Security of Payments (NSW) 2026: what councils need to know

In 2026, the security of payment regime under the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOPA) remains one of the fastest ways for contractors to turn payment disputes into cashflow in the short term.

For councils, the risks presented by SOPA almost always arise out of the process. As principals on capital works and maintenance contracts, councils can face an enforceable liability for the claimed amount if a payment claim is missed or a payment schedule is late, particularly now that claims are commonly served via email and contract platforms outside business hours.

This update highlights recent NSW decisions that sharpen the practical message for councils:

• to treat digital service as immediate

• assume imperfect claims still require a response 

• build “SOPA readiness” into everyday contractadministration (monitoring, escalating and diarising deadlines) rather than relying on crisis response.

Deeming clauses and service timing

The NSW Court of Appeal has recently confirmed that the effect of section 14(4) SOPA is that the period for responding to a payment claim can be contractually shortened but not lengthened and, in particular, clauses seeking to defer service until the next business day may be ineffective.

In Roberts Co (NSW) Pty Ltd v Sharvain Facades Pty Ltd (Administrators Appointed) [2025] NSWCA 161 (Sharvain Facades), the Court held that an electronically served payment claim was served when it became accessible to the principal, notwithstanding a contractual provision deeming service to occur on the following business day, essentially extending the statutory 10-day deadline.

In the case of Sharvain Facades, the head contractor served a $3.2M payment claim via Payapps at 7:18pm on Friday, 28 February 2025. Roberts Co (the principal) considered the clause deeming after-hours service as received the next business day and responded with a payment schedule on Monday, 17 March 2025.

The Court held that the deeming clause was void under section 34 SOPA and the clock started on 28 February 2025, and Roberts Co became liable for the full payment claim amount.

What to do differently in 2026

In 2026, parties responding to a payment claim cannot assume a deeming clause buys time to respond, even where a payment claim is served outside business hours.

Parties should treat a payment claim capable of being retrieved as the practical trigger point for internal escalation and ensure whoever monitors the platform for service of SOPA claims (eg. Payapps, email, etc) understands the implications of receiving a payment schedule and diarises the earliest plausible deadline.

Imperfect payment claims

Another 2025 appellate decision provides clarity for claimants and a clear warning for respondents - the validity of payment claims is not about perfection. 

The NSW Court of Appeal found in Manariti Plumbing Pty Ltd v Universal Property Group Pty Ltd [2025] NSWCA 135 (Manariti Plumbing) that a payment claim can be enforceable even if its supporting material is not perfect, provided it is reasonably comprehensible and the work is reasonably identifiable.

This matters because the most common (and risky) response we still see is principals or administrators of a contract ignoring a payment claim on the assumption that it is invalid. Courts have repeatedly emphasised that disputes about valuation, defects, set offs or overclaiming are ordinarily matters to be dealt with through the SOPA regime and not by silence.

Manariti served a $221K payment claim via email with an invoice, statement and spreadsheet

In Manariti Plumbing the payment claim was submitted on a cost-plus basis in circumstances where earlier claims were fixed price. The claim also sought profits on previously paid invoices, and Manariti failed to explain why these were applied or why the claims shifted to cost-plus.

Universal did not serve a payment schedule or pay the amount claimed and argued the claim was not a valid claim for the purposes of SOPA.

The District Court refused Manariti its application for a summary judgment and agreed with Universal that it was an invalid claim. On appeal, the Court of Appeal held that while the claim was not perfect, the prior invoices and spreadsheet sufficiently identified the work and so was a valid claim.

What to do differently in 2026

If the claim is intelligible enough to understand what is being claimed for, assume it requires a payment schedule, then assess and address the claims substance.

Parties should reserve “invalidity” arguments for genuinely unclear claims and run them in a schedule and adjudication response rather than doing nothing. Similarly, disputes over damages or restitution must be resolved via adjudication, not by ignoring them.

Conclusion

In practice, SOPA disputes are usually won or lost on deadlines. For councils, the key is to assume electronic service is effective as soon as a claim can be accessed, respond to any reasonably understandable claim with a payment schedule (even if you disagree with it), and diarise the earliest possible due date. Simple controls such as clear monitoring of email/platforms, back‑up cover during leave, and a reliable escalation path can prevent avoidable liability and keep payment disputes manageable.

If you would like support to review your council’s SOPA procedures, or to prepare a payment schedule or adjudication response within the statutory timeframes, our Building & Construction team can assist.

Authors: Joanna Hawke & Nicholas Kallipolitis

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This publication is intended as a source of information only. No reader should act on any matter without first obtaining professional advice.