Previously we talked about the process for making a valid payment claim under the BCIPA. In this article we will talk about how to respond to a payment claim by preparing a payment schedule under the BCIPA.
You have a commercial construction project worth $250,000. On the last day of the month you receive a claim from your contractor for $250,000 and another $100,000 worth of variations. The variations are completely unjustified and you feel so aggrieved that you don’t even bother responding to them, instead you pay the contract value and bid them farewell.
A week later you receive a notice from the contractor requesting a payment schedule under the BCIPA. Well he’s certainly not getting that you think, you rip it up and throw it in the trash. Another two weeks pass by and you receive an adjudication notice in the mail and think what the heck is this?
Unfortunately that scenario is quite common across Australia and New Zealand. Let’s be honest – in the face of a claim that we see as completely ridiculous many of us would be tempted to rip it up and throw it in the bin. However when a claim is made under the BCIPA that sets the wheels in motion for what can ultimately be a costly experience if not responded to properly. Let’s look at S19(2) of the Qld Act (in NSW S15(2) is similar) which says what happens when a payment schedule is not made:
S19(2) The respondent becomes liable to pay the claimed amount to
the claimant on the due date for the progress payment to
which the payment claim relates.
and if you don’t pay S19(3) says:
S19(3) the claimant—
(i) recover the unpaid portion of the claimed amount
from the respondent, as a debt owing to the
claimant, in any court of competent jurisdiction
The Payment Schedule
The good news is that providing a valid payment schedule and hence preserving your rights under the BCIPA is very easy to do. S18 of the QLD Act and S14 of the NSW Act outline what is required.
18 (2) A payment schedule—
(a) must identify the payment claim to which it relates; and
(b) must state the amount of the payment, if any, that the
respondent proposes to make (the scheduled amount).
(3) If the scheduled amount is less than the claimed amount, the
schedule must state why the scheduled amount is less and, if it
is less because the respondent is withholding payment for any reason, the respondent’s reasons for withholding payment.
Responding within time is critical – generally the contract will specify the time you have to provide your payment schedule. If in doubt the sooner the better, however the Acts generally stipulate 10 days from receiving the claim. The content in your response need not be elaborate as well, here is an example of how simple it can be:
I have received your progress claim dated 30th May 2017 of $350,000 for the works at 97 Wilcott St. I agree that we owe you $250,000 for the contract works completed. However I do not agree with the variation claim of $100,000 that you have made for rock excavation. This is because clause 22 of the contract specifies that you must excavate all rock to build the foundations down to the level of the basement, so this is not a variation. The scheduled payment of $250,000 will be made next week into your bank account.
So long as you identify the claim that the schedule is in response to (in this case the 30th May 2017) the value you will pay ($250,000) and the reasons for with holding the difference (not a variation under the contract) then you have met your obligations and importantly you have preserved your right to defend any adjudication claim made.
If you have any questions or comments please leave them below or drop me an email. Good luck with your payment scheduling!