Responding to a claim - frequently asked questions

Who is a respondent?

You are a respondent if you:

  • are a party to a contract in which construction work or related goods or services are being provided to you in NSW
  • do not live or propose to live in the part of the premises where the construction work or related goods or services are being provided to you, and
  • are served with a payment claim under the Act.
A payment claim under the Act must have written on it "This is a payment claim made under the Building and Construction Security of Payment Act 1999 NSW", or a statement to that effect.

 

What is a payment schedule?

A payment schedule is the notice in writing, which you must serve upon a claimant if you do not intent to pay the full amount of a payment claim under the Act.

A payment schedule must:

  • be in writing and addressed to the claimant
  • identify the payment claim to which it relates
  • state the scheduled amount of payment that you propose to make (it may be 'nil')
  • if that amount is less that the amount claimed, state all reasons why, and
  • be posted, delivered or faxed to the claimant as allowed under the Act or the contract, so that it reaches the claimant no later than 10 business days after you received the payment claim.
The payment schedule may also include attachments containing detailed explanation of the reasons why you intend to:
  • not pay any or all of the claimed amount, and
  • withhold any or all of the claimed amount including how the valuation of the withheld amount has calculated.

Do I have to submit a payment schedule?

If you fail to serve a payment schedule within time, you are liable for the amount claimed. If the claimant sues for recovery of that amount, you cannot raise any defence based on the construction contract or raise any cross claim.

Therefore, keep a careful record of the date of receipt of the payment claim and the date when the claimant must receive your payment schedule.

What if the Claimant disputes the Payment Schedule?

If the claimant disputes your payment schedule that claimant may apply for adjudication. In such cases, you have a maximum of 5 business days in which to deliver a submission to the adjudicator.

You cannot raise any defence, set off, cross-claim, or other reasons for not paying that you did not state in the payment schedule.

What if I don't submit a payment schedule in time and don't pay the claim?

The claimant may:

  • go to court immediately (or up to 6 years later) to file a summons and obtain judgement for the total amount of the payment claim, or
  • within 20 business days of the due date for payment, give notice of intention to make an adjudication application
  • in either event, give notice of intention to suspend work
  • exercise a lien over unfixed plant or material supplied to you by the claimant, and use the Contractors Debts Act 1997 to recover money directly from the Principal.

Can a claimant suspend work?

Yes. A claimant can suspend work under the Act, following 2 business days warning, if the respondent fails to pay:

  • the whole claimed amount by the due date for payment, where no payment schedule was served
  • the scheduled amount by the due date for payment, or
  • the adjudicated amount within 5 business days after an adjudication determination.
However, if a claimant is paid for the whole amount due, the claimant must resume work within 3 business days.

Nothwithstanding anything in the contract, the claimant is not liable for any loss or expense suffered by the respondent as a consequence of a suspension under the Act.

Further, if a respondent deducts any part of the work or the supply of goods or services from the claimant, the respondent is liable for any loss and expense suffered by the claimant.