Statutory debt (Security of Payment)
Under Security of Payment laws, an unpaid claim becomes a statutory debt in court if no payment schedule is served in time, and the respondent can't raise a defence.
Ask Chalkline about this →A statutory debt under the Security of Payment (SOP) laws is the claimed amount that becomes a debt recoverable in court when a respondent fails to serve a payment schedule in time in response to a payment claim. It is one of the sharpest enforcement tools in the SOP regime.
How it arises:
- A claimant (head contractor or subbie) serves a payment claim.
- The respondent has a set time (in NSW, 10 business days) to serve a payment schedule stating what they propose to pay.
- If the respondent serves no payment schedule and does not pay, they become liable for the full claimed amount, recoverable by the claimant as a debt due in any court of competent jurisdiction (verified 2026-05-25, NSW SOP Act).
The teeth (“pay now, argue later”): in that court action (or in adjudication to recover the amount), the respondent cannot raise a defence based on the construction contract, and cannot bring a cross-claim (for example for defects or delay). They have to pay first and pursue any genuine dispute separately. This is deliberate: SOP keeps money flowing down the contracting chain and stops respondents sitting on a subbie’s money behind a contractual argument.
For a builder:
- As a claimant: serve a compliant payment claim; if no payment schedule comes back in time, you have a fast statutory-debt path.
- As a respondent: never ignore a payment claim. Serve a payment schedule within the time limit even if you dispute the amount, or you lose the right to defend and can be hit for the full claim.
Also known as: SOPA statutory debt, debt due under the SOP Act.
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Last updated: 2026-05-25. Verified: 2026-05-25. Quarterly review for currency.