NSW: Respondent Does NOT Serve Payment Schedule within Time after receipt of s17(2) Notice

A payment schedule need only be prepared if the respondent does not propose to pay the full amount claimed by the due date. Once the s17(2) notice is received, the respondent now has only 5 business days to provide a payment schedule.

Unfortunately many respondents make the mistake of leaving their response until after the fifth business day in the belief that they have complied with the Act. They have not. Service on business day 6 means the payment schedule is out of time (invalid) and, should the claimant apply for adjudication, the respondent is not entitled to provide an adjudication response to the adjudicator.

The payment schedule is not served until it is delivered in person to the claimant or lodged, posted or emailed (if an email address is specified by the claimant) during normal business hours (or as otherwise provided by the contract) to the claimant's ordinary place of business, so that it reaches the claimant no later than 5 business days after receipt of the s17(2) notice. Fax is not permitted unless allowed by the contract.

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 (or such shorter period provided by contract). In this case, the respondent must be able to evidence the date of service.

What happens if the respondent does not provide a payment schedule?

Failure to provide a payment schedule within time compromises the respondent's right to participate in the adjudication process and increases the likelihood of an adverse outcome for the respondent.

If the respondent does not pay the full amount then the claimant can:

• Apply in writing to Adjudicate Today for adjudication of the claimed amount; or
• Sue in court or commence any dispute resolution process permitted by the construction contract; and / or
• Give notice of intention to suspend work.

What happens now?

If the claimant is paid the full amount claimed by the due date for payment, the payment process under the Act is complete.

If payment has not been made, the claimant having fulfilled the pre-adjudication notification requirements of the Act may now prepare the adjudication application.

To be successful in adjudication, the claimant still needs to satisfy the adjudicator of certain key components of its claim, including:

• The payment claim and s17(2) notice were served on the respondent at its normal place of business or otherwise as specified in any contract and within the time requirements of the Act;
• There was a construction contract in existence between the parties for work in the State of New South Wales;
• Work was performed under the contract which remains unpaid;
• The rate at which the work is to be remunerated and how the total amount claimed is calculated.

Please move to the next step on the NSW flowchart" being "Claimant has 10 business days after expiry of the 5 business days given by the Adjudication Notice to prepare & serve the Adjudication Application".