{"id":"nsw:act-1997-110","name":"Contractors Debts Act 1997","slug":"contractors-debts-act-1997","collection":"act","jurisdiction":"nsw","status":"in_force","isInForce":true,"actNumber":"110 of 1997","makingDate":null,"administeringDepartment":null,"currentVersion":{"id":105415,"registerId":"nsw-act-1997-110-current","compilationNumber":null,"startDate":"2026-04-03","status":"InForce","reasons":null,"registeredAt":null},"sections":[{"sectionNumber":"Part 1","sectionType":"part","heading":"Preliminary","content":"# Part 1 Preliminary\n\nPart 1 Preliminary","sortOrder":0},{"sectionNumber":"1","sectionType":"section","heading":"Name of Act","content":"#### 1 Name of Act\n\n1 Name of Act\n\n> This Act is the [Contractors Debts Act 1997](/view/html/inforce/current/act-1997-110).","sortOrder":1},{"sectionNumber":"2","sectionType":"section","heading":"Commencement","content":"#### 2 Commencement\n\n2 Commencement\n\n> This Act commences on a day or days to be appointed by proclamation.","sortOrder":2},{"sectionNumber":"3","sectionType":"section","heading":"Definitions","content":"#### 3 Definitions\n\n3 Definitions\n\n> > (1) In this Act:\n> > \n> > approved form means a form approved by the Minister.\n> > \n> > certified debt, in relation to an unpaid person, means the amount specified in a debt certificate as being owed to the unpaid person.\n> > \n> > contract means an express or implied contract, whether or not in writing.\n> > \n> > debt certificate means a certificate issued under section 7.\n> > \n> > defaulting contractor—see section 5.\n> > \n> > discharge notice means a notice referred to in section 13.\n> > \n> > notice of claim means a notice referred to in section 6.\n> > \n> > principal—see section 5.\n> > \n> > unpaid person—see section 5.\n> \n> > (2) This Act applies to a debt that is owed partially for work carried out and partially for materials supplied in the same way as it applies to a debt that is owed solely for work carried out or solely for materials supplied.\n> \n> > (3) A reference in this Act:\n> > \n> > > (a) to the carrying out of work includes a reference to construction work (within the meaning of the [Building and Construction Industry Security of Payment Act 1999](/view/html/inforce/current/act-1999-046)) carried out or undertaken to be carried out under a construction contract within the meaning of that Act, and\n> > \n> > > (b) to the supply of materials includes a reference to related goods and services (within the meaning of that Act) supplied or undertaken to be supplied under any such contract.\n> \n> **s 3:** Am 2002 No 133, Sch 2 \\[1\\].","sortOrder":3},{"sectionNumber":"4","sectionType":"section","heading":"Notes","content":"#### 4 Notes\n\n4 Notes\n\n> Notes included in this Act are explanatory notes and do not form part of this Act.","sortOrder":4},{"sectionNumber":"Part 2","sectionType":"part","heading":"Obtaining payment of debt","content":"# Part 2 Obtaining payment of debt\n\nPart 2 Obtaining payment of debt","sortOrder":5},{"sectionNumber":"5","sectionType":"section","heading":"Unpaid persons can obtain payment from principal","content":"#### 5 Unpaid persons can obtain payment from principal\n\n5 Unpaid persons can obtain payment from principal\n\n> > (1) A person (the unpaid person) who is owed money for work carried out for or materials supplied to some other person (the defaulting contractor) can obtain payment of that money in accordance with this Act out of money that is payable or becomes payable to the defaulting contractor by some other person (the principal) for work or materials that the principal engaged the defaulting contractor to carry out or supply under a contract.\n> \n> > (2) However, the unpaid person can obtain payment from the principal under this Act only if the work carried out or materials supplied by the unpaid person are, or are part of or incidental to, the work or materials that the principal engaged the defaulting contractor to carry out or supply.\n> \n> Note—\n> \n> A typical example of an unpaid person is a tradesperson, labourer or supplier (including a corporation).","sortOrder":6},{"sectionNumber":"6","sectionType":"section","heading":"Procedure for obtaining payment","content":"#### 6 Procedure for obtaining payment\n\n6 Procedure for obtaining payment\n\n> > (1) The following procedure must be followed to obtain payment of the money owed:\n> > \n> > > (a) firstly, a debt certificate must have been issued for the money owed (as provided for by section 7),\n> > \n> > > (b) secondly, the unpaid person must serve a notice of claim on the principal.\n> \n> > (2) A notice of claim is a notice in an approved form together with a copy of the debt certificate.","sortOrder":7},{"sectionNumber":"7","sectionType":"section","heading":"Certification of debt by court","content":"#### 7 Certification of debt by court\n\n7 Certification of debt by court\n\n> > (1) When judgment is given or entered up in any proceedings relating to the recovery of money owed to a person for work carried out or materials supplied, the court may, by order made on the application of the person in whose favour the judgment is given, issue a certificate (a debt certificate) in respect of the debt under this section.\n> \n> > (1A) If an adjudication certificate within the meaning of the [Building and Construction Industry Security of Payment Act 1999](/view/html/inforce/current/act-1999-046) has been filed as a judgment for a debt in accordance with section 25 of that Act, the court may, by order made on the application by the person who filed the adjudication certificate, issue a debt certificate in respect of the debt under this section.\n> \n> > (2) If the debt concerned consists of daily, weekly or monthly wages, and the debt exceeds 120 days’ wages, the amount certified in the debt certificate is not to exceed 120 days’ wages.\n> \n> > (3) A debt certificate is not to be issued if the court is satisfied that the work was done on something moveable and it would be practicable for the applicant to exercise a lien by retaining the thing in the applicant’s possession.\n> \n> > (4) A debt certificate is to be in an approved form.\n> \n> > (5) In this section, judgment includes a default judgment.\n> \n> **s 7:** Am 1998 No 120, Sch 2.6; 2002 No 133, Sch 2 \\[2\\].","sortOrder":8},{"sectionNumber":"8","sectionType":"section","heading":"Notice of claim operates as assignment of debt","content":"#### 8 Notice of claim operates as assignment of debt\n\n8 Notice of claim operates as assignment of debt\n\n> > (1) Service of a notice of claim on the principal operates to assign to the unpaid person the obligation of the principal to pay the money owed under the contract to the defaulting contractor.\n> \n> > (2) The assignment is limited to the amount of the unpaid person’s certified debt.\n> \n> > (3) The assignment is subject to any prior assignment under this Act that is binding on the principal and the defaulting contractor.","sortOrder":9},{"sectionNumber":"9","sectionType":"section","heading":"Payment of defaulting contractor’s debt by principal","content":"#### 9 Payment of defaulting contractor’s debt by principal\n\n9 Payment of defaulting contractor’s debt by principal\n\n> > (1) After a notice of claim is served on a principal in accordance with this Part, the principal must pay the money owed to the defaulting contractor to the unpaid person.\n> \n> > (2) The principal must make the payments to the unpaid person as they become payable under the contract with the defaulting contractor until whichever of the following first occurs:\n> > \n> > > (a) the principal receives a discharge notice, or discharge notices, indicating that the certified debt has been fully discharged, or\n> > \n> > > (b) the payments are no longer payable under the contract.","sortOrder":10},{"sectionNumber":"10","sectionType":"section","heading":"Priority of assignments under Act","content":"#### 10 Priority of assignments under Act\n\n10 Priority of assignments under Act\n\n> > (1) The priority of assignments under this Act is to be determined by the order of service of notices of claim on the principal.\n> \n> > (2) All notices of claim in respect of debts owed by the same defaulting contractor that are served on the principal within the period of 7 days after the first notice in respect of the defaulting contractor is served on the principal are taken to be served at the same time and, accordingly, take equal priority.\n> \n> > (3) The principal is not to make any payment to an unpaid person who serves a notice of claim until that 7 day period has elapsed (despite section 9).\n> \n> > (4) If assignments take equal priority, the principal is to make the payments by distributing the money payable between the unpaid persons who have equal priority pro rata in proportion to the amount of their respective certified debts.\n> \n> > (5) The principal must continue to make those payments to each unpaid person until whichever of the following first occurs:\n> > \n> > > (a) the principal receives a discharge notice, or discharge notices, indicating that each certified debt has been fully discharged, or\n> > \n> > > (b) the payments are no longer payable under the contract.","sortOrder":11},{"sectionNumber":"11","sectionType":"section","heading":"Right of recovery if principal fails to pay","content":"#### 11 Right of recovery if principal fails to pay\n\n11 Right of recovery if principal fails to pay\n\n> > (1) An assignment effected by operation of this Act is valid at law.\n> \n> > (2) Accordingly, if the principal fails to make any payment required to be made by this Act, the unpaid person may sue for and recover the debt assigned to the unpaid person, in the unpaid person’s own name.\n> \n> > (3) Proceedings for recovery of the debt may be taken in any manner in which the defaulting contractor might have taken them had there been no assignment.\n> \n> > (4) An unpaid person’s right of recovery under this section is subject to any defence that the principal would have had against recovery of the debt by the defaulting contractor had there been no assignment, other than a defence based on something done by the principal after the notice of claim was served on the principal.\n> \n> Note—\n> \n> For example, if the principal continues to make the contract payments to the defaulting contractor, rather than the unpaid person, after having been served with a notice of claim, the unpaid person is still entitled to recover the money from the principal.","sortOrder":12},{"sectionNumber":"12","sectionType":"section","heading":"Assignment ceases to operate on discharge of debt","content":"#### 12 Assignment ceases to operate on discharge of debt\n\n12 Assignment ceases to operate on discharge of debt\n\n> > (1) If the debt owed to an unpaid person by a defaulting contractor is discharged, or the judgment or order that resulted in a debt certificate being issued in respect of the debt is set aside, any assignment effected by operation of this Act in connection with that debt ceases to operate.\n> \n> > (2) If only part of the debt is discharged, the assignment effected in respect of that part of the debt ceases to operate.\n> \n> > (3) This section does not affect any payment or dealing that is made by a principal in good faith before the principal receives notice, and sufficient evidence of, the discharge of the debt or the setting aside of the judgment or order. To the extent necessary to give effect to such a payment or dealing, the assignment effected by operation of this Act is taken to continue in force.\n> \n> Note—\n> \n> If a principal makes a payment to an unpaid person (as required by section 9), instead of paying the defaulting contractor, without knowing that the debt owed to the unpaid person has been discharged by the defaulting contractor, this section protects the principal from being required by the defaulting contractor to make the payment to the defaulting contractor.","sortOrder":13},{"sectionNumber":"13","sectionType":"section","heading":"Unpaid person required to provide discharge notice","content":"#### 13 Unpaid person required to provide discharge notice\n\n13 Unpaid person required to provide discharge notice\n\n> > (1) If a defaulting contractor or principal makes a payment to an unpaid person in partial or full discharge of the debt owed to the unpaid person, the unpaid person must, on the request of the person making the payment, give that person a discharge notice in respect of the payment.\n> \n> > (2) A discharge notice is a notice in an approved form that acknowledges the payment of the amount paid and is signed by the unpaid person.\n> \n> > (3) If the unpaid person does not give the notice within 7 days of such a payment and request, the unpaid person is to forfeit and pay to the person who made the payment a sum equal to the amount paid. The penalty is recoverable by the person who made the payment as a debt in a court of competent jurisdiction.","sortOrder":14},{"sectionNumber":"Part 3","sectionType":"part","heading":"General","content":"# Part 3 General\n\nPart 3 General","sortOrder":15},{"sectionNumber":"14","sectionType":"section","heading":"Attachment order","content":"#### 14 Attachment order\n\n14 Attachment order\n\n> > (1) If proceedings are commenced by an unpaid person against a person (the defendant) for the recovery of money owed to the unpaid person by the defendant for work carried out or materials supplied by the person, the court may, on the application of the unpaid person, make an order under this section (an attachment order) against any other person from whom the unpaid person may be able to recover the debt under this Act.\n> \n> > (2) An application for an attachment order:\n> > \n> > > (a) may be made on the commencement of the proceedings or at any time before judgment is given in the proceedings, and\n> > \n> > > (b) may be heard in the absence of other parties, and\n> > \n> > > (c) is to be verified by oath or affirmation.\n> \n> > (3) The court may make an attachment order only if it is satisfied, on the basis of the application, that:\n> > \n> > > (a) the defendant owes the unpaid person money for work carried out or materials supplied by the unpaid person, and\n> > \n> > > (b) the work or materials are, or are part of or incidental to, work or materials for which the defendant is to be paid under a contract with the person against whom the order is sought.\n> \n> > (4) On service of a copy of the attachment order on the person against whom the order is made, any money that is payable or becomes payable to the defendant under the contract concerned, not exceeding the amount specified in the order, is attached for the purposes of the proceedings and is to remain in the hands of the person against whom the order is made until judgment is given in the proceedings or until the court otherwise orders.\n> \n> > (5) An attachment order:\n> > \n> > > (a) is to be in an approved form, and\n> > \n> > > (b) is to specify the amount that is attached for the purposes of the proceedings (being the amount sued for by the unpaid person or such other amount as the court considers appropriate).\n> \n> > (6) An attachment order may be varied or set aside on the application of any person.\n> \n> **s 14:** Am 2004 No 55, Sch 2.5.","sortOrder":16},{"sectionNumber":"15","sectionType":"section","heading":"Defaulting contractor to give information concerning principal","content":"#### 15 Defaulting contractor to give information concerning principal\n\n15 Defaulting contractor to give information concerning principal\n\n> > (1) If a debt certificate is issued in respect of a debt owed by a defaulting contractor, the defaulting contractor must, on the demand of any person to whom the defaulting contractor owes money for work or materials, supply to the person a notice in an approved form that sets out the name of any person from whom the person may be able to recover the debt under this Act.\n> > \n> > Maximum penalty: 20 penalty units.\n> \n> > (2) A person who gives or purports to give a person a notice under this section knowing that it is false or misleading in a material particular is guilty of an offence.\n> > \n> > Maximum penalty: 20 penalty units.","sortOrder":17},{"sectionNumber":"16","sectionType":"section","heading":"Act capable of application to series of contractual arrangements","content":"#### 16 Act capable of application to series of contractual arrangements\n\n16 Act capable of application to series of contractual arrangements\n\n> > (1) If a principal fails to pay a debt assigned to an unpaid person by operation of this Act and the unpaid person takes proceedings against the principal for recovery of the debt (as provided for by section 11), this Act applies in respect of the debt as if it were a debt owed to the unpaid person by the principal for work carried out for or materials supplied to the principal by the unpaid person (instead of work carried out for or materials supplied to the principal by the defaulting contractor).\n> \n> > (2) Accordingly, the unpaid person can obtain payment of the debt in accordance with this Act out of money that is payable to the principal by some other person.\n> \n> Note—\n> \n> An example of a situation to which this section might apply is where a person engages another person (a contractor) to carry out work or supply materials and the contractor then engages someone else (a subcontractor) to carry out that work or supply those materials. If a person is engaged by the subcontractor to carry out any of the work or supply the materials and the subcontractor fails to pay the person for the work or materials, the unpaid person can seek payment of the debt in accordance with this Act from the contractor. Under this section, if the contractor fails to pay the debt, the unpaid person can then seek payment from the person who engaged the contractor. In other words, this section allows an unpaid person to pursue payment of an unpaid debt from any number of “defaulting contractors”.","sortOrder":18},{"sectionNumber":"17","sectionType":"section","heading":"Limitation period","content":"#### 17 Limitation period\n\n17 Limitation period\n\n> > (1) Proceedings under this Act in respect of a debt cannot be taken more than 12 months after the debt becomes payable.\n> \n> > (2) A debt that is payable to an unpaid person because of an assignment effected by operation of this Act becomes payable when it would have become payable to the defaulting contractor had there been no assignment.","sortOrder":19},{"sectionNumber":"18","sectionType":"section","heading":"No contracting out","content":"#### 18 No contracting out\n\n18 No contracting out\n\n> > (1) The provisions of this Act have effect despite any stipulation to the contrary in any contract.\n> \n> > (2) No contract entered into before or after the commencement of this section operates to annul, vary or exclude any of the provisions of this Act.","sortOrder":20},{"sectionNumber":"19","sectionType":"section","heading":"Act does not affect other remedies","content":"#### 19 Act does not affect other remedies\n\n19 Act does not affect other remedies\n\n> This Act does not affect:\n> \n> > (a) any remedy an unpaid person may have against a defaulting contractor or any other person in respect of a debt owed to the unpaid person, or\n> \n> > (b) any rights a defaulting contractor, principal or other person may have under any contract or otherwise (except as expressly provided by this Act), or\n> \n> > (c) any rights or obligations a person may have under the [Industrial Relations Act 1996](/view/html/inforce/current/act-1996-017).","sortOrder":21},{"sectionNumber":"20","sectionType":"section","heading":"Proceedings for offences","content":"#### 20 Proceedings for offences\n\n20 Proceedings for offences\n\n> Proceedings for an offence against this Act are to be dealt with summarily before the Local Court.\n> \n> **s 20:** Am 2001 No 121, Sch 2.61; 2007 No 94, Sch 2.","sortOrder":22},{"sectionNumber":"21","sectionType":"section","heading":"Regulations","content":"#### 21 Regulations\n\n21 Regulations\n\n> The Governor may make regulations, not inconsistent with this Act, for or with respect to any matter that by this Act is required or permitted to be prescribed or that is necessary or convenient to be prescribed for carrying out or giving effect to this Act.","sortOrder":23},{"sectionNumber":"22","sectionType":"section","heading":"Repeal","content":"#### 22 Repeal\n\n22 Repeal\n\n> The Contractors’ Debts Act 1897 is repealed.","sortOrder":24},{"sectionNumber":"23","sectionType":"section","heading":"Savings, transitional and other provisions","content":"#### 23 Savings, transitional and other provisions\n\n23 Savings, transitional and other provisions\n\n> Schedule 1 has effect.","sortOrder":25},{"sectionNumber":"24","sectionType":"section","heading":"Review of Act","content":"#### 24 Review of Act\n\n24 Review of Act\n\n> > (1) The Minister is to review this Act to determine whether the policy objectives of the Act remain valid and whether the terms of the Act remain appropriate for securing those objectives.\n> \n> > (2) The review is to be undertaken as soon as possible after the period of 5 years from the date of assent to this Act.\n> \n> > (3) A report on the outcome of the review is to be tabled in each House of Parliament within 12 months after the end of the period of 5 years.","sortOrder":26},{"sectionNumber":"Schedule 1","sectionType":"schedule","heading":"Savings, transitional and other provisions","content":"# Schedule 1 Savings, transitional and other provisions\n\nSchedule 1 Savings, transitional and other provisions\n\n(Section 23)","sortOrder":27}],"analysis":{"summary":{"complexity_score":5,"scope_assessment":{"changed":false,"description":"Based on the available metadata and version history, the Act appears to have remained focused on its original purpose of protecting subcontractors in the construction industry by enabling debt recovery from principals. The multiple amendments (2003, 2004, 2009) likely refined procedural details rather than fundamentally expanding or contracting the law's scope. No evidence of significant scope drift is apparent from the information provided."},"complexity_factors":["Multi-party contractual relationships (principal, head contractor, subcontractor) create layered legal interactions","Requires understanding of pre-existing court judgment requirements before the Act's mechanisms activate","Payment chain tracing — determining exactly what money flows between parties at any given time — can be factually complex","Intersects with insolvency law, contract law, and building industry regulation","Limited text was provided, preventing full assessment of definitional and procedural complexity within the Act itself","Has been amended multiple times since 1997, suggesting accumulated complexity over time"],"plain_english_summary":"## Contractors Debts Act 1997 (NSW)\n\n**What is this law?**\nThis is a New South Wales law designed to protect subcontractors and workers in the building and construction industry who are owed money but haven't been paid.\n\n**Who does it affect?**\n- **Subcontractors** (tradespeople, labourers, and businesses hired by a main contractor to do part of a job)\n- **Head contractors** (the main company running a construction project)\n- **Principals** (the person or company who owns the project and hired the head contractor)\n\n**How does it work?**\nIf a subcontractor does work but doesn't get paid by the head contractor, this law allows the subcontractor to go directly to the person at the top of the chain — the principal (i.e., the project owner) — and claim the money owed. Essentially, it lets unpaid workers and subcontractors \"skip a level\" and recover their debt from whoever has money still owing to the head contractor.\n\n**Why does it matter?**\nConstruction payment chains can be long and complicated. If a head contractor goes broke or simply refuses to pay, subcontractors can be left with nothing. This law gives them a legal tool to recover what they're owed without having to chase an insolvent or uncooperative contractor.\n\n**Key things to know:**\n- The subcontractor must have a court judgment (a formal legal decision confirming money is owed to them) before using this process\n- The amount you can claim from the principal is limited to what the principal still owes the head contractor\n- It applies specifically within New South Wales\n\n**Note:** Only basic status and administrative metadata was available in the provided text — no full legislative content was included for detailed analysis."},"issue_detection":{"absurdities":[],"contradictions":[]},"kimi_summary":{"content_quality":"ok","complexity_score":4,"scope_assessment":{"changed":false,"description":"The legislation appears consistent with its original intent as a statutory assignment mechanism for construction industry debts. The 2002 amendments (noted in sections 3 and 7) expanded the mechanism to incorporate adjudication certificates from the Building and Construction Industry Security of Payment Act 1999, but this represents a logical integration with parallel payment protection legislation rather than scope creep. The core mechanism—allowing unpaid subcontractors to claim directly from principals—remains the central and sole purpose of the Act."},"complexity_factors":["Moderate cross-referencing with the Building and Construction Industry Security of Payment Act 1999 (section 3(3) and section 7(1A))","Nested conditional logic in payment obligations (section 9(2) with dual termination triggers)","Priority rules with a 7-day equalisation window creating temporal complexity (section 10)","Dual procedural pathways for debt certificates (court judgment vs. adjudication certificate under separate legislation)","Assignment mechanics with statutory override of contractual terms (sections 8, 11, 18)","Cascading application up contractual chains (section 16) creating recursive potential","Good faith protections and discharge mechanics (sections 12-13) with penalty provisions","Attachment order procedure with ex parte hearing provisions (section 14(2)(b))"],"plain_english_summary":"This law helps tradies, labourers, and suppliers get paid when a contractor (the middleman) doesn't pay them.\n\n**The problem it solves:**\nImagine you're a plumber who did work for a builder, but the builder hasn't paid you. The builder was hired by a property developer who *has* paid the builder. Normally, you'd have to chase the builder through court, even though there's money sitting with the developer that was meant for your work.\n\n**What this law does:**\nIt lets you go directly to the property developer (called the \"principal\") and claim the money owed to you from what the developer still owes the builder.\n\n**How it works:**\n1. **Get a debt certificate:** First, you need a court judgment or an adjudication certificate under the building payment laws. You take this to court to get an official \"debt certificate.\"\n2. **Serve a notice of claim:** You give formal notice to the principal (the developer) that you're claiming the money.\n3. **The principal pays you instead:** Once notified, the principal must pay you directly from money they owe the builder, until your debt is paid off.\n\n**Key protections:**\n- **No \"contracting out\":** Builders can't put clauses in contracts to stop you using this law.\n- **Priority rules:** If multiple tradies are chasing the same builder, the first to serve notice generally gets paid first (though notices served within 7 days of each other get equal priority).\n- **Chain of contracts:** You can chase up the chain—if the developer doesn't pay, you can potentially go to whoever hired the developer.\n- **Attachment orders:** Before you even get a judgment, you can ask the court to freeze money owed to the builder so it doesn't disappear.\n\n**Who it affects:**\n- **Unpaid persons:** Tradies, labourers, suppliers, and corporations owed money for work or materials.\n- **Defaulting contractors:** Builders or subcontractors who haven't paid their workers/suppliers.\n- **Principals:** Property owners, developers, or head contractors who hired the defaulting contractor.\n\n**Why it matters:**\nThis law prevents builders from pocketing money meant for subcontractors. It gives small contractors and suppliers a powerful tool to bypass insolvent or dodgy middlemen and get paid directly from the source of funds."},"flash_summary":{"complexity_score":5,"scope_assessment":{"changed":false,"description":"The Act repeals the earlier Contractors’ Debts Act 1897 (section 22) but Schedule 1 carries forward certificates and applies the new Act to certain pre-repeal work and debts (Schedule 1, parts 2–4). The core scope—allowing unpaid persons to obtain payment from higher-tier parties in a contracting chain—continues under the new statutory scheme (sections 5, 8, 16). The legislative text therefore preserves the prior practical reach while updating procedure and formalities, rather than expanding or narrowing scope in a material way within the Act itself."},"complexity_factors":["Multiple defined actors and roles (unpaid person, defaulting contractor, principal) with obligations distributed between them (sections 3, 5, 8, 9).","Two-step statutory procedure requiring court-issued debt certificates and service of notices in approved forms (sections 6–7; section 3 on approved forms).","Court discretion to issue certificates and make attachment orders (sections 7 and 14), creating case-by-case variability.","Priority and timing rules including a 7‑day window that treats closely timed notices as simultaneous and requires pro rata distribution (section 10).","Interplay with other statutes (reference to Building and Construction Industry Security of Payment Act 1999 in section 7(1A)) and preservation of other remedies (section 19).","Administrative delegation: Minister and Governor control approved forms and regulations, adding procedural detail outside the Act (sections 3 and 21).","Sanctions and procedural penalties (sections 13 and 15) that impose financial and compliance costs.","Special limits and exceptions (120 days’ wages cap, lien exception, limitation periods) that must be checked case-by-case (sections 7(2)–(3), 17).","Transitional and savings provisions carrying over effects from the repealed 1897 Act, which add complexity to historical claims (section 22; Schedule 1)."],"plain_english_summary":"# What this law does\n\nThis Act creates a procedure that lets a person who is owed money for work done or materials supplied (an \"unpaid person\") recover that money from the person who contracted with the worker or supplier (the \"principal\") instead of only from the contractor who failed to pay (the \"defaulting contractor\"). The main steps are: obtain a court-issued debt certificate (section 7), serve a notice of claim on the principal in an approved form (sections 6 and 3), and then the principal must pay the unpaid person out of amounts otherwise payable to the defaulting contractor (sections 8–9). Priority between multiple unpaid persons is set by the order notices are served, with a 7‑day window that makes notices served soon after the first notice share equal priority (section 10).\n\n# Who it affects and who pays\n\n- The unpaid person (for example, a tradesperson, labourer or supplier) is the intended beneficiary (section 5 note; sections 6–11).  \n- The defaulting contractor loses the immediate right to payments from the principal because service of the notice of claim operates as an assignment of the principal's obligation to pay (section 8).  \n- The principal must divert payments that would otherwise go to the defaulting contractor to the unpaid person until the certified debt is discharged or payments under the contract stop (section 9).  \n- If the principal does not pay as required, the unpaid person can sue the principal in the unpaid person’s own name (section 11).\n\n# How it works mechanically\n\n- Debt certificate: A court may issue a debt certificate after a judgment for recovery of money, and may also issue one after an adjudication certificate filed under the Building and Construction Industry Security of Payment Act 1999 (section 7(1) and (1A)). The court will not issue a certificate where a lien is practicable (section 7(3)); wages are capped to 120 days when the debt is for periodic wages (section 7(2)).  \n- Notice of claim: The unpaid person must serve a notice of claim in an approved form together with a copy of the debt certificate (sections 6 and 3). Service of that notice assigns to the unpaid person the principal's obligation to pay up to the certified amount (section 8).  \n- Payments and priorities: The principal must make payments as they become payable under the contract to the unpaid person until a discharge notice is given or payments cease (section 9). Priority between multiple unpaid persons depends on the order of service; notices served within 7 days of the first notice are treated as simultaneous and paid pro rata (section 10).  \n- Recovery and defences: If the principal fails to pay, the unpaid person may sue for the assigned debt; the principal keeps any defences it would have had against the contractor except for defences arising from the principal’s conduct after receiving the notice (section 11(2)–(4)).  \n- Discharge notices and penalties: An unpaid person who accepts payment must, on request, give a discharge notice in an approved form; failing to do so within 7 days makes the unpaid person forfeit an amount equal to the payment (section 13). A defaulting contractor must provide information about relevant principals when a debt certificate is issued; false or misleading notices attract penalties (section 15).  \n- Attachment orders: While proceedings are on foot, a court may order money payable to the defendant under a contract to be attached and held by the person against whom the order is made (section 14).  \n- Time limits and contractual effect: Claims under the Act must be started within 12 months after the debt becomes payable (section 17). Parties cannot contract out of the Act’s provisions (section 18). The Act does not extinguish other remedies or contractual rights except as expressly provided (section 19).\n\n# Official purpose-claims and a practical reading\n\nThe Act’s provisions operate to allow unpaid persons to obtain payment from higher-tier parties in a contractual chain (sections 5 and 16). The source text supports this purpose-claim by: (a) enabling assignment by operation of law on service of a notice of claim rather than requiring private assignment agreements (section 8), and (b) allowing the unpaid person to pursue successive principals up a contractual chain (section 16).\n\nTesting that purpose against practical considerations found in the text:  \n- Costs and who bears them: The immediate payment burden is shifted to the principal once notice is served (section 9). The defaulting contractor loses amounts payable under the contract up to the certified debt (section 8).  \n- Incentives and behaviour changes: Unpaid persons are given a statutory route to demand payment from principals (sections 6–9), which creates an incentive for principals to monitor notices of claim and for contractors to pay subcontractors promptly to avoid assignment.  \n- Compliance burden and administrative frictions: Unpaid persons must secure a court-issued debt certificate (section 7) and use approved forms (sections 6 and 3). Principals must track notices, possible overlapping claims within the 7‑day priority window (section 10), and discharge notices (section 13). The Minister approves forms (section 3) and the Governor may make regulations (section 21), introducing administrative detail that parties must follow.  \n- Discretion and implementation risk: Courts exercise discretion to issue debt certificates (including refusing where a lien is practicable) and to make or vary attachment orders (sections 7 and 14). That judicial discretion affects predictability of outcomes. The Act also permits regulations and approved forms, which centralises some procedural detail with the Minister and the executive (sections 3 and 21).  \n- Trade-offs and opportunity costs: The Act reduces the unpaid person’s need to pursue only the immediate contractor and transfers some enforcement to courts and principals; this trades a statutory administrative route for the unpaid person against added compliance, court step(s) and potential disruption of principals’ cash-flow (sections 7–9, 14).  \n- Effects on private choice and contract freedom: The Act expressly forbids contractual clauses that try to annul, vary or exclude its provisions (section 18), so parties cannot contract around the statutory assignment and payment rules.  \n- Interaction with other laws: The Act cross-references the Building and Construction Industry Security of Payment Act 1999 for adjudication certificates (section 7(1A)) and preserves other remedies and statutory rights (section 19), so parties must consider multiple statutory regimes together.\n\n# Other notable mechanics\n\n- Time limits: 12‑month limitation for proceedings (section 17).  \n- Wage cap: where debt is wages, certified amount cannot exceed 120 days’ wages (section 7(2)).  \n- Sanctions: failure to provide required information or giving false information attracts penalty units (section 15); failing to issue a discharge notice after receiving payment results in forfeiture equal to the payment and recovery as a debt (section 13(3)).  \n- Transition and continuity: The Act repeals the 1897 Act (section 22) but carries forward existing certificates and extends the new Act to some debts and work done before repeal under Schedule 1 (Schedule 1, parts 2 and 4).  \n- Review: The Minister must review the Act about 5 years after assent and table a report within 12 months after that period (section 24).\n\n# Bottom-line practical summary\n\nMechanically, the Act creates a court‑anchored procedure (debt certificate + notice of claim) by which an unpaid person can convert the principal’s obligation to pay a contractor into an enforceable right against that principal (sections 6–9). The effect is to reallocate payment responsibility up the contracting chain, subject to court discretion, time limits, priority rules and required forms (sections 7, 10, 17, 3, 21). The principal pays the certified debt when notices are properly served (section 9); unpaid persons gain a statutory enforcement route and principals gain obligations to monitor notices, while the defaulting contractor loses the direct benefit of the contract payments assigned by operation of the Act (sections 8–9)."}},"importantCases":[],"_links":{"self":"/api/acts/contractors-debts-act-1997","history":"/api/acts/contractors-debts-act-1997/history","analysis":"/api/acts/contractors-debts-act-1997/analysis","conflicts":"/api/acts/contractors-debts-act-1997/conflicts","importantCases":"/api/acts/contractors-debts-act-1997/important-cases","documents":"/api/acts/contractors-debts-act-1997/documents"}}