How to respond to a Security of Payment Claim (ACT)

This information sheet provides information on the Building and Construction Industry (Security of Payment) Act 2009 (ACT) that came into effect on 1 July 2010.

More specifically, it provides general information on responding to a Payment Claim under the security of payment laws.

Are you a respondent?

You are a respondent if you:

• are a party to a contract in which construction work or related goods or services are being provided to you in the ACT
• do not live or propose to live in the part of the premises where the construction work or related good or services are being provided to you
• are served with a payment claim under the Act, and this claim states the following: “This is a payment claim made under the Building and Construction (Security of Payment) Act 2009 (Act)”, or a statement to a similar effect.

What is a payment schedule?

A payment schedule is a written notice that you serve upon the claimant should you not intend to pay the full amount that is stated in the payment claim under the Act.

A payment schedule must:

• be in writing and addressed to the claimant
• identify the payment claim which it is relating to
• state the scheduled amount of payment which you propose to make (this may be ‘nil’). if the amount you propose is less than the amount claimed, you MUST state all the reasons why
• be posted, delivered or faxed to the claimant as allowed under the Act or in the contract, so that the schedule payment reaches the claimant no later than 10 business days after you received the payment claim.

What happens if you do not deliver a payment schedule within the timeframe?

If you do not serve a payment schedule to the claimant within the requisite timeframe, you are automatically liable for the amount claimed. If the claimant sues for the amount owing, you are not able to raise any defence based on the construction contract or raise any cross claim. It is therefore advisable that you keep an accurate record of when you received the payment claim and the date of when the claimant must receive your payment schedule.

What happens if the claimant disputes your payment schedule?

If your payment schedule is disputed by the claimant, they may apply for adjudication.

If this occurs you have a maximum of;

• seven business days after receiving a copy of the application, or
• five business days after receiving a notice of the adjudicator’s acceptance of the application

in which to deliver a submission to the adjudicator.

Note–­­ you are not able to raise any defence, set off, cross-claim, or other reasons for not paying the claim which you did not raise in the payment schedule.

What happens if you do not respond in time with a payment schedule and do not pay the claimant on the due date?

The claimant will have recourse to the following actions against you:

• recovery of unpaid portion of the claimed amount, as a debt due, in any court of competent jurisdiction
• within 20 business days of the due date for payment, give notice of an intention to make an adjudication application
• give notice of intention to suspend work
• exercise a lien over unfixed plant or materials supplied to you by the claimant.

Can a claimant suspend work under the Act?

The claimant is able to exercise this right under the Act, following two business days warning, if you fail to pay:

• the whole payment claim by the due date, where you failed to serve a payment schedule within the requisite timeframe
• the scheduled amount by the due date for payment
• the adjudicated amount within five business days after an adjudication determination is received by you.

Consequence of suspension

Once you have paid the whole amount due to the claimant, the claimant must resume work within three business days. If you have suffered loss or expense due to a consequence of the suspension of works, the claimant is not liable for costs stemming from this regardless of condition to the contrary in the contract. If you attempt to deduct any part of the work or supply of goods and services from the claimant due to the suspension, you will be liable for any loss or expense suffered by the claimant.