Tasmania: Respondent Does NOT Serve Payment Schedule after receipt of s21(4) Notice

The respondent need only serve a payment schedule if they do not propose to pay the full amount claimed by the due date. However if there is a dispute over the payment claim and given that a s21(4) notice has now been served, failure to provide the payment schedule within 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.

Unfortunately many respondents have made 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 renders the payment schedule invalid and, should the claimant give notice of 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 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 s21(4) 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 (or such shorter period provided by contract). 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 service which requires a signature.

1. Courier - signature required
2. Fax - Print and keep full page fax journal report as evidence of transmittal
3. Mail - Express Post: keep express post tracking number for delivery verification
4. Platinum Post: signature required
5. Ordinary Post: make a statement verifying the address, date of postage and other relevant details
6. Email (only to an email address which has a history of usage between the parties and/or as an agreed method of service of notices) - In email options, tick both "request a delivery receipt" and "request a read receipt"
7. A method prescribed under the relevant construction contract.

What happens now?

If the claimant is paid the full amount claimed by the due date of 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.

Secure in the knowledge that the respondent is being effectively punished by the Act for not providing written responses to the payment claim, the claimant still needs to satisfy the adjudicator of certain key components in any claim, including:

• The payment claim and s21(4) notice was served on the respondent's 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 Tasmania;
• 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 flowchart" being "Claimant has 10 business days after the 5 business days from receipt of s.21(4) notice has expired to prepare and serve Adjudication Application".