposit above 10 percent of the price. NSW Fair Trading publishes free contract templates for both bands: one for work over $5,000 and up to $20,000, and one for work over $20,000. The Home Building Act 1989 also builds statutory warranties into residential contracts, including duties to work with due care and skill and to use suitable materials.
Commercial jobs and subcontracts fall outside those residential rules, so the written terms carry even more weight. Before you sign, check that the contract:
- Describes the scope of work and what it excludes
- States the price and how it changes
- Sets a written process for variations, including who approves them and by when
- Fixes payment dates and the steps for making a claim
- Covers delay, defects and termination
What a construction lawyer checks before work starts
Contractors often sign whatever the head contractor sends. That habit leaves them bound by indemnities and delay damages they never negotiated. A lawyer who reviews the contract finds the terms that shift risk onto you, rewrites unclear variation and delay clauses, and turns notice requirements into steps your site team can follow. Sydney law services for contractors usually begin with this review.
Brander Smith McKnight Lawyers lists its full range of legal services on its website, and you can find more information there, including contract drafting and review for the building industry. Ask for the review before you sign, because most clauses become hard to change once the job starts. A lawyer can also draft a standard set of subcontract terms for your own trades, so you apply the same protections on every job.
How payment claims work under the Security of Payment Act
The Building and Construction Industry Security of Payment Act 1999 (NSW) gives head contractors, subcontractors, suppliers, equipment hirers and consultants a fast route to progress payments. It applies even when the contract is oral or has no payment schedule.
A valid payment claim is in writing, states the amount and describes the work. You serve it on or after the reference date, which is the date in the contract or, if the contract names none, the last day of each month. You can claim for work completed in the past 12 months. You can make only one claim for each reference date, and any unpaid amount rolls into the next claim. Subcontractors on contracts connected to residential work must also state that they make the claim under the Act. When a head contractor claims from a principal, it must attach a supporting statement declaring that it has paid its subcontractors, and giving false information on that statement is an offence.
The respondent then has 10 business days, or less if the contract sets a shorter time, to serve a payment schedule. The schedule states how much they will pay and why they will withhold the rest. If they serve no schedule, they owe the full claimed amount. Unless the contract sets an earlier date, payment falls due 15 business days after the claim for a head contractor and 20 business days after the claim for a subcontractor. Business days exclude weekends, public holidays and the days from 27 to 31 December. If payment runs late, you can claim interest at the contract rate or the court rate, whichever is higher.
Your next move depends on what the respondent does:
- If the schedule offers less than you claimed, apply for adjudication within 10 business days of receiving it.
- If the respondent accepts the claim but does not pay, apply within 20 business days of the due date.
- If you receive no schedule and no payment, sue for the debt, or serve a notice that you intend to apply for adjudication, which gives the respondent five more business days to serve a schedule.
An adjudicator reviews the documents and usually decides within 10 business days of the response. If payment is overdue, you can also give written notice that you will suspend work, and you may stop two business days later. The respondent cannot claim damages for that suspension. Record the service date of every claim and schedule, because each deadline runs from that date.
Head contractors face the same clock from the other side. When a subcontractor’s claim arrives, diary the schedule deadline that day. A missed deadline makes you liable for the full amount claimed.
Handling a dispute before it reaches court
Adjudication gives a quick result on payment, but many disputes involve defects, delay, variations or termination. Start by building the record. Keep site diaries, dated photos, signed variation approvals, delivery dockets and email threads in one folder, because an adjudicator decides on the documents alone.
NSW Fair Trading offers free dispute resolution for home building disputes. For commercial disputes, a lawyer can send a letter of demand or run a mediation. Brander Smith McKnight says it resolves most disputes through alternative dispute resolution instead of litigation. When those steps fail, the matter goes to a court or tribunal, and the right forum depends on the parties, the type of work and the amount claimed.
Time limits apply to every route. A lawyer can read your contract and your claim history and tell you which deadlines you still have.
Choosing Sydney law services for a building or trade business
Look for a firm that acts for contractors regularly and handles the whole path, from contract review through adjudication to court. Ask who will do the work, how the firm charges and what the first estimate covers. Lawyers must tell you in writing how they will charge you, so compare those disclosures before you commit.
Brander Smith McKnight offers a free 20-minute consultation that includes case evaluation and a cost estimate, by phone, Zoom or in person. Call 02 8539 7475 or use the contact page to book.
By: Chris Bates
