Subcontractor Didn’t Get Paid: How to Recover Money in New South Wales

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

New South Wales 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, a debt claim in the Local Court of New South Wales. A subcontractor owed money has a debt claim for the Local Court, not NCAT: NCAT hears consumer claims, which are brought by the consumer.

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 New South Wales:

• 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 New South Wales, 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

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 (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 court
• Starts the clock for limitation purposes
• Preserves your legal position if you later need to file in court
• Can be used as evidence in any subsequent proceeding

Step 5: File in the Local Court

If the principal still doesn’t pay after your letter of demand, you can file a statement of claim in the Local Court of New South Wales, through the NSW Online Registry.

Local Court Jurisdiction for Construction Debts

The Local Court’s Small Claims Division hears claims up to $20,000, and its General Division hears claims over $20,000 up to $100,000. Above that, the claim goes to the District Court.

How to File

1. Complete a statement of claim (filed through the NSW Online Registry)
2. Attach supporting documents: your contract, invoices, payment claim, any payment schedule, correspondence, photos of completed work
3. Pay the filing fee (filing fees change each 1 July; check the current fee on the Local Court’s website before you file)
4. Serve the statement of claim on the principal contractor

If the principal files a defence, the court will list the matter for hearing. If no defence is filed, you can apply for default judgment.

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 the court gives judgment against the principal and they still don’t pay, 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 New South Wales

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 court.

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 a court claim 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 Claim Done Helps Subcontractors in New South Wales

Claim Done’s Programmatic Algorithms help subcontractors recover unpaid money fast:

• Letter of Demand — Tell us about your invoice and contract. We draft a demand letter citing the Security of Payment Act and contract law, and deliver it by email. $49 flat fee.
• Tribunal Application — If the demand is ignored, we draft a Local Court statement of claim for your New South Wales debt and a witness statement outline you complete, for you to file yourself. $97 flat fee.
• Statutory Demand — If the principal is a company owing $4,000+, we prepare the required form and supporting affidavit. $97 flat fee.

No subscription. No hourly billing. Just fast, fixed-fee documents generated by our Programmatic Algorithms.

Final Thoughts

Being a subcontractor in New South Wales 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 court.

If you’re owed money for construction work in New South Wales, don’t wait. Issue a payment claim, escalate to a demand letter, and if necessary, file in the Local Court.

Get Started

If a principal contractor owes you money, start with a letter of demand drafted by our Programmatic Algorithms. Claim Done generates it in about 5 minutes and sends it for you.

Start My Letter of Demand

Frequently Asked Questions

Can I issue a payment claim on a residential building project in New South Wales?

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 a Local Court claim. Missing the adjudication deadline does not prevent you from recovering the debt through other means.

How long does a construction debt claim take in the Local Court?

It depends on whether the principal defends the claim and how complex the case is. If no defence is filed, you can apply for default judgment without a hearing. A defended claim takes longer, and some settle once the principal sees you have strong evidence.

Can I recover my legal costs if I win in the Local Court?

That is up to the court, and the costs it allows may be less than what you actually spend. This is why Claim Done’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 determinations and court judgments 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.