- Who is a respondent?
- What is a payment schedule?
- What important facts must I consider with respect to payment schedules?
- Can the claimant suspend work under the Act?
- What are the consequences of suspension?
- What contract provisions are void by the Act?
A PAYMENT SCHEDULE NEED ONLY BE PREPARED IF THE RESPONDENT DOES NOT INTEND TO PAY THE FULL AMOUNT OF A PAYMENT CLAIM UNDER THE ACT BY THE DUE DATE
A "Respondent" is a person who has received a valid payment claim and is liable, or may be liable, to make a payment under a construction contract [section 15(1)] or for related goods or services.
A payment claim under the Act must have written on it “This is a payment claim made under the Building and Construction Industry Security of Payment Act 2002 Vic”, or a statement to that effect.
A payment schedule is the notice in writing which must be served on a claimant if the respondent does not intend to pay the full amount of a payment claim under the Act by the due date. This is regardless of whether the respondent believes that the claimant is or is not entitled to make the claim.
The due date is the date on which a progress claim becomes due and payable either by virtue of a valid contract provision or if there is no such valid provision, 10 business days after the payment claim is made [section 12(1)].
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
- Identify any "excluded amounts" (see section 10B for a definition)
- Be 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 10 business days after receipt of the payment claim (or such shorter period if provided by the contract).
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".`
The payment schedule is not served until it is received by the claimant in the correct manner as detailed above. It is important that evidence of serving is kept, for example courier and/or fax receipts.
DOWNLOAD AN EXAMPLE OF A PAYMENT SCHEDULE
What important facts must I consider with respect to payment schedules?
If within 10 business days of being served with a payment claim, the respondent provides the claimant with a payment schedule and the claimant disputes the reasons for withholding the claimed amount or the respondent fails to pay the claimed amount by the due date, the claimant can apply to Adjudicate Today for adjudication of the claimed amount. Where the claimant disputes the reasons for withholding payment, the claimant must apply for adjudication of the claimed amount within 10 business days of receiving the payment schedule. Where the respondent fails to pay the scheduled amount by the due date, the claimant must apply for adjudication of the claimed amount within 10 business days after the due date for payment.
If after 10 business days of being served with a payment claim, the respondent has NOT provided the claimant with a payment schedule and has failed to pay the claimed amount by the due date, the respondent becomes liable to pay the claimed amount. This means that if a claimant sues for the amount of the payment claim, the respondent cannot raise a defence based on the construction contract or raise any cross claim. Therefore it is important to keep careful records of the date of receipt of a payment claim, the date by which the claimant must receive the payment schedule and evidence of serving the payment schedule on the claimant. However as an alternative to suing, the claimant may apply to Adjudicate Today for optional adjudication.
The notification for optional adjudication is made under section 18(2) of the Act. If the claimant elects to apply for optional adjudication, the claimant must notify the respondent within 10 business days of the due date for payment that they will be proceeding to adjudication. The notice of optional adjudication must include advice that the respondent has 2 business days to respond with a payment schedule before the claimant is entitled to make the actual adjudication application. If after service of the section 18(2) notice, the payment schedule is still not received or the claimant disagrees with the scheduled amount, the claimant has 5 business days from the expiry of the Section 18(2) notice to apply for adjudication.
In each of these circumstances the claimant may give notice of intention to suspend work.
Can the claimant suspend work under the Act?
Yes. Following written notice of 3 business days, the claimant can suspend work under the Act where:
- A payment schedule was not served within time and the whole claimed amount is not paid by the due date for payment; or
- A payment schedule is served and the whole scheduled amount is not paid by the due date for payment; or
- The adjudicated amount is not paid within 5 business days after an adjudication determination or review adjudication determination is received by the respondent.
What are the consequences of suspension?
Once the claimant is paid the whole amount due, work must be resumed within 3 business days or such less period as the contract provides (section 29).
Notwithstanding anything in the contract, the claimant is not liable for any loss or expense suffered by the respondent as a consequence of the suspension under the Act.
The respondent is not entitled to deduct any part of the work or the supply of goods or services from the claimant and is liable for any loss and expense suffered by the claimant as a result.
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.
