How do i respond to a payment claim under the security of payment act?

October, 2013

 

This article answers two questions

  1. How do I make a payment claim?
  2. How do I defend a payment claim?

If you have received a payment claim, then you have become the respondent. If you are the recipient of a valid payment claim, you must respond in the appropriate time frames.

Not responding is not an option

According to the Act, the respondent becomes liable to pay the claimed amount to the claimant on the due date for the progress payment to which the payment claim relates if:

  1. The claimant gives a payment claim to the respondent; and
  2. The respondent does not provide a payment schedule to the claimant within the earlier of:
  3. a) the time required by the relevant construction contract; or b) 10 business days after the payment claim is given to the respondent

Failure to respond in a timely manner may lead to a successful claim against you.

Here is the timing:

What do I include in my response?

In your response you must identify why such a claim is either invalid or that any or all of the claim is not to be paid. You need to provide a full account of all reasons. If you do not then if the claimant makes and Adjudication Application then you are not entitled to raise any new issues in an Adjudication response. This may be one of the biggest observable failings of respondents in this process. The timing is so tight in practice is often very difficult to respond in time. The best advice is to get help.

Understanding Adjudication

Just because someone makes a payment claim does not mean it will win in an adjudication application. The claimant must show in the application that a contract was entered and the work falls within the meaning of the act and that the respondent has refused to pay any or all of the amount and the process has been strictly followed.

An adjudication is an interim award. It is not final. Keep you documents in order, apply or respond in time and make sure you have a paper trail.

 

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