In responding to a Payment Claim you must serve a Payment Schedule, some Contracts may call this a payment certificate. In this article I shall place myself in the shoes of a Project Owner / Head Contractor or Superintendent managing a Project. You are working with a building and / or construction contractor the “Claimant”, who has issued you payment claim or a progress claim or a progress payment or an invoice or a simple email requesting payment of an amount. Are they all the same ? or do they have different meanings ? Our first step in understanding the answer to these questions is if you have a Contract or not and if the work being performed is considered as “construction work” or “related goods and services” under the Building Industry Fairness Act 2017, BIF Act. If you do have some form of contract, be it oral, partly oral and partly written or written and the work is considered as “construction work” or “related goods and services” as defined by the Act, then a request for payment in any one of the previous terms can be considered as a “Payment Claim” under the BIF Act. That then makes you the Respondent as the person / company that needs to respond to the payment request, the Payment Claim. So what ? Well the key issue is that even though you may have a Contract, the Act still operates and is an overarching piece of Legislation that affords entitlements to Claimants and obligations on Respondents, including strict timeframes in which to perform particular duties. The Act can also prohibit certain types of Contract clauses from operating, resulting in you not being able to trigger particular mechanisms the way you might like to do. But the Contract outlines payment requirements so why is this important ? Because if your Contract does not accommodate for, contain or mirror the entitlements and obligations in the BIF Act then the Act can simply operate or override the provisions of the Contract in certain circumstances, particularly around withholding amounts. The Act also allows the Claimant to make an Adjudication Application against you which then locks you into a course of action which may result in you having to pay the full amount of the claim and one in which you have no choice but to participate. What’s an Adjudication Application ? An Adjudication Application is an application that can be made under the BIF legislation for an Adjudicator to decide an amount of the Payment Claim to be paid by you which results in an Adjudication Certificate that can be enforced in a Court of competent Jurisdiction as a Judgement Debt. Adjudication is a faster and more cost effective way for a Claimant to take action to recover payment rather than applying for a the matter to be heard in Court, which may take several months to years to reach some form of resolution. So What ? Well if you do not adequately take measures to address Payment Claims issued on you properly then you assume a number of risks which can have adverse consequences.  How to Protect yourself

• Understand ahead of time if your Contract or Work falls under the Building Industry Fairness Act 2017.
• Ensure you know the timeframe for which you need to respond to any request for payment, payment claim, and provide a payment schedule. Your contract may have a different time to that within the Act and that’s ok. If your contract does not state anything then the time under the Act is 15 business days. Make sure everyone knows the timeframe in your team.
• Be aware that if you do not provide a “Payment Schedule” you are committing an offence under the QBCC Act 1991 of 100 penalty units and possible disciplinary action.
• Know that even though you have a Contract a “Payment Claim” can take many forms and be called a payment claim or a progress claim or a progress payment or an invoice or a simple email and you should treat them seriously as your clock starts ticking from the date of submission. Make sure you are within time.
• Make sure that you clearly describe your response as a Payment Schedule such that there can be no misinterpretation as to what the document is. If you are deducting amounts or have a different valuation of the claimed amounts make sure you include good and extensive reasons as to why you have a different amount. If you do not include a reason and an Adjudication Application is made against you, you will not be allowed to provide new reasons later and will be likely liable for the full amount.
• Make sure the Payment Schedule is served on the correct person / representative as defined in the Contract. Correct service is an essential requirement for a valid Payment Schedule.
• If you have determined a lower amount than that of the Payment Claim, make sure you pay the amount as per the requirements of the Contract by the due date as there are more generous time requirements for Claimants in making Adjudication Applications if you do not pay. This limits the time they have to make an Application which is a good thing for you.

Finally, be proactive and never let a Payment Claim come in that you don’t know what might be on it or without having first had the discussions and agreed a valuation and an amount for each payment claim line item or at least understand where you and your Contractor may have a difference in valuation. This is just good old school contact administration and Contract set up in the first instance. Where you do make a determination or valuation that differs, make sure you stick to the Contract in valuing the work and provide a logical, clear and comprehensive reason and calculation for how you came to that valuation. Doing so can make your life so much easier later on. If you would like to learn more about how to structure your Contract progress payments in such a way so that you minimise your chances of your Contractor overclaiming and having valuation problems or if you would like to know exactly how to respond to a Payment Claim by providing a comprehensive and valid Payment Schedule, get in touch and we can assist by either performing the work on your behalf or training your staff on what to look out for and how to do what we do. Want to know more ? Check out some of our more detailed information on Adjudication here. We have put together a comprehensive guide in 7 parts. You can download all of them as a consolidated paper from the last article.