Subcontractor Didn’t Get Paid: How to Recover Money in NSW

You finished the job. The principal contractor has your invoice. Weeks pass. Nothing. You’re a subcontractor in NSW, and you need to get paid.

NSW has one of the strongest payment protection regimes in Australia. The Security of Payment Act gives subcontractors a statutory right to progress payments and a fast adjudication process. If that doesn’t work, you can escalate to a formal demand letter and, if necessary, the NSW Civil and Administrative Tribunal.

Who the Security of Payment Act Protects

The Act applies to anyone who carries out construction work or supplies related goods and services under a construction contract in NSW:

• Subcontractors (electrical, plumbing, carpentry, concreting, painting)
• Suppliers of materials to a construction site
• Consultants and designers engaged under a construction contract
• Labour hire and plant hire providers on construction projects

It does not cover:

• Residential building work where the contract is with the homeowner (covered by different legislation)
• Contracts for professional services unrelated to construction

If you’re a subbie working on a commercial build, civil project, or multi-unit residential development, the Security of Payment Act is your primary tool.

Step 1: Issue a Payment Claim

A payment claim is a written demand for payment under the Act. It can be an invoice, but it must meet strict requirements:

• Identify the construction work or related goods and services
• State the amount claimed
• State that it is made under the Security of Payment Act
• Be served within the time allowed by your contract (or, if the contract is silent, at any time)

Practical tip: Add this line to every invoice: “This is a payment claim under the Building and Construction Industry Security of Payment Act 1999 (NSW).” That makes it valid from day one.

How to Serve the Payment Claim

Serve the payment claim according to your contract. If the contract is silent, you can serve it:

• By hand
• By post to the principal’s business address
• By email if the principal has previously accepted invoices by email

Keep proof of service. A read receipt, registered post receipt, or signed acknowledgment is critical if you end up in adjudication.

Step 2: Wait for a Payment Schedule

Once you serve a payment claim, the principal contractor has a limited time to respond with a payment schedule. The response time is typically:

• 10 business days after receiving the payment claim, or
• The time stated in the contract (if longer)

The payment schedule must state the amount the principal proposes to pay and, if less than the claimed amount, provide reasons for withholding payment.

If No Payment Schedule Is Issued

If the principal does not provide a payment schedule within the time allowed, they lose the right to dispute your claim. You can sue for the claimed amount as a debt or apply for adjudication to recover it.

This is a powerful position. Many subcontractors recover their full amount at this stage simply by pointing out the missed deadline.

Step 3: Adjudication

If the principal issues a payment schedule offering less than you claimed, you can apply for adjudication. Adjudication is a rapid, interim dispute resolution process designed to keep cash flowing on construction projects.

How Adjudication Works

1. Apply within 10 business days of receiving the payment schedule (or 20 business days after the payment claim if no schedule was provided)
2. Lodge your application with an Authorised Nominating Authority — in NSW, common bodies include Master Builders Association and Australian Institute of Building Surveyors
3. The authority appoints an adjudicator within 5 business days
4. The principal has 5 business days to lodge a response
5. The adjudicator typically makes a determination within 10 business days

The adjudicator’s determination is binding and immediately enforceable as a judgment debt. If the principal doesn’t pay, you can file the determination as a judgment in court and enforce it.

Cost

Adjudication fees vary by authority and claim size, but typically range from $1,500 to $4,000. The adjudicator can order the losing party to pay the fees.

Limitations

Adjudication is interim only. The principal can still dispute the claim in court or arbitration later, but they must pay you first. In practice, most adjudication determinations are never challenged.

Step 4: Issue a Letter of Demand

If adjudication isn’t suitable — you missed the deadline, or the claim is borderline and you want to avoid adjudication costs — a letter of demand is the next step.

A letter of demand is a formal written notice that:

• States the amount owed
• Cites the contract and any relevant statutory provisions
• Demands payment within a specified time (usually 7 days)
• States the consequences of non-payment (tribunal proceedings, court action, or a statutory demand if the debtor is a company)

What a Letter of Demand Achieves

• Demonstrates seriousness — many principals pay at this stage to avoid tribunal or court
• Starts the clock for limitation purposes
• Preserves your legal position if you later need to file in NCAT or court
• Can be used as evidence in any subsequent proceeding

Step 5: File in NCAT

If the principal still doesn’t pay after your letter of demand, you can file a claim in the NSW Civil and Administrative Tribunal under the Consumer and Commercial Division.

NCAT Jurisdiction for Construction Debts

NCAT can hear claims up to $30,000 in the General Division. For claims over $30,000, you must file in the District Court or Supreme Court.

How to File

1. Complete the NCAT General Division application form (available on the NCAT website)
2. Attach supporting documents: your contract, invoices, payment claim, any payment schedule, correspondence, photos of completed work
3. Pay the filing fee (scales with claim size, from $51 for claims under $2,000 to $427 for claims $20,001–$30,000)
4. Serve the application on the principal contractor

NCAT will schedule a directions hearing, then a final hearing. Most construction debt cases are resolved at or before the final hearing.

Evidence You’ll Need

• Signed contract or purchase order
• Scope of work (plans, specifications, emails confirming the scope)
• Invoices and payment claims
• Proof of service
• Photos or site records showing work completed
• Correspondence showing you chased payment
• Any payment schedules or responses from the principal

Step 6: Enforce the Judgment

If NCAT orders the principal to pay and they still don’t, you can enforce the judgment by:

• Garnishee order — seizing money from the debtor’s bank account
• Writ of execution — seizing and selling the debtor’s assets
• Examination summons — requiring the debtor to attend court and disclose their financial position

If the debtor is a company and owes $4,000 or more, you can also issue a statutory demand. If the company doesn’t pay or apply to set aside the demand within 21 days, you can apply to wind up the company.

Practical Tips for Subcontractors in NSW

Always issue a payment claim under the Act Even if your contract doesn’t require it, issuing a valid payment claim triggers the statutory protections and adjudication rights.

Keep detailed records Photos, daily logs, signed variations, and email confirmations are critical if you end up in adjudication or NCAT.

Act fast Security of Payment Act deadlines are strict. If you miss the 10-business-day window to apply for adjudication, you lose that right.

Don’t wait too long to escalate If the principal is ignoring your calls and emails, issue a letter of demand. Waiting months only weakens your position.

Consider the principal’s financial position If the principal is insolvent or about to go under, adjudication and NCAT won’t help — the company has no money. In that case, consider lodging a proof of debt if the company enters administration, or pursuing the directors personally if there’s a personal guarantee.

How ClaimDone Helps Subcontractors in NSW

ClaimDone’s Proprietary AI Engine helps subcontractors recover unpaid money fast:

• Letter of Demand — Upload your invoice and contract. We draft a demand letter citing the Security of Payment Act and contract law, and deliver it automatically. $79 flat fee.
• NCAT Application — If the demand is ignored, we prepare your NCAT application with all supporting documents, ready to file. $197 flat fee.
• Statutory Demand — If the principal is a company owing $4,000+, we prepare the required form and supporting affidavit. $197 flat fee.

No subscription. No hourly billing. Just fast, fixed-fee documents generated by AI.

Final Thoughts

Being a subcontractor in NSW means you have strong statutory rights — but only if you use them. The Security of Payment Act gives you a fast-track adjudication process that most principals fear. A well-drafted letter of demand often gets you paid before you ever need to file in NCAT.

If you’re owed money for construction work in NSW, don’t wait. Issue a payment claim, escalate to a demand letter, and if necessary, file in NCAT.

Get Started

If a principal contractor owes you money, start with an AI-generated letter of demand. ClaimDone generates it in 60 minutes and sends it for you.

Start My Letter of Demand — $79

Frequently Asked Questions

Can I issue a payment claim on a residential building project in NSW?

Only if the contract is with a builder or developer, not the homeowner. The Security of Payment Act does not apply to contracts between a tradesperson and a residential homeowner. If you’re a subcontractor to a builder on a residential project, the Act does apply.

What happens if I miss the 10-business-day deadline to apply for adjudication?

You lose the right to adjudicate that payment claim. However, you can still issue a new payment claim for the same work (if the contract allows it), or proceed directly to a letter of demand and NCAT. Missing the adjudication deadline does not prevent you from recovering the debt through other means.

How long does NCAT take to hear a construction debt case?

From filing to final hearing, expect 3 to 6 months depending on NCAT’s workload and the complexity of your case. Many cases settle at the directions hearing or shortly after, once the principal realises you have strong evidence.

Can I recover my legal costs if I win in NCAT?

NCAT generally does not award legal costs in the General Division unless there are exceptional circumstances. However, you can recover your filing fees and the cost of serving documents. This is why ClaimDone’s fixed-fee model is attractive — you know your costs upfront.

What if the principal contractor goes into liquidation before I get paid?

If the company enters liquidation, you become an unsecured creditor and must lodge a proof of debt with the liquidator. Adjudication and NCAT orders are still valid debts, but you’ll rank behind secured creditors and employees. If there’s a personal guarantee from the directors, you may be able to pursue them personally.