Customer Won’t Pay, Claims Defective Work: What Now?

# Customer Won’t Pay, Claims Defective Work: What Now?

You completed the job. You sent the invoice. Now the customer refuses to pay, claiming the work was defective, substandard, or not what they ordered.

The temptation is to fire back an angry email or immediately threaten legal action. Both are mistakes. What you need is a methodical response that protects your legal position, gathers the right evidence, and gives you leverage to either get paid or defend yourself if the matter escalates.

Why customers claim defective work when they don’t want to pay

Not every defect claim is genuine. Some customers use it as a delay tactic. Others genuinely believe there is an issue but have unrealistic expectations.

Common reasons customers claim defects:

• Cash flow problems — they cannot pay now and are buying time
• Buyer’s remorse — they regret the purchase and want out
• Scope creep expectations — they expected more than what was agreed
• Perfectionism — minor cosmetic issues become deal-breakers
• Advice from a mate — someone told them “that’s not how it’s done”
• Genuine defect — the work does not meet the agreed standard

Your response must work regardless of their motivation. Do not assume bad faith, but do not admit fault either.

Review the contract and scope of work first

Before you respond to the customer, go back to your paperwork. What did you actually agree to deliver?

Documents to review:

• Written quote or proposal
• Signed contract or terms and conditions
• Email correspondence confirming scope
• Variations or change orders
• Specifications, plans, or drawings
• Industry standards referenced in the agreement

If the contract says “supply and install kitchen benchtop” and you did exactly that, a complaint about the colour of the grout may be outside scope. If the contract specified “waterproof membrane to AS 3740” and you used a non-compliant product, you have a problem.

What you are looking for:

• The exact deliverables you promised
• The standard of work required (e.g. “workmanlike manner”, compliance with Australian Standards)
• Any exclusions or limitations
• Acceptance or sign-off procedures
• Warranty or defects liability period

If there is no written contract, reconstruct the agreement from emails, text messages, and any other evidence of what was discussed.

Assess whether the defect claim has merit

Not all defect claims are equal. Some are legitimate. Some are exaggerated. Some are fabricated.

Questions to ask:

• Does the alleged defect actually exist, or is it subjective opinion?
• Does it affect the function, safety, or durability of the work?
• Is it a breach of the agreed scope, or just not what they imagined?
• Would an independent expert agree there is a defect?
• Is the defect caused by your work, or by something outside your control (e.g. customer-supplied materials, site conditions, subsequent damage)?

Minor vs major defects:

Under Australian Consumer Law, goods and services must be of acceptable quality and fit for purpose. A major defect renders the work unsafe, unusable, or substantially different from what was agreed. A minor defect is something that can be easily fixed without significant cost or delay.

If the defect is minor and you can fix it quickly, that is often the commercial solution — even if you believe the complaint is unreasonable. If the defect is major or the claim is baseless, you need a different strategy.

Gather evidence that the work was done properly

If you are confident the work meets the agreed standard, start building your evidence file.

Evidence to collect:

• Photographs — before, during, and after the work (timestamped if possible)
• Compliance certificates — electrical, plumbing, building certificates
• Material invoices and receipts — proof you used the specified products
• Timesheets or job records — showing the work was completed as agreed
• Industry standards — copies of relevant Australian Standards or codes of practice
• Expert opinion — if necessary, get an independent assessment from a qualified professional in your trade
• Customer communications — emails, texts, or messages where they accepted the work, requested changes, or caused delays

If the customer signed off on the work or made a payment after completion, that is strong evidence they were satisfied at the time.

Respond in writing without admitting fault

Your response must be professional, factual, and non-defensive. Do not apologise for defects that do not exist. Do not offer to fix things that are not broken. Do not admit liability.

What to include in your response:

1. Acknowledge their complaint without agreeing with it
2. Restate what was agreed in the contract or scope of work
3. Explain why you believe the work meets that standard
4. Offer to inspect the alleged defect (if appropriate)
5. Request specific evidence of the defect (photos, independent report)
6. Reiterate that payment is due under the contract

Example structure:

> “Thank you for your email dated [date]. I note you have raised concerns about [specific issue]. I have reviewed the scope of work we agreed on [date], which required [specific deliverable]. The work was completed in accordance with that agreement and complies with [relevant standard]. I am happy to inspect the site to discuss your concerns, but based on the evidence available, I believe the work meets the agreed standard. Payment of $[amount] remains due under our agreement dated [date]. Please arrange payment by [date] or contact me to discuss.”

Adapt this to your situation. The point is to be clear, factual, and firm without being aggressive.

Offer an inspection or independent assessment

If the customer persists, offer to inspect the work together or engage an independent expert. This shows good faith and often exposes baseless claims.

Two options:

• Joint inspection — you and the customer (and their representative if they wish) inspect the work together and document any issues
• Independent expert — agree on a qualified third party to assess the work and provide a written report

If you offer an independent expert, propose that the cost be split, or that the losing party pays. This discourages frivolous claims.

Make the offer in writing and set a reasonable deadline. If they refuse or ignore it, that strengthens your position.

Decide whether to pursue payment or wait

You now have three options:

1. Fix any genuine defects and pursue payment — if there is a minor issue you can resolve quickly, do it and move on
2. Pursue payment without fixing anything — if the claim is baseless, send a letter of demand or commence tribunal proceedings
3. Wait for them to take action — if the amount is small or the customer is litigious, sometimes the best move is to document everything and wait

If you choose to pursue payment, a letter of demand is the standard first step. It sets out the amount owed, the basis of the claim, and a deadline for payment.

What if they file a tribunal claim against you?

If the customer files a claim in the relevant tribunal (VCAT, NCAT, QCAT, etc.) alleging defective work, you will need to file a defence and potentially a counterclaim for the unpaid amount.

Your defence should:

• Deny the defect or argue it is minor and remediable
• Plead that the work was completed in accordance with the contract
• Attach evidence (photos, compliance certificates, expert reports)
• Counterclaim for the unpaid invoice plus interest and costs (if the tribunal rules allow)

Do not ignore a tribunal claim. If you fail to respond, the customer may get a default judgment against you.

Protect yourself for next time

Once this dispute is resolved, update your processes:

• Use a written contract for every job, no matter how small
• Include clear acceptance or sign-off procedures
• Take timestamped photos at every stage
• Get variations in writing before you do extra work
• Include a defects liability clause that specifies the process for raising and remedying defects
• Require a deposit and progress payments to reduce your exposure

The best way to deal with defect claims is to prevent them. The second-best way is to have the evidence ready when they arise.

When to get a lawyer

If the amount in dispute is over $10,000, the defect claim involves personal injury or property damage, or the customer is represented by a lawyer, get your own legal advice. ClaimDone generates legal-style documents — it does not replace a qualified Australian lawyer for complex or high-value matters.

How ClaimDone helps when a customer won’t pay

For straightforward payment disputes where the customer is using defects as an excuse not to pay, ClaimDone gives you the tools to respond professionally without paying hourly legal fees.

ClaimDone’s Legal Response service prepares a professionally formatted written response to defect claims, setting out your position clearly without admitting fault. You upload the contract, the customer’s complaint, and your evidence — our Proprietary AI Engine drafts a response that protects your legal position.

If the customer has already filed a tribunal claim, ClaimDone’s Tribunal Response / Defence Pack prepares your defence and counterclaim, formatted for the relevant tribunal in your state.

If you are ready to pursue payment, ClaimDone’s Letter of Demand service drafts and sends a formal demand letter citing the Australian Consumer Law, contract law, and your evidence — giving the customer a final opportunity to pay before you escalate.

All services are flat-fee, no subscription, and delivered within 60 minutes. Respond to defect claims professionally and protect your right to payment.

Frequently Asked Questions

Can a customer refuse to pay by claiming defects after they have already used or accepted the work?

Yes, but their claim is weaker. If the customer signed off on the work, made a payment after completion, or used the work for an extended period without complaint, that is strong evidence they accepted it. However, some defects (e.g. latent defects that only appear later) may still be valid. Document any acceptance or sign-off carefully.

Do I have to fix defects before I can demand payment?

It depends on the contract and the nature of the defect. If the defect is major and makes the work unfit for purpose, you may need to remedy it before you are entitled to full payment. If the defect is minor or the claim is baseless, you can demand payment and offer to fix any genuine issues separately. Get legal advice if the amount is significant.

What if the customer claims defects but refuses to let me inspect the work?

If you offer to inspect in writing and the customer refuses or ignores the offer, that strengthens your position. Document the offer and their refusal. If the matter goes to tribunal, the tribunal will typically consider whether the customer acted reasonably in allowing you to assess and remedy any defects.

Can I charge the customer for my time responding to a baseless defect claim?

Generally no, unless your contract specifically allows it. However, if the customer’s claim is found to be without merit in a tribunal proceeding, you may be able to recover some costs as part of your counterclaim. Keep records of all time spent responding to the claim.

How long does a customer have to raise a defect claim after the work is completed?

Under Australian Consumer Law, the timeframe depends on the nature of the goods or services and what a reasonable consumer would expect. For minor defects, a few weeks or months may be reasonable. For major defects affecting durability, several years may apply. Your contract can specify a defects liability period (e.g. 12 months), but it cannot exclude the consumer guarantees under the ACL.