Building and Construction Law – Responding to a payment claim
With the recent implementation of certain parts of the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (Act) on 17 December 2018 it’s important to consider again what to do when you receive a payment claim where the Act applies.
If you are a contractor and receive a payment claim from your subcontractor seeking a sum of money which is disputed, it is very important to issue a payment schedule in the circumstances challenging all or the part of the payment claim in dispute. If you fail to do so, the implications are serious.
When is the payment schedule due?
The payment schedule must be given to the claimant within the earlier of the time stipulated by any contract in place between the parties or 15 business days after the payment claim is given to the respondent.
What does the payment schedule need to look like?
At a minimum, the payment schedule must be a written document that:
(a) identifies the payment claim to which it responds;
(b) states the amount of the payment, if any, that the respondent proposes to make;
(c) if the amount proposed to be paid is less than the amount stated in the payment claim, states why the amount proposed to be paid is less, including the respondent’s reasons for withholding any payment; and
(d) includes the other information prescribed by regulation.
What happens if I don’t issue a payment schedule?
If a respondent fails to issue a payment schedule within the appropriate timeframe (set out above) and fails to pay the amount claimed, the respondent is liable to pay the amount claimed under the payment claim to the claimant on the due date for the progress payment. The claimant then has two options to enforce payment of the payment claim, which include adjudication or Court. If the claimant wishes to proceed to Court it must issue a warning notice in accordance with the Act. If the claimant wishes to proceed to adjudication instead, it can do so without issuing a warning notice to the respondent as used to be the case under the previous legislation (BCIPA). In other words, don’t expect to receive a second warning before an adjudication application is filed.
It’s important to note that if the respondent has not issued a payment schedule to the claimant as required by the Act, it is then precluded from filing an adjudication response at adjudication, which means the adjudication will be decided without consideration of any submissions the respondent wishes to make about the payment claim or matters the subject of the adjudication. There are very limited grounds to overturn any adjudication decision made in those circumstances.
If the claimant proceeds to recover the payment claim amount in Court, the respondent cannot raise a defence or counterclaim in response to matters arising under the contract, where the respondent has not issued a payment schedule (or paid the amount it agreed to pay under any payment schedule (if any)). In other words, it is difficult and usually inappropriate to defend a claim brought in those circumstances.
The implications are therefore very serious.
If you’re uncertain about your rights or how to deal with a payment claim please contact one of our commercial lawyers at McLaughlins Lawyers.
Author: Matt Kollrepp
Directors: Ian Kennedy
Date: 23 April 2019