Introduction

Getting your head around the tricky world of construction payments feels like wading through a maze, especially when there’s a tussle over progress claims. Homeowners and builders will find that they really need to wrap their heads around the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOPA) because it’s got the lowdown on how to handle and question these claims the right way. The legal landscape is also constantly changing, with important new laws and court decisions in 2025 that all parties need to be aware of.

Grounds for Disputing Progress Claims under Security of Payment Act

Under the SOPA, homeowners have several grounds on which they can dispute a builder’s progress claim. These include:

• Non-compliance with the Home Building Act: As of 20 August 2024, a major legal change has created a powerful new defence for homeowners. The new Section 8(2) of SOPA now states that a builder is not entitled to a progress payment if their contract or work does not comply with the Home Building Act 1989 (NSW). This applies if the builder is not properly licensed for the work or has failed to provide a mandatory Home Building Compensation Fund (HBCF) insurance certificate for residential projects over $20,000.
• Non-compliant Payment Claim: A homeowner can dispute a payment claim if it fails to meet the statutory requirements set out in SOPA. This might include issues with how the claim was formatted or delivered, or if it lacks necessary details as stipulated by the SOPA.
• Dispute Over the Amount: If there is a disagreement over the amount stated in the progress payment claim, the homeowner is entitled to challenge this through adjudication. The process provides a structured way to resolve disputes over claimed amounts without resorting to more formal legal proceedings.
• Breach of Contract: A breach of contract by the builder provides a valid basis for disputing a progress claim. This might involve non-adherence to agreed timelines, specifications, materials, or other terms explicitly outlined in the contract.
• Defective Work: If the construction work is found to be defective or substandard, the homeowner can dispute the progress claim and may be entitled to damages for defective building work. This argument can be used to withhold payment until the defects are rectified, or to adjust the payment to reflect the reduced value of the work performed.

Each of these grounds requires the homeowner to provide substantial evidence to support their claim during the dispute resolution process, typically through the adjudication system provided under the SOPA.

What to do if Your Progress or Payment Claim is Disputed?

When your progress or payment claim is disputed, it’s crucial to approach the situation strategically to safeguard your interests and secure your rights under the contract. Here’s a detailed guide on what steps you can take:

• Resolve the Dispute Amicably: Before taking formal steps, try to resolve the issue through direct communication with the homeowner, as resolving construction disputes without courts is often the most effective first step. An amicable solution is often less costly and preserves the relationship, which could be beneficial for future projects.
• Review the Contract Terms: Examine your building contract to understand your rights and obligations regarding progress claims and dispute resolution. This review will help determine the best course of action based on the contractual agreements between you and the homeowner.
• Analyse the Dispute Grounds: Understand the reasons behind the homeowner’s dispute of the progress claim. Assess whether their claims have merit and prepare your response based on this analysis. This step is crucial for strategising whether to proceed with more confrontational measures like suspension or termination.
• Remember Strict Deadlines: Recent court cases, such as the 2025 case of Roberts Co (NSW) Pty Ltd v Sharvain Facades Pty Ltd (Administrators Appointed) [2025] NSWCA 161, have reinforced that the law is very strict about deadlines. Contractual clauses that try to extend the time to respond to a payment claim are not legally valid under the Security of Payment Act. This means you must always be precise and timely with your responses.
• Understand that Adjudication Decisions are Not Easily Overturned: If a dispute proceeds to adjudication, the resulting decision is meant to be a quick, interim payment. The 2025 case of DECC Credit Pty Ltd v Australia Wide Lining Pty Ltd [2025] NSWSC 826 demonstrated that it is very difficult to have a court stop the enforcement of an adjudicated amount. Courts will only do so in exceptional circumstances, reinforcing the ‘pay now, argue later’ policy of the Act.
• Consider Suspending Works: If your contract provides the right to suspend works due to unpaid valid progress claims, and it’s strategically sound, issuing a Notice of Suspension might prompt reconsideration by the homeowner. However, ensure that any suspension is legally justified to avoid potential breaches of contract on your part.
• Consult Legal Experts: Engaging a lawyer early in the dispute can provide crucial insights into your legal rights and the feasibility of your intended actions. Our team can offer preliminary advice and guide you through the process, especially before taking significant steps like communicating with the homeowner or suspending works.
• Issue Notice of Breach or Initiate Dispute Resolution: If the contract specifies procedures for handling unpaid claims, such as issuing a Notice of Breach or initiating dispute resolution, consider these as potential next steps. These formal actions often lead homeowners to reassess their stance on the payment issue.
• Terminate the Contract: As a last resort, if the dispute remains unresolved and the homeowner’s breach of contract continues, terminating the contract may be necessary. Termination should be handled with legal guidance to ensure it’s executed correctly and to avoid any legal repercussions for wrongful termination.

How to Prevent Your Progress Claim from being Disputed?

To mitigate the risk of disputes over progress claims in construction projects, it’s essential to adhere to a set of best practices that enhance transparency and accountability. Here’s a structured approach to help you prepare and submit progress claims that are less likely to be contested:

• Ensure Full Compliance with Licensing and Insurance: This is now a critical step to prevent disputes. Since the new Section 8(2) of SOPA came into effect on 20 August 2024, a builder’s right to be paid is tied to their compliance with the Home Building Act 1989. This means you must hold the correct licence for the work and, for residential projects valued over $20,000, you must provide the homeowner with the mandatory HBCF insurance certificate before starting work or accepting a deposit.
• Regular and Timely Submission: Always adhere to the payment schedule specified in your construction contract. Submit your progress claims regularly and on time to avoid any delays in payment. Delays in submission can lead to complications and slow down the approval process.
• Detailed Documentation: Accompany your claims with comprehensive documentation that supports the work completed, as knowing how to describe construction works in payment claims is a key part of this process. This should include copies of relevant permits, invoices, timesheets, and any other records that substantiate the claim. Including high-resolution photographs of the completed work can significantly bolster your claim by providing visual proof of progress.
• Accuracy in Measurements and Calculations: Before submitting your claim, double-check all measurements and calculations to ensure accuracy. Errors in quantities, rates, or totals can lead to disputes and delays while the discrepancies are resolved. It’s crucial to confirm onsite that the work has been completed as claimed.
• Use of Photographic Evidence: Take multiple high-resolution photographs from various angles to document the progress comprehensively. Ensure these images clearly show completed work and include labels with details about the location on site and the specific work completed.
• Provide a Logical Sequence: Arrange your photos in a logical sequence that depicts the progression of work, such as the stages of an installation process. This adds context and demonstrates systematic adherence to the construction schedule.
• Dated Evidence: Ensure all photographs are dated to provide a clear timeline of the work progress. This can be crucial if the timing or extent of the work is questioned during disputes.
• Integration with Claims: Incorporate photographs into your progress claims by referencing them in your cover letter. Clearly describe each photo in the letter to direct the reviewer’s attention to the evidence provided.
• Clear and Concise Cover Letters: Each claim should be accompanied by a cover letter that restates the details of the work completed and the total claim value. Reference the attached photos in your letter to ensure that the client notices the visual evidence you have provided.

By following these guidelines, you can enhance the credibility of your progress claims, expedite their approval, and reduce the likelihood of disputes. Employing photos effectively, alongside detailed documentation and precise calculations, serves as a robust defence against discrepancies and enhances the likelihood of receiving timely payments.

Stop Adjudication of Progress Payment Claim Disputes Before it’s Too Late: Contact Us Today!

The rules of the game have changed. The legislative amendments of 2024, particularly the new Section 8(2) of the Security of Payment Act, have created a powerful new defence for homeowners who can now dispute a claim from a builder who is not properly licensed or insured. At the same time, recent court cases from 2025 have reinforced that both parties must strictly follow the deadlines and procedures of the Act.

For builders, this means prioritising meticulous preparation of claims and strict adherence to all legal requirements. For homeowners, it means understanding your new rights and using the Act’s procedures, especially the payment schedule, to protect your interests. Navigating this environment requires up-to-date knowledge and a strategic approach. If you’re a contractor, builder, or homeowner needing help with a construction dispute, contact our building and construction lawyers at PBL Law Group to ensure you’re on the right track.

Frequently Asked Questions (FAQ)