Security of Payment Act vs Debt Recovery: Which Is Faster for Unpaid Invoices?

Two Paths to Getting Paid — One Is Much Faster

When a contractor owes you money, you generally have two legal options: Security of Payment Act adjudication or debt recovery through the courts. Understanding the differences will help you choose the right path and set realistic expectations.

Security of Payment Act Adjudication

Timeframe

3–8 weeks from serving the payment claim to receiving a determination. If the contractor pays on receipt of the claim (which is common), as little as 1–2 weeks.

Cost

PayClaim: $79 per claim. Adjudicator fees (if adjudication proceeds): typically $500–$3,000 for claims under $150,000. Legal assistance optional but rarely necessary for straightforward claims.

Requirements

Must be for construction work. Must have a valid construction contract. Must be within the statutory claim periods. Claimant must serve a valid payment claim.

Outcome

A binding determination that can be enforced as a court judgment. Note: adjudication is “on account” — the merits of the underlying contract dispute can still be litigated in court, though this rarely happens.

Debt Recovery Through the Courts

Timeframe

Undefended claims in the Magistrates Court: 2–4 months. Defended matters in District or Supreme Court: 12–36 months. The other party can extend timeframes by applying for more time, seeking mediation, or filing counterclaims.

Cost

Court filing fees plus solicitor costs. Budget $3,000–$10,000+ for even a straightforward defended matter. Complex litigation can run to six figures in legal costs.

Requirements

Any type of debt. Any type of contract. No specific deadlines for initiating (subject to the standard 6-year limitation period).

Outcome

A court judgment that is enforceable for 12 years. Full legal determination of the merits, including any counterclaims.

The Verdict

For construction payment disputes, the SOP Act is almost always the right first step. It’s faster, cheaper, and the outcome — a determination or debt due and payable — is effectively equivalent to a court judgment for the purpose of getting paid. Debt recovery through the courts is better suited to disputes where the SOP Act doesn’t apply, or as a fallback if adjudication doesn’t resolve the matter.

In practice: serve your payment claim first. If the contractor pays, great. If not, adjudicate. Only go to court if the adjudicated amount is not paid.