Responding to a payment claim

Who is a respondent?

You are a respondent to a payment claim if you:

  • are in a contract where construction work or related goods or services are being provided to you in NSW;
  • do not live or propose to live in the part of the premises where the construction work or related goods or services are being provided to you; and
  • are served with a payment claim.

NOTE: A payment claim served in connection with an exempt residential construction contract must state:

"This is a payment claim made under the Building and Construction Security of Payment Act 1999 NSW"

What is a payment schedule? (Section 14)

A payment schedule is the notice you must serve on a claimant in response to a payment claim. A payment schedule must:

  • be in writing and addressed to the claimant;
  • identify the related payment claim;
  • state the scheduled amount of payment that you propose to make if any (and includes the amount of “Nil”);
  • state all the reasons why if the payment is less that the amount claimed; and
  • be posted, delivered or faxed to the claimant to reach them within 10 business days after you received the payment claim.

The payment schedule should also include attachments containing detailed explanation of the reasons why you intend:

  • not to pay any or all of the claimed amount; or
  • to withhold any or all of the claimed amount including how the valuation of the withheld amount was calculated.

Do I have to submit a payment schedule? (Section 15)

No. But if you don't submit a payment schedule within the allocated time to do so, you are liable for the full amount claimed. If the claimant applies for adjudication or starts Court action to recover that amount, you cannot raise a defence based on the construction contract or a cross-claim.

IMPORTANT: Pay attention to the date the payment claim was received, and the date when the claimant must receive your payment schedule if you decide to submit one.

What if the claimant disputes the payment schedule?

If the claimant disputes your payment schedule, that claimant can apply for adjudication. When a claimant makes an application, they must serve a copy of the application on you. Once an adjudicator accepts the referral, they must also notify you in writing. You can lodge an Adjudication Response with the adjudicator within five business days of receiving the application, or two business days of receiving the adjudicator’s acceptance, whichever comes later. You cannot raise any defence, set off, cross-claim, or other reasons for not paying that you did not include in the payment schedule. Go to the responding to an adjudication application page for more information.

What if I don't submit a payment schedule in time and I don't pay the claim? (Section 15)

The claimant may:

  • go to court immediately or within the next six years to file a summons and obtain judgment for the total amount of the payment claim; or
  • give notice of intention to make an adjudication application (within 20 business days of the due date for payment).

If either of these actions is taken, the claimant may:

  • give notice of intention to suspend work; or
  • exercise a lien (the right to seize and sell goods so as to obtain payment) over unfixed plant or material supplied to you by the claimant, and use the Contractors Debts Act 1997 to recover money directly from the principal.

Can a claimant suspend work? (Section 27)

Yes. A claimant can suspend work (following two business days' warning) if the respondent fails to pay:

  • the whole amount claimed by the due date for payment (where no payment schedule was served)
  • the scheduled amount by the due date for payment (as indicated in a payment schedule provided within the set timeframe); or
  • the adjudicated amount within five business days after an adjudication determination.

However, if the whole amount due is paid, the claimant must resume work within three business days.

Despite anything outlined in the contract, the claimant is not liable for any loss or expense suffered by the respondent resulting from work being suspended. Also, if a respondent deducts any part of the work or the supply of goods or services from the claimant, then the respondent is liable for any loss and expense suffered by the claimant.

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