In construction law, your builder may serve you a payment claim if you fail to pay for their services. Sometimes, even the sub-contractor can serve you a payment claim if the builder that sub-contracted them fails to provide payment.
A person may be served with a payment claim stating that they owe money to the claimant. Under the Building & Construction Industry Security of Payment Act 1999 (The Act), the Respondent or the person being served with the payment claim must provide a payment schedule in response to the claim.
Responding to a payment claim
As a respondent, it is essential that you respond to the payment claim with a valid payment schedule on the claimant in reply. Generally you must serve a payment schedule onto the claimant within 10 business days of receiving the payment claim. Failure to do so will result in severe consequences, and the amount claimed becomes a statutory debt, which is legally enforceable against you.
However, sometimes the claimant may give you a second chance to respond to the payment claim. Known as the 17/2 notice in NSW, the claimant can give you another 5 business days for you to serve a payment schedule in reply. It is important that not all claimants will give you this type of leniency and therefore highly recommended that you provide the payment schedule within the originally required time frame.
What do I include in the payment schedule?
Under section 14 of the Act, a payment schedule must include the following:
- Identification of the payment claim
- The amount of the payment (if any) that the respondent proposes to make otherwise known as the ‘scheduled amount.’
What does this mean?
The payment schedule must identify the amount that is being claimed against you, and schedule the amount that is to be paid. As such, if you do not intend to pay the full amount, it is essential that you provide in your schedule document clear reasons as to why you may or may not be paying the amount in full. Forgetting to include the reasons for not paying the full amount in your payment schedule may prevent you from providing any reasons for non-payment in your adjudication response at all.
What does this mean for the amount being claimed?
Failure to outline reasons for partial or non-payment may cause an adjudicator to enforce the payment claim against you with costs and interest. To avoid this situation, it is therefore important for you to outline proper reasons for precluding payment of the full amount in your initial payment schedule.
Key Takeaways
- Upon receipt of a payment claim, it is crucial that you respond with a payment schedule immediately and within the required time frame.
- Failure to provide any response to the payment claim can make the claim a statutory debt enforceable by the law.
- It is thus essential that you outline any reasons for partial or non-payment in your payment schedule, otherwise the courts may enforce the statutory debt against you without giving you the chance to explain your reasons.
If you would like to speak with our construction lawyers, just contact us via 1300 337 997 or by filling out the contact form.
Kristine is a legal intern at OpenLegal. She is a fifth year UTS law student nearing the final stages of her law degree. She has previously worked for a boutique law firm and volunteered as a paralegal with the Refugee Advice and Casework Services (RACS).
Phil is a director at OpenLegal. He has over 16 years experience working in private practice and in-house counsel in Sydney and London, giving him expertise in employment law, IP, finance, leases, dispute resolution, insurance and contracts.
