IGNORING A S17(2) NOTICE WITHOUT AN INTENTION TO PAY THE FULL CLAIMED AMOUNT IS LIKELY TO HAVE SERIOUS FINANCIAL CONSEQUENCES***
As the respondent did not issue the payment schedule within 10 business days of receiving the payment claim nor pay the full claimed amount, the Act requires the claimant serve a notice under s17(2) to advise of the intention to proceed to adjudication and give the respondent a second opportunity to prepare and serve a payment schedule.
The period in which the respondent can serve the payment schedule on the claimant is reduced to 5 business days. A contract provision seeking to extend the period beyond 5 business days is void.
***Failure to serve the payment schedule within the 5 business days has the serious consequence of denying the respondent the opportunity to make any submissions (the adjudication response) to the adjudicator. Often, but not always, an adjudicator confronted with no submissions from the respondent may determine that the claimant is entitled to the full amount claimed.
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 it is proposed to make (it may be “nil”);
- If the amount that the respondent proposes to pay is less than the amount claimed in the payment claim, the respondent should set out:
- The amount (if any) that the respondent agrees to pay - the “scheduled amount”;
- The amount that the respondent does not agree to pay under the payment claim;
- Detailed reasons in the attachment(s) as to why the respondent intends not paying any amount with respect to the payment claim;
- Detailed reasons in the attachment(s) as to why the respondent intends withholding any amount with respect to the payment claim including how the valuation of the withheld amount has been calculated.
- If that amount is less than the amount claimed, state all the reasons why. The Act precludes the adjudicator from considering issues not included in the payment schedule.
The payment schedule is not served until it is delivered in person to the claimant or lodged during normal business hours at the claimant's ordinary place of business or posted or faxed to the claimants ordinary place of business (or as otherwise provided by the contract), so that it reaches the claimant no later than 5 business days after receipt of the s17(2) notice. The contract or common practice may provide for other methods of service, such as email.
We recommend that a record of the time, date and manner of service on the claimant be kept. A claimant may deny receipt of the payment schedule or claim receipt after the expiry of 5 business days. In this case, the respondent must be able to evidence the date of service.
In the absence of any contract provision, we suggest that service of the payment schedule be performed in one of the following ways with the preferred option being personal delivery by courier who requires a signature.
- Courier - signature required
- Fax - Print and keep full page fax journal report as evidence of transmittal
- Mail - Express Post: keep express post tracking number for delivery verification
- Platinum Post: signature required
- Ordinary Post: make a statement verifying the address, date of postage and other relevant details
- Registered mail - signature required
- Email (only to an email address which has a history of usage between the parties) - In email options, tick both "request a delivery receipt" and "request a read receipt".
Download example of a Payment Schedule
A common reason provided by respondents for not agreeing to a payment claim is that they have not been paid. Effectively the respondent is asking the claimant for an extension of payment terms. This defence and others to an adjudication application are expressly barred by the Act. The policy behind the Act is that a respondent should not cause a claimant financial detriment because of their problems. The Act provides a remedy to the respondent being to serve a payment claim on the principal and apply for adjudication of the dispute.
What contract provisions are void by the Act?
Void contract provisions include:
- Any provisions that are inconsistent with the Act;
- “Pay if paid” and “pay when paid” clauses, even if they are included in the contract;
- Clauses that attempt to “contract out” of the Act;
- Clauses aimed to deter a person from taking action under the Act; and
- Any provision which would limit interest on late progress payments to an amount less than the rate of interest on judgments of the Supreme Court.
Please move to the next step on the flowchart being EITHER "Respondent serves second opportunity Payment Schedule within 5 business days. As Payment Schedule now issued, process reverts to Payment Schedule Served" OR "Respondent does not serve second opportunity Payment Schedule within 5 business days" depending on the circumstances.
