Building & Construction Law Basics – Part 2 – Payment Schedules
We’ve recently launched our Building and Construction Law Basics series to give you the basics of the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (BIFA) and help those working in the building and construction industry shape their business practices and improve their prospects of successfully making or defending a claim for payment under BIFA. This is our second article in our series discussing the basics of BIFA.
If you missed our first article about payment claims, you can read it here.
If a respondent plans to dispute any part of the payment claim and does not intend on paying all of the claimed amount, then the respondent must provide a payment schedule in a response to the payment claim. Failure to submit a payment schedule can have serious consequences.
The first step is for the individual or company (“the respondent”) responsible for payment to submit a payment schedule to the individual or company who performed construction work or supplied related goods or services (“the claimant”). A payment schedule must:
- be in writing;
- identify the payment claim to which it responds;
- state the amount of payment, if any, the respondent proposes to make;
- state why the amount proposed to be paid is less than the claimed amount and provide detailed reasons for withholding any payment. Reasons not specifically included in the payment schedule will not be considered by the adjudicator later.
The second step is to provide the payment schedule to the claimant. The payment schedule must be properly served on the claimant within the earlier of:
- the period within which the respondent must give the payment schedule under the construction contract; or
- 15 business day after the payment claim is given to the respondent.
If a payment schedule is not served within the specified time frame, the respondent is liable to pay the amount claimed under the payment claim to the claimant on the due date for the progress payment to which the payment claim relates.
If the respondent does not pay the amount owed to the claimant in full on or before the due date for the progress payment. The claimant can:
- recover the unpaid portion of the amount owed from the respondent, as a debt owing to the claimant, in a court of competent jurisdiction; or
- apply for adjudication of the payment claim; and
- give the respondent written notice of the claimant’s intention to suspend carrying out construction work, or supplying related goods and services, under the relevant construction contract.
It is therefore best practice for the respondent to give a payment schedule that contains sufficient reasons why payment is being withheld or reduced when not paying the full claimed amount.
Stay tuned for part 3 of our Building and Construction Law Basics series.
With more than 15 years’ experience in the building and construction industry and as a commercial litigator with a focus on contractual disputes, debt recovery, building and construction for the last 10 years, our principal solicitor Sam Cohen brings a wealth of knowledge and experience in a complex area of law. If you would like to find out more about the payment schedule process or any other matters relating to building and construction, please contact us today!