Progress Payment Rules for NT Residential Building Work

What it is

The Northern Territory is one of the few Australian jurisdictions that legislates a progress payment stage table. Regulation 41HA of the Building Regulations 1993 (NT) sets out the standard progress payments by name and by percentage. Victoria does the same through the section 40(2) table in its Domestic Building Contracts Act. Queensland, for contrast, does not legislate stage percentages at all.

Section 48B(2A) of the Building Act 1993 (NT) is the enabling hook. It says a regulation may provide for the contract to include provisions about progress payments linked to specified stages of the prescribed building work. Regulation 41HA is that regulation.

The stage table

Regulation 41HA(1) sets the standard progress payments under a residential building contract:

Stage	Cap on the total contracted price
Base	no more than 10 per cent
Frame	no more than 20 per cent
Enclosed	no more than 25 per cent
Fixing	no more than 30 per cent
Practical completion	no more than 7 per cent
Final	the remaining percentage

Two points about this table are widely got wrong.

First, the deposit is not in it. The 5 per cent deposit is a separate rule under regulation 41H(e) and regulation 41HE(1). Regulation 41HA(1) starts at base stage.

Second, the final payment is not fixed at 3 per cent. Regulation 41HA(1)(f) simply says "the remaining percentage". If every earlier cap is taken at its maximum, 5 plus 10 plus 20 plus 25 plus 30 plus 7 gives 97, leaving 3. Under the standard schedule the 3 per cent is arithmetic, not a rule.

The stages are defined, not left to argument

Regulation 41HA(2) defines each stage. Base stage varies by floor type. Enclosed stage requires cladding and roof covering fixed, the structural floor laid and external doors and windows fixed, with express tolerance for temporary fixing. Fixing stage covers internal lining, architraves, cornice, skirting, doors, baths, shower trays, wet area tiling and built-in joinery. Practical completion is when the work is complete apart from minor omissions or minor defects.

Final stage is the one with teeth. For work needing an occupancy permit, final stage is when the permit has been granted and a copy has been given to the contracting owner. Handing over the copy is part of the definition. For work not needing a permit, it is when the contractor has made all relevant declarations required under the Act and given the owner a copy, along with all relevant certificates and documents.

Restrictions on when money can be asked for

Regulation 41HE(2) does two jobs. A contractor must not request or receive a payment except as a progress payment after completion of the stage to which it relates, nor request or receive more than the percentage of the total contracted price specified in or under the contract. Maximum penalty is 50 penalty units.

Read that literally. Payment follows completion of the stage. There is no claiming ahead of the work, no front-loading and no drawing down against a stage in progress. The only money that lawfully moves before any work happens is the deposit, capped at 5 per cent. Regulation 41HE(5) lets a court that convicts order a refund of some or all of the amount paid.

Regulation 41HF adds a paperwork obligation with its own 50 penalty unit maximum: an invoice requesting a progress payment must include a declaration by the contractor that the work to which the invoice relates has been completed.

Departing from the standard schedule

Regulation 41H(g) permits a progress payment agreement where the parties have agreed to a variation of the standard progress payments, or where the contract is for a retaining wall.

Regulation 41HB sets the conditions. The agreement must be in the approved form and signed by the parties, must state that the parties have agreed to a variation of the standard progress payments, must specify the percentage payable after each stage up to final stage, must give details of each stage, and must specify the remaining percentage payable after final stage, which must be no less than 3 per cent of the total contracted price.

That is where the 3 per cent floor actually lives. It is a rule about alternative schedules, not about the standard one.

This is not security of payment

None of the above is the adjudication regime. The Construction Contracts (Security of Payments) Act 2004 (NT) is a separate statute with a separate purpose. Regulation 41HA governs what a residential contract may lawfully claim and when. The NT security of payment Act governs what happens when a claim goes unpaid. A builder can comply with the stage table and still end up in adjudication, and can win an adjudication on a schedule that breached regulation 41HE.