Payment disputes are one of the most common occurrences in the building and construction industry. Because of these disputes, the Security of Payment Act was legislated to ensure that contractors, subcontractors, and suppliers get paid. This gives any person carrying out construction work and supplying materials the legal right to demand for payment.
Payment disputes commonly revolve around issuances of payment claims and payment schedules. This happens when the claimant (the one issuing the payment claim) claims for the construction work done but the respondent (the one issuing the payment schedule or making payment) refuses to pay, does not issue a payment schedule, or withholds payment. Consequently, the claimant may apply for adjudication and recover debt.
A payment claim is issued by the person carrying out the construction work and supplying related goods and services. It is a document containing the claimed amount and the breakdown of the prices. This is served to the person responsible to pay the amount on the payment claim.
Contents of a Payment Claim:
For payment claims in NSW, the payment claims must state that it is made under the Security of Payment Act, which goes as follows:
“This is a payment claim made under the Building and Construction Industry Security of Payment Act 1999 (NSW).”
This statement must be included in payment claims to ensure that its validity under the Act and to make it legally bound. In addition, it implies that the claimant has the legal or statutory right to demand payment.
A payment schedule is provided by the person whom the payment claim was issued to. It is a document containing the scheduled amount (the amount they propose to pay) in relation to the payment claim and the reasons for withholding payment. The respondent is obliged to respond to the payment claim as it is subject to the Security of Payment Act.
The respondent may include supporting documents for his/her reasons for denying or withholding the claim.
Contents of a Payment Schedule:
Yes, there is.
When we refer to ‘invoice’, we are talking about Tax Invoice. A Tax Invoice functions as evidence for the receipt of the payment and to help with applying the Goods and Services Tax or GST. Additionally, Tax Invoice is required under A New Tax System (Goods and Services Tax) Act 1999.
As for the Payment Claim, it functions as a request for payment. As mentioned earlier, this is issued by the contractor or builder who acts as the claimant. Moreover, a payment claim is required under the Security of Payment Act NSW 1999.
Under the Security of Payment Act, the claimant has the right to apply for adjudication when experiencing partial payment, late payment, and non-payment.
For this reason, it is advisable for builders and contractors to seek the expertise of a construction lawyer. Construction lawyers could assist in resolving payment disputes by helping the client in taking the proper steps to pursue an adjudication.
An adjudication is a resolution for parties engaged in a payment dispute. It involves a third party called an adjudicator to come up with a decision to resolve the payment dispute. Moreover, an adjudication is a quicker and less expensive resort than a court process.
Contracts Specialist is a Sydney-based construction law firm that deals with Building Disputes, Construction Contracts, Debt Recovery, and Security of Payment. With Contracts Specialist, you are ensured that you are in good hands.