SECURITY OF PAYMENT
QUESTIONS & ANSWERS
SECURITY OF PAYMENT QUESTIONS AND ANSWERS
13 Payment claims
(1) A person referred to in section 8 who is or who claims to be entitled to a progress payment (the claimant) may serve a payment claim on the person who, under the construction contract concerned, is or may be liable to make the payment.
(1A) A payment claim may be served on and from the last day of the named month in which the construction work was first carried out (or the related goods and services were first supplied) under the contract and on and from the last day of each subsequent named month.
(1B) However, if the construction contract concerned makes provision for an earlier date for the serving of a payment claim in any particular named month, the claim may be served on and from that date instead of on and from the last day of that month.
(1C) In the case of a construction contract that has been terminated, a payment claim may be served on and from the date of termination.
(2) A payment claim--
(a) must identify the construction work (or related goods and services) to which the progress payment relates, and
(b) must indicate the amount of the progress payment that the claimant claims to be due (the claimed amount), and
(c) must state that it is made under this Act.
(3) The claimed amount may include any amount--
(a) that the respondent is liable to pay the claimant under section 27(2A), or
(b) that is held under the construction contract by the respondent and that the claimant claims is due for release.
(4) A payment claim may be served only within--
(a) the period determined by or in accordance with the terms of the construction contract, or
(b) the period of 12 months after the construction work to which the claim relates was last carried out (or the related goods and services to which the claim relates were last supplied),
whichever is the later.
(5) Except as otherwise provided for in the construction contract, a claimant may only serve one payment claim in any particular named month for construction work carried out or undertaken to be carried out (or for related goods and services supplied or undertaken to be supplied) in that month.
(6) Subsection (5) does not prevent the claimant from--
(a) serving a single payment claim in respect of more than one progress payment, or
(b) including in a payment claim an amount that has been the subject of a previous claim, or
(c) serving a payment claim in a particular named month for construction work carried out or undertaken to be carried out (or for related goods and services supplied or undertaken to be supplied) in a previous named month.
(7) A head contractor must not serve a payment claim on the principal unless the claim is accompanied by a supporting statement that indicates that it relates to that payment claim.
Maximum penalty—1,000 penalty units in the case of a corporation or 200 penalty units in the case of an individual.
(8) A head contractor must not serve a payment claim on the principal accompanied by a supporting statement knowing that the statement is false or misleading in a material particular in the particular circumstances.
Maximum penalty—1,000 penalty units in the case of a corporation or 200 penalty units or 3 months imprisonment (or both) in the case of an individual.
(9) In this section--
supporting statement means a statement that is in the form approved by the Secretary and (without limitation) that includes a declaration to the effect that all subcontractors, if any, have been paid all amounts that have become due and payable in relation to the construction work concerned.
An offence against subsection (7) or (8) committed by a corporation is an executive liability offence attracting executive liability for a director or other person involved in the management of the corporation—see section 34D.
Who can make a payment claim?
Any company or person who is, or claims to be, entitled to a progress payment and:
1. who provides construction work or related services under a construction contract,
2. where the construction site is in New South Wales (section 7 (4) of the NSW Act)
3. within 12 months before the service of the payment claim (section 13 (4)), or if the contract provides a longer period, that longer period (section 13 (4)).
4. who is not an employee of the respondent (section 7 (3) (a) of the NSW Act), and
5. who is entitled to be paid for the value of that work or those services (see section 7 (2) - contracts of loan, guarantee or insurance or where the consideration is not related to the value of the goods and services supplied are excluded);
can make a payment claim.
Do you have to first establish that you are entitled to a payment before you can serve a payment claim?
No. You just have to claim that you are. As a result of the 2002 amendments it is now only necessary for the claimant to claim to be entitled to a progress claim. The earlier legislation conferred the right only on a "person who was entitled to a progress payment" (see the comments of Austin J in Jemzone v Trytan  NSWSC 395 at para 38 which gave rise to the amendment).