A Respondent is the person who is served a payment claim from a Claimant under the Act and who under the construction contract is liable to pay the Claimant.
What do I do if I receive a Payment Claim made under the Act?
The Respondent may agreed to the claimed amount and pay such amount on the due date for payment OR reply to the claim by providing a Payment Schedule. The Payment Schedule must:
- identify the Payment Claim; and
- must indicate the amount of payment (if any) that the Respondent proposes to make.
If the amount of payment is less than the amount claimed, the Payment Schedule must indicate why the scheduled amount is less and reaons for withholding payment.
IMPORTANT: A Payment Schedule must be served before the end of the period in which payment is to be made under the contract, OR before the expiry of the applicable day, whichever expires earlier.
WHAT IF the Respondent does not provide a Payment Schedule within the required time and does not pay the Claimant the claimed amount on the due date for payment?
The Claimant must notify the Respondent within 20 business days immediately following the due date for payment of it's intention to apply for adjudication and gives the Respondent another opportunity to provide a Payment Schedule within 5 business days, this is referred to as S21(4) Notice.
THE CONSEQUENCES: If the Respondent does not provide a Payment Schedule within the required time, the Claimant may recover the claimed amount as a debt due in any court of competent jurisdiction, or may make an adjudication application, and may serve notice of the Claimant's intention to suspend carrying out the construction work or suspend the supply of related goods and services.
IF the Claimant applies for adjudication and the Respondent has not provided a Payment Schedule in either circumstance, the Respondent is NOT eligible to provide an Adjudication Response for an Adjudicator to consider. This could be detrimental to a Respondent as it is most likely the adjudicator will find in favour for the Claimant once he/she is satisfied the process has been strictly adhered to and the documents provided by the Claimant support the Claimant's claim.
GOOD BUSINESS PRACTICE: Assess all tax invoices/payment claims if they are endorsed "This is a payment claim made under the Security of Payment Act".