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Quick Summary
Before we give you some tips, here is a short summary of how it all works:
- A person or entity (“the Claimant”) who provides certain goods / services has automatic rights to progress payments under security of payment laws
- If the Claimant is owed money, they may give the person or entity they are claiming payment from (“the Respondent”) a written claim for payment (called a ‘Payment Claim’)
- when the Respondent receives the Payment Claim, they can either:
- pay the Claimant the money being claimed, OR
- give the Claimant a written response to the Payment Claim, which is called a ‘Payment Schedule’, if they do not agree with the amount being claimed, and this Payment Schedule can indicate a lesser amount that the Respondent is prepared to pay, and the reasons why it is a lesser amount
- if the Claimant wishes to recover the full amount that they have claimed (i.e they do not agree with the Payment Schedule), the Claimant can then either go to court to recover the full payment, OR they can go to Adjudication, which is where an independent third party examines the case and makes a decision as to how much is payable to the Claimant
- the decision of the Adjudicator is legally binding, and the process is far less expensive than going to court
Note: A person or entity cannot make a claim under Security of Payment laws if the relevant contract relates to ‘residential building work’ under the Home Building Act 1989, AND the person against whom they are making the claim lives or intends to live in the premises where that work was done (i.e the home owner)
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Tips for the Claimant - (person / entity claiming a progress payment)
- If you are planning to submit a Payment Claim, make sure that you don’t submit it any earlier than the day upon which you can claim a progress payment (for more information, see our Online CPD Course Security of Payment Laws).
- Make sure each and every Payment Claim you submit includes the following words:
This is a Payment Claim under the Building and Construction Industry Security of Payment Act 1999 (NSW)
Tips for the Respondent -
(person / entity against who a progress payment claim is being made)
If you receive a Payment Claim, make sure you do ONE of TWO things (either ONE or the OTHER):
- Pay the amount stated in the Payment Claim within the time agreed in the contract; or if no time has been agreed, within ten (10) business days; OR
- Give the Claimant a Payment Schedule within ten (10) business days, identifying which Payment Claim it relates to, and detailing the lesser amount you are prepared to pay, and the reasons why you do not agree to paying the full amount (e.g defective works). You should also then pay this lesser amount to the Claimant
- Make sure each and every Payment Schedule you submit includes the following words:
This is a Payment Schedule under the Building and Construction Industry Security of Payment Act 1999 (NSW
If you fail to do either one of the above two things within ten (10) business days after receiving the Payment Claim, you will not be able to raise a defence or bring a cross claim against the Claimant if they take the matter to court. This is why it is so important that you take action immediately.
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