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/Factsheet_print/Tradespeople/Building_industry_essentials/Security_of_payment/_Responding_to_a_claim.pdf
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Standard fact sheet.

Responding to a claim 

Who is a respondent? 

You are a respondent to a payment claim if you:

  • are a party to a contract in which 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".

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What is a payment schedule? 

A payment schedule is the notice you must serve on a claimant if you do not intend to pay the full amount of 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 (it may be '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 may 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.

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Do I have to submit a payment schedule? 

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 sues for recovery of that amount, you cannot raise any defence based on the construction contract or raise any 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.

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What if the claimant disputes the payment schedule? 

If the claimant disputes your payment schedule, that claimant may apply for adjudication. When a claimant lodges an adjudication 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, but you must do so within 5 business days of receiving the application, or 2 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. (visit the Responding to an adjudication application page)

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

The claimant may:

  • go to court immediately or within the next 6 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.

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Can a claimant suspend work? 

Yes. A claimant can suspend work (following 2 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 5 business days after an adjudication determination.

However, if the whole amount due is paid, the claimant must resume work within 3 business days.

Despite anything 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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