Responding to a security of payment claim

You are a Respondent if you:

  • are a party to a contract in which building or construction work or related goods or services are provided to you in Tasmania; and
  • are served with a payment claim under the Building and Construction Industry Security of Payment Act 2009 (the Act). A payment claim made under the Act must have written on it: "This is a Payment Claim made under the Building and Construction Industry Security of Payment Act 2009" or a similar statement.

What is a payment schedule?

A payment schedule is a notice in writing, which the Respondent must serve on the Claimant, if they do not intend to pay the full amount of the payment claim.

A payment schedule must:

  • be in writing and be addressed to the Claimant
  • identify the payment claim to which it relates
  • state the scheduled amount that the Respondent is willing to pay (it may be nil)
  • if the amount offered is less than the amount claimed, give all the reasons why that amount is being offered. For example, if payment is to be withheld, the Schedule must give the Respondent's reasons for withholding it
  • be posted, delivered by hand or faxed to the Claimant (service is as allowed under the Act or specified in the contract) so that it reaches them no later than 10 business days (or 20 business days if the Respondent is a residential home owner) after the Respondent received the payment claim. A payment schedule can also be sent by email by prior agreement of both parties.

A payment schedule may also include attachments containing detailed explanations of the reasons why the Respondent intends -

  • not to pay all the amount claimed; and
  • withholding any part, or all of the claimed amount, including how the withheld amount was calculated.

Implications of receiving a payment claim

Respondents need to have contract administration skills to ensure that they can meet critical timelines imposed by the Act.  Employees handling invoices and mail must be aware of the importance of a payment claim so that the Respondent has time to give consideration of amounts claimed.

If there is a disagreement over items claimed, it is important that a payment schedule is served within time, in the correct form and manner and giving all the reasons why a claim is disputed.

Does a Respondent have to provide a payment schedule?

If a Respondent fails to serve a payment schedule within time, they are liable for the full amount of the payment claim. If the Claimant then sues for recovery in a court, or seeks an adjudication of that amount, the Respondent cannot raise any defence based on the building or construction contract or raise any cross claim.

What happens if the Respondent does not submit a payment schedule in time and will not pay the claim?

A Claimant may then:

  1. Take the matter to a court and get an immediate judgment as a debt due to the Claimant; or
  2. Give notice that they intend to take their claim to an adjudication application and suspend work under the contract; and
  3. Excercise a lien over any plant of materials they supplied to the Respondent.

What if the Claimant disputes the Respondent's payment schedule?

If the Claimant disputes the Respondent's payment schedule, the Claimant may then apply for adjudication of that claim.  The Respondent will be notified of an adjudication application, and has 5 business days to deliver their submission to the appointed adjudicator.

If a Respondent's payment schedule fails to raise a defence, set-off (counter claim or cross-claim) or other reasons for not paying, they cannot raise that defence during adjudication proceedings.

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