This is the second article explored by our litigation lawyers gold coast, in our three-part series regarding the operations of the Building Industry Fairness (Security of Payment) Act 2017 (' BIF Act ' ). The BIF Act was introduced primarily to simplify the procedure for recovering payments owing to contractors in the building and construction industry.
In this three-part article series, Ramsden's litigation lawyers Gold Coast shares their insights on the procedural and dispute resolution aspects of the BIF Act. Part one of the series focused on issuing a payment claim and part three of the series will focus on the adjudication process. In this part, the litigation team outlines how to issue a payment schedule in accordance with the BIF Act.
WHAT IS A PAYMENT SCHEDULE?
As discussed in part one, once you have been served with a payment claim, you are referred to as the respondent thereafter. The respondent is the party responsible for payment of the relevant building and construction services. When responding to a payment claim, you can elect to either pay the amount claimed in full or provide a payment schedule indicating what you believe to be the actual amount due and owing to the claimant.
A payment schedule must:
- be a written document;
- identify the payment claim which you are responding to;
- state the amount you intend to pay; and
- if applicable, provide reasons for paying a lesser amount than that claimed in the payment claim.
If you disagree with any claimed amount, you must provide a payment schedule within 15 business days of the payment claim. With that said, depending on the terms of the relevant construction contract, you may need to serve a payment schedule even earlier. To that end, you should review and keep a detailed log of all contract dates, payment claims and payment schedules to ensure you are not missing any important dates.
It is important to note that you must never ignore a payment claim. Ignoring a payment claim may result in serious consequences under the BIF Act, including being fined by the QBCC, the suspension of construction works or the claimant taking steps to recover the entirety of the amount deemed owing on the payment claim in question. Those risks are further explained below.
COMMON MISTAKES WITH PAYMENT SCHEDULES
Failure to serve a payment schedule
Under the BIF Act, failing to serve a payment schedule within the required time (i.e. 15 business days from the date of the payment claim (or within the time stipulated under the contract)) is an offence, which can expose you to disciplinary action under the Queensland Building and Construction Commission Act 1991 (Qld).
Upon failure to serve a payment schedule, you otherwise likely:
- forfeit your rights to dispute the amount claimed in any subsequent adjudication or legal action (save for, potentially, raising jurisdictional issues); and
- become liable to pay the full amount claimed under the payment claim.
With the above in mind, failing to serve a payment schedule could result in serious financial and legal consequences.
In the case of Melaleuca View Pty Ltd v Sutton Constructions Pty Ltd [2019] QSC 226, the Queensland Supreme Court held that the defendant had failed to serve a payment schedule in accordance with the BIF Act, because the payment schedule did not:
- identify the relevant payment claim to which it was responding to; and
- confirm the amount (if any) proposed to be paid in respect of the relevant payment claim.
The Court confirmed that the onus is on the respondent to ensure it has complied with the requirements of the BIF Act, just as a claimant must provide a payment claim that accords with the BIF Act.
FAILURE TO PROPERLY SERVE A PAYMENT SCHEDULE
To ensure your interests are properly protected, you must ensure that your payment schedule is properly served. In order to ensure there is no dispute regarding service of the payment schedule, it is best practice to send the payment schedule to the address(es) for service listed in the relevant construction contract, including (among other things) the relevant postal address, registered office and email address.
If you do not serve your payment schedule by the above means, and the matter proceeds to adjudication, there is a risk that the adjudicator may determine that the payment schedule was not validly served and determine that the amount claimed within the payment claim is due and owing.
ADJUDICATION APPLICATION
Under the BIF Act, if you have failed to serve a payment schedule, then you will be prohibited from making an adjudication response. This means that, when the adjudicator is making their decision, the adjudicator will generally only consider the adjudication application and the relevant payment claim, as well as determining issues of jurisdiction (that is, among other things, that there was a valid reference date under the contract to serve the payment claim). To that end, without a valid payment schedule, the adjudicator may be more inclined to find in the claimant's favour in the absence of an adjudication response, which also exposes you to having to pay the adjudicator's fees of the adjudication.
FAILURE TO PROPERLY ACKNOWLEDGE A COMPLEX PAYMENT CLAIM:
Under the BIF Act, a complex payment claim is a payment claim for an amount more than $750,000. Under the BIF Act, a respondent is allowed a greater time to provide an adjudication response to complex payment claims, which will be addressed in Part 3 of this newsletter series.
OUR ROLE AS LITIGATION LAWYERS GOLD COAST
If you are looking to seek legal advice regarding a building or construction dispute, Ramsden Lawyers are able to assist you in navigating the procedures set out under the BIF Act. There are strict timeframes that you must follow whether defending or bringing a claim in building and construction disputes. You must act without delay in order to protect your interests, so please do not hesitate to contact our experienced litigation lawyers Gold Coast to arrange a free, no obligation initial consultation.
The content of this article is intended to provide a general guide to the subject matter and must not be relied on as legal advice. Specific advice should be sought about your circumstances.
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