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  • Writer's pictureJohn Lowry

Payment Claims and Payment Schedules - How far to go?

Construction Payment has become a specialist area of competence. It is a complex process that requires special knowledge and skills.

Payment Claims and Payment Schedule were designed to mirror the traditional system for construction payment, at the same time giving it certainty and a time frame that provides for reasonable commercial payment terms.

The intention was to us the legislated process as the “business normal” method.

From and early time under the BCIPA Act (after 2004), when a payment claim required a statement to the effect it was indeed a payment claim, there was a view that any payment claim was pre-empting a dispute.

This situation was exacerbated by some advisors who were advising clients to only serve a payment claim when they had a looming dispute. Some respondents then started to produce, legally prepared, “over the top” payment schedules, in preparation for adjudication or the courts.

It took a long time to change this behaviour, and some changes to the law. As surprising as it seems, the industry still has a problem with taking payment seriously, until it becomes a problem. Even then, we know customers who refuse to change after being bitten multiple times.

In 2009, we developed an online payment claim / payment schedule application to streamline the process and ensure that it was correctly followed by claimants and respondents, avoiding mistakes and improving productivity. It was not well received by the market at the time, who still preferred the chaotic, “wild-west” rules that always applied.

In a recent Queensland case (1), the Court of Appeal considered that an argument about whether the validity of a payment claim, that dealt with work under more than one construction contract, should be raised in a payment schedule, rather than waiting for an adjudication response, where legal advisers are searching for hurdles to an application.

The Court of Appeal suggested that a respondent cannot simply sit by and raise this point later. If it is not put in a payment schedule and that such an argument ‘is a matter for adjudication after having been raised in a payment schedule‘. A payment claim which ‘purports to be made under one contract is not rendered invalid simply because at a later time (whether during adjudication or otherwise) it is determined that part of the claim was, in fact, a claim under a different contract’.

This comment is a departure from the generally accepted position that, notwithstanding limitations in the BIF Act on raising new reasons in an adjudication response, jurisdictional arguments may be raised for the first time in an adjudication response even if they have not been raised in a prior payment schedule. The NSW Supreme Court (2) did not agree with this proposition.

This suggestion from the Queensland Court of Appeal makes some sense. Whilst contractors and subcontractors may not need to know the finer points of the law, it is reasonable to expect that they should have a working knowledge of the law that is so central to the operation of their businesses.

Construction Payment has become a specialist area of competence. It is a complex process that requires special knowledge and skills.

It is no longer reasonable or sensible to throw invoicing to the girl on the desk, or the woman at home managing a small subcontracting business, without offering proper training, resources and authority.

It is a recipe for failure, especially with the looming Statutory Trust payment regimes.

I’ve been specialising in construction payment since 2005. Please contact me if you would like more information on how to protect and collect your payments.

(1) Ausipile Pty Ltd v Bothar Boring and Tunnelling (Australia) Pty Ltd [2021] QSC 39

(2) Ventia Australia Pty Ltd v BSA Advanced Property Solutions (Fire) Pty Ltd [2021] NSWSC 1534

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