Subcontractor Didn’t Pay: Debt Recovery in Building Industry

You finished the job. You sent the invoice. The subcontractor or head contractor has not paid. In the building industry, unpaid invoices can cripple your cash flow and threaten your business.

Australian law gives tradies, subcontractors, and builders debt recovery tools that do not exist in other industries. Security of payment legislation in every state and territory is designed to keep money flowing down the contractual chain, fast.

Why building industry debt is different

Construction work operates on long payment chains. The developer pays the head contractor, who pays the subcontractor, who pays you. When one link breaks, everyone downstream suffers.

Every Australian state and territory has security of payment legislation designed to fix this problem:

• NSW: Building and Construction Industry Security of Payment Act 1999
• VIC: Building and Construction Industry Security of Payment Act 2002
• QLD: Building Industry Fairness (Security of Payment) Act 2017
• WA: Construction Contracts Act 2004
• SA: Building and Construction Industry Security of Payment Act 2009
• TAS: Building and Construction Industry (Security of Payment) Act 2009
• ACT: Building and Construction Industry (Security of Payment) Act 2009
• NT: Construction Contracts (Security of Payments) Act 2004

These laws create a fast statutory process to recover progress payments without going to court. The process is typically quicker and cheaper than traditional debt recovery.

Step 1: Issue a payment claim

A payment claim is a formal demand for payment under security of payment legislation. It is not the same as an invoice, although your invoice can form part of it.

What a valid payment claim must include

Each state has slightly different requirements, but a payment claim typically must:

• Identify the construction work or related goods and services
• State the amount claimed
• Be given to the person liable to pay
• State that it is made under the relevant security of payment Act
• Include sufficient detail to identify the basis of the claim

Timing matters. Most states require the payment claim to be served within a specific reference period, often monthly or as defined in your contract. Miss the window and you may need to wait for the next reference period.

How to serve a payment claim

Service must comply with the contract (if it specifies a method) or the Act. Common methods include:

• Personal delivery
• Registered post
• Email to the address last notified by the respondent
• Leaving it at the respondent’s place of business

Keep proof of service. If the matter escalates to adjudication, you will need to prove when and how the claim was served.

Step 2: Wait for a payment schedule (or lack of one)

Once you serve a payment claim, the respondent typically has 10 business days to issue a payment schedule, or the time specified in the contract (whichever is shorter).

A payment schedule is the respondent’s formal response. It must:

• State the amount they propose to pay
• If less than the claimed amount, give reasons why
• Be served on you within the statutory timeframe

If they do not respond

If the respondent does not provide a payment schedule within the time allowed, they are liable to pay the full claimed amount and cannot later dispute it in adjudication. You can:

• Sue for the debt as a debt due (fast-track court proceeding)
• Suspend work under the contract
• In some states, apply to have the claim entered as a judgment

Many contractors miss this deadline and lose the right to dispute the claim.

If they respond but offer less

If the payment schedule offers less than you claimed, you can accept the reduced amount or proceed to adjudication to challenge their reasons.

Step 3: Apply for adjudication

If the respondent disputes your claim or fails to pay the scheduled amount, you can apply for adjudication — a fast, binding determination by an independent adjudicator.

How adjudication works

1. Lodge your application with an authorised nominating authority in your state, typically within 10 business days of receiving the payment schedule
2. Pay the application fee (typically $1,500–$3,000, recoverable if you win)
3. The authority appoints an adjudicator within 5 days
4. The respondent files a response (typically within 5 business days)
5. The adjudicator makes a determination within 10–15 business days

The adjudicator decides:

• The amount to be paid
• When it must be paid (typically within 5 business days of the determination)
• Who pays the adjudication costs

Adjudication is binding (for now)

The determination is temporarily binding. The respondent must pay the determined amount even if they disagree. They can later challenge it in court or arbitration, but they cannot withhold payment while doing so.

This “pay now, argue later” principle keeps cash flowing and prevents disputes from paralysing projects.

Costs of adjudication

• Application fee: $1,500–$3,000
• Adjudicator’s fee: $3,000–$10,000+ (split or allocated by the adjudicator)
• Legal or consultant fees: optional but common for larger claims

If you win, the respondent typically pays the adjudicator’s fee and your application fee.

Step 4: Enforce the determination

If the respondent does not pay the adjudicated amount within the required timeframe, you can:

• File the determination as a judgment in the relevant court (NSW, VIC, QLD, SA, TAS, ACT)
• Enforce the judgment using standard methods: garnishee orders, writs of execution, bankruptcy or wind-up proceedings

In most states, filing the determination as a judgment is a simple administrative process. Once filed, it has the same force as a court judgment.

Step 5: Tribunal or court (if adjudication is not suitable)

Security of payment adjudication is designed for progress payment disputes. It is not suitable for:

• Final account disputes after practical completion
• Defects claims
• Damages claims
• Claims outside the scope of construction work

For these disputes, your options are:

Small claims tribunal (under $10,000–$25,000)

Each state has a civil and administrative tribunal for small building disputes:

• NSW: NSW Civil and Administrative Tribunal (NCAT)
• VIC: Victorian Civil and Administrative Tribunal (VCAT)
• QLD: Queensland Civil and Administrative Tribunal (QCAT)
• WA: Magistrates Court (small claims division)
• SA: South Australian Civil and Administrative Tribunal (SACAT)

Tribunal is cheaper and faster than court, with no lawyers required (though you can bring one). The monetary limit varies by state.

Magistrates or District Court (larger claims)

For claims above the tribunal limit, you file in the Magistrates Court (typically up to $100,000 in most states) or District Court (higher amounts). This is traditional litigation: longer, more expensive, but necessary for complex or high-value disputes.

Other debt recovery tools for builders

If security of payment adjudication is not suitable or has failed, you can use the same debt recovery tools available to any creditor:

• Letter of demand: formal written demand citing the debt, the contract, and the consequences of non-payment
• Statutory demand (if the debtor is a company and the debt exceeds $4,000): 21-day notice leading to wind-up proceedings if unpaid
• Court proceedings: file a statement of claim and obtain a judgment
• Bankruptcy or liquidation: for debts over $10,000 (individuals) or $4,000 (companies)

How Claim Done helps tradies recover building debts

ClaimDone’s Proprietary AI Engine helps subcontractors, tradies, and builders recover unpaid invoices without hiring a lawyer.

Our Letter of Demand service generates a professionally formatted letter citing the applicable security of payment legislation in your state, the contract terms, and the consequences of non-payment. The letter is automatically delivered to the debtor via email and registered post.

Our Tribunal Application service prepares the application form, statement of claim, and supporting documents based on the evidence you upload, formatted for the tribunal in your state.

Our Deed of Settlement service creates a binding agreement once the debtor agrees to pay, protecting you if they default on the agreed terms.

All services are fixed-fee, Australia-wide, and delivered within 60 minutes. No subscription, no hidden costs.

Act fast

Security of payment laws have strict time limits. Miss the deadline to serve a payment claim, and you lose the statutory right for that reference period. Miss the deadline to apply for adjudication, and you cannot challenge the payment schedule.

If a subcontractor or head contractor has not paid you, do not wait. Issue a payment claim, escalate to adjudication if necessary, and use the tribunal or court system if the debt falls outside the security of payment framework.

Start your debt recovery now

If you are owed money for building work, start with a formal demand letter. Claim Done generates a letter citing the applicable security of payment legislation, the contract, and the debt, then delivers it automatically via email and registered post.

Start your Letter of Demand now — $79 flat fee, done in 60 minutes, Australia-wide.

Frequently Asked Questions

Can I use security of payment laws if I don't have a written contract?

Yes. Security of payment legislation typically applies to oral contracts, implied contracts, and even quantum meruit claims for construction work. You do not need a signed written contract, but you do need to prove that construction work was performed and payment is due.

What happens if the respondent ignores the adjudication determination?

If the respondent does not pay the adjudicated amount within the required timeframe (typically 5 business days), you can file the determination as a judgment in the relevant court and enforce it using standard methods: garnishee orders, writs of execution, or wind-up proceedings.

How long does adjudication take?

From lodging the application to receiving the determination, the process typically takes 3–4 weeks. The adjudicator must make a determination within 10–15 business days in most states, and payment is typically due within 5 business days of the determination.

Can I suspend work if I'm not paid?

Yes, but only if the contract allows it or if the respondent has failed to provide a payment schedule. Under security of payment laws, you can typically suspend work if the respondent does not pay the scheduled amount or the adjudicated amount. Always give written notice before suspending work.

Do I need a lawyer for adjudication?

No. Adjudication is designed to be accessible without legal representation. However, many claimants engage a building consultant or lawyer to prepare the application and supporting documents, especially for claims over $50,000.