Construction Law
Security of payment claims, adjudication, building defects, variations, delay and termination disputes for NSW builders, contractors and owners.
Construction law governs how building work is paid for, what happens when it is defective or late, and how building disputes are resolved. Vamp Law acts for builders, contractors, subcontractors, suppliers, developers, owners corporations and homeowners in NSW construction disputes, with every matter run directly by Kyra Pastrovic.
Who does Vamp Law act for in construction disputes?
Vamp Law acts for builders, head contractors, subcontractors, suppliers, developers, owners corporations and homeowners in NSW building and construction disputes, as part of its commercial litigation practice. It never acts for both sides of the same dispute, and a conflict check is run on every new matter. Every matter is run directly by Kyra Pastrovic.
How does a security of payment claim work in NSW?
Security of payment is a statutory process under the Building and Construction Industry Security of Payment Act 1999 (NSW) that lets anyone who carries out construction work, or supplies related goods and services, under a construction contract recover progress payments. A contract cannot exclude the Act (s 34), and most of its time limits run in business days, which exclude weekends, public holidays and 27 to 31 December.
Payment claim
The claimant serves a claim that identifies the work and the amount and states that it is made under the Act, generally once a month and within 12 months after the work was last done, or any longer period the contract allows (s 13).
Payment schedule
The respondent has the time set by the contract or 10 business days, whichever is earlier, to reply with a schedule stating what it will pay and why (s 14).
No schedule
Without a schedule, the respondent becomes liable for the full amount. If that is unpaid when due, the claimant can recover it as a debt without the respondent raising contract defences (s 15), or seek adjudication after giving notice within 20 business days of the due date and allowing 5 more business days for a schedule (s 17(2)).
Adjudication
Where a schedule offers less than was claimed, the claimant has 10 business days after receiving it to apply for adjudication (s 17). A respondent that served no schedule in time cannot respond, and no respondent can add new reasons (s 20).
Payment and enforcement
The adjudicated amount is payable within 5 business days after the determination is served, or a later date the adjudicator sets (s 23). If it is not paid, the claimant can request an adjudication certificate and file it as a judgment debt (ss 24 and 25).
These rules apply to contracts made on or after 21 October 2019, or 1 March 2021 for owner occupier contracts with homeowners. Earlier contracts follow earlier versions of the Act.
What warranties protect owners against residential building defects?
Every contract for residential building work includes statutory warranties under section 18B of the Home Building Act 1989 (NSW), including that the work will be done with due care and skill, with good and suitable materials, in compliance with the law and on time. Later owners have the same rights (s 18D).
Proceedings must be started within 6 years after completion for a major defect and 2 years for other defects, with 6 more months if the breach becomes apparent in the last 6 months (s 18E). A major defect broadly means a defect in a major element, such as the structure, fire safety systems or waterproofing, that causes, or is likely to cause, the building or part of it to be unusable for its purpose, or its destruction or collapse.
Most residential building work over $20,000 must also be covered by home building compensation insurance before work starts or any payment is taken (s 92; Home Building Regulation 2014 (NSW), cl 53). icare describes that cover as a last resort, for when a builder becomes insolvent, dies, disappears or has their licence suspended for not complying with a money order.
Who else can be liable for building defects?
Under section 37 of the Design and Building Practitioners Act 2020 (NSW), anyone who carries out construction work, which includes building, design, supplying building products and project management (s 36), must take reasonable care to avoid economic loss caused by defects. The duty is owed to each owner and later owner, including an owners corporation, even without a contract with them, and it cannot be delegated or contracted out of (ss 39 and 40).
In Roberts v Goodwin Street Developments Pty Ltd [2023] NSWCA 5, the Court of Appeal held that the duty is not confined to apartment buildings, because "building" takes its broad meaning from the Environmental Planning and Assessment Act 1979 (NSW). The Building (Approvals and Practitioners) Act 2026 (NSW), assented to in August 2026, will repeal the 2020 Act and restate the duty in similar terms once it commences.
Where are building disputes heard in NSW?
Home building disputes usually go to the NSW Civil and Administrative Tribunal (NCAT), which can decide building claims of up to $500,000 (Home Building Act, s 48K). Most claims must first go through the home building dispute resolution service run by Building Commission NSW, whose inspector can issue a rectification order (ss 48C to 48E). The Tribunal must reject a claim that has not been investigated unless its President directs otherwise (s 48J), which is how some claims, such as a contractor's claim for a debt, are accepted without a referral.
Commercial disputes and larger residential claims are usually heard in the Local, District or Supreme Court of NSW, depending on the amount.
What are the most common commercial construction disputes?
Most fall into a few recurring categories and turn on notices and the wording of the contract, which contract law covers in more depth:
Variations
whether extra or changed work was properly directed, and what it is worth.
Delay and liquidated damages
an agreed rate for late completion, and whether the contractor was entitled to more time.
Extensions of time
claims for more time, which many contracts make conditional on strict notice requirements.
Termination
whether a party could end the contract, since terminating without a proper basis can itself be repudiation.
Retention and security
cash retentions and bank undertakings held as security, and when they can be called on or must be released.
What happens when a builder or contractor becomes insolvent?
Once a building company is in liquidation, it can no longer serve or enforce a payment claim under the Security of Payment Act (s 32B), and homeowners may turn to home building compensation cover. Where a head contractor is struggling, a claimant that has applied for adjudication can require the party that owes the head contractor money to hold back up to the amount claimed, and that party becomes jointly liable if it pays anyway (ss 26A to 26C). Where the head contractor's own contract is worth $20 million or more, subcontractors' cash retentions must be kept in trust (Building and Construction Industry Security of Payment Regulation 2020 (NSW), cls 6 and 8).
Frequently asked questions
Yes, for owner occupier contracts made on or after 1 March 2021, with payment due when the contract says or, if it is silent, 10 business days after the claim (s 11(1C)).
There is no entitlement for residential work done without the required home building insurance (s 8(2)).
No. It decides what must be paid now. A court or tribunal can later decide the parties' final rights, allowing for any amount already paid (s 32).
Under the Home Building Act, 6 years from completion for a major defect and 2 years for other defects. Separately, an action for defective building work generally cannot be brought more than 10 years after completion (Environmental Planning and Assessment Act 1979 (NSW), s 6.20).
Yes, in separate matters, but never for both sides of the same dispute.
Speak with Vamp Law about a construction dispute
This page is general information only: the right answer in any building dispute depends on its facts and on the documents. If you have a payment dispute, defective building work or a construction contract that has broken down, make an enquiry or call +61 431 569 686 to speak with Kyra Pastrovic.
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