Vic: Payment Schedule NOT Served - Claimant NOT Paid
If a respondent fails to provide a payment schedule within 10 business days, or earlier time if provided by the construction contract, and does not pay the full or any part of the claimed amount by the due date for payment, a statutory debt is created which the claimant is entitled to recover upon demonstrating the work was performed under a valid construction contract between the parties.
The claimant may now decide from the following possibilities.
- Seek to recover payment by giving notice of adjudication; or
- Make application to the court; and
- Suspend work on giving 3 business days' notice.
Seek to recover payment by giving notice of adjudication
Almost all claimants choose to go to adjudication as this avenue avoids the risk of lengthy and expensive litigation. Often claimants also give 2 business day's notice of suspension of work. Adjudication is a quick and informal process introduced by government to "keep the money flowing in the building and construction industry". It represents an alternative to the slow, expensive and difficult process of going to court.
The right to make an adjudication application or to suspend work only arises after the due date for payment has passed. A common reason for an adjudication application not being properly made is that the claimant gives notice of adjudication either too early or too late because they have wrongly calculated the due date for payment. The due date for payment is the date on which a payment claim becomes due and payable either in accordance with the terms of the contract or, if there is no such valid provision, 10 business days after the payment claim is made. Proper calculation of this date is imperative as a number of milestones under the Act are calculated from this date.
Notice of Intention to Exercise Lien
If a progress payment became due and payable under the construction contract and 10 business days have elapsed, the claimant may serve a 'Notice of Intention to Exercise Lien'. The lien is exercised in respect of the unpaid amount of the progress payment over unfixed plant and/or materials that must be detailed in the notice. The Building and Construction Industry Security of Payment Regulations 2013 published form at Regulation 6 must be used when serving the notice.
Suspend work on giving 3 business days' notice
Regardless of whether the claimant chooses adjudication or litigation, there is a statutory right to suspend work on giving 3 business days' notice to the respondent.
Please move to the next step on the Victoria flowchart "Claimant chooses adjudication as faster and cheaper alternative to court action".