What Constitutes a Valid Payment Schedule?

In NSW (and most states and territories in Australia), a party contracts to carry out construction work (or supply related goods and services) is able to seek progress payments pursuant to the Building and Construction Industry Security of Payment Act 1999 (NSW) (“the Act”). Oftentimes, the party required to pay (“the respondent”) disagrees with the amount claimed under the payment claim. In those circumstances, the Act requires the respondent to serve a payment schedule.

What is a payment schedule?

A payment schedule is the written notice required under section 14 of the Act. If the respondent disagrees with the amount claimed and refuses to pay the full amount of a payment claim, the Act requires the respondent to serve a payment schedule in writing stating the reasons for withholding payment.[1]

What constitutes a valid payment schedule?

A payment schedule must[2]:

1. Identify the payment claim to which it relates;
2. Indicate the amount of the payment that the respondent proposes to make; and
3. State the respondent’s reasons for withholding payment.

What is the timeframe for serving a payment schedule?

Under the Act, if the respondent does not intend to pay the claimed amount in full by the due date, a payment schedule is required to be served within 10 business days after the valid payment claim has been served (or within the time required by the contract, whichever time expires earlier)[3].

What if the respondent failed to serve a valid payment schedule in time?

If a respondent does not intend to pay the claimed amount in full and fails to serve a valid payment schedule within the timeframe, then the claimant becomes liable to pay the claimed amount in full (See our article What is a “Statutory Debt” Under the Building and Construction Industry Security of Payment Act? for more details).

If you require further assistance or have any questions, please get in touch with our building and construction team.

 

 

[1] Section 14, Building and Construction Industry Security of Payment Act 1999 (NSW).

[2] Section 14 (2) and (3), Building and Construction Industry Security of Payment Act 1999 (NSW).

[3] Section 14(4), Building and Construction Industry Security of Payment Act 1999 (NSW).