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How to enforce a Payment Claim

Issuing a payment claim is part of the construction process in Australia’s building and construction industry.

A contractor presents a payment claim to his/her client to claim all the construction work done on the building project or the work completed for every phase. It is specified in this particular document all the work that had been done and how much each costs.

In the construction industry, every task completed always has an equivalent payment that contractors and builders rightfully deserve. Paying the people who carried out construction services and supplied goods and materials is obliged under the Building and Construction Industry Security of Payment Act 1999 which originated in New South Wales. Hence, payment claims should not be belittled as these claims are the rights enforced to the builders. Moreover, the Act also enforces the rights of builders and contractors to file an adjudication, recover debts, and even suspend work for a couple of days in case of payment disputes.

What is a Payment Claim?

In the Security of Payment Act, contractors and subcontractors should be given progress payments by issuing a document called a Payment Claim to make sure that they are deservedly paid for their construction services. The contractor becomes the claimant, while the client becomes the respondent. This is issued by the claimant indicating that it is served under Section 13 of the Security of Payment Act.

What should a payment claim contain?

  • The amount of the construction work.
  • Specific information of the work carried out and the materials supplied.

For a payment claim to be valid, it must:

  • Be served by the claimant (the contractor)
  • Be indicated that the said payment claim is served in accordance to the Security of Payment Act.
  • Indicate the work done and the amount being claimed.

Enforcing a Payment Claim

4 steps on enforcing a payment claim in Sydney | Contracts Specialist

Payment Claim Process

  • Contractor and client agree on a reference date.

  • Contractor issues a payment claim on the said date.

  • Client must respond by paying the amount stated on the payment claim or by issuing a payment schedule.

  • If no amount was paid or if no payment schedule was issued, the contractor may file for adjudication.

It is the issuance of payment claims and payment schedules that makes the payment process quicker.

What You Should Know First About Payment Claims

What is a Reference Date?

A reference date is the due date for progress claims. This is agreed upon by both the contractor and the client and should be included in the contract.

What if there is no reference date stated in the contract?

According to the Building and Construction Industry Security of Payment Act 1999 NSW, the last day of the month shall serve as the reference date.
A payment schedule is issued by the respondent or the client and states when he/she plans to pay the amount on the payment claim.

Under NSW’s construction law, the Building and Construction Industry Security of Payment Act 1999, the payment schedule shall contain the scheduled amount proposed by the contractor or the claimant. Moreover, the client or respondent must issue a payment schedule within 10 days.

What if no payment schedule is issued?​

  • The contractor is entitled to file for adjudication.
  • Work may be suspended on two business days’ notice.
If the respondent pays the claimant less than the amount being claimed, the respondent must indicate his/her reasons.

Can the claimant dispute the amount presented by the respondent on the payment schedule
and apply for adjudication?

In NSW’s construction law, the claimant is allowed to file for adjudication if the respondent did not seem to satisfy the claimed amount of the contractor. The claimant may apply for adjudication in 10 business days.

What is a Progress Payment?

A progress payment contains the claimed amount by the contractor (or claimant) for every work completed. In terms of the Building and Construction Industry Security of Payment Act 1999, progress payments include:

The final payment of the construction work including the work carried out and related goods and services that were written in the contract.

Single payment for all construction work and related goods and services written in the contract.

Payment based on a date or event. Also called a “milestone payment.”

 

What if the respondent did not pay any amount claimed by the claimant?

The claimant may file for adjudication and the payment shall become a debt.

What work is covered under a payment claim?

There are a number of construction work and services that can be claimed by the contractors. These construction work include landscaping, building work, maintenance, and electrical and civil engineering work. Other services include plant or equipment hiring, demolition, supply of construction materials, and even professional services such as soil testing and architectural design.

What work can be claimed under a payment claim?

Specified construction work can be claimed under a payment claim. A claimant (the contractor) may claim not just for the construction work and services that were done. A claimant may also claim for the construction materials supplied, overdue interest of progress payments, money from retention, as well as losses and additional expenses.

What contractor clients must understand with payment claims

Contractor clients must understand and must always keep in mind that construction work is a very tedious task. It must also be kept in mind that construction work can also be very expensive.

In a country like Australia where cities such as Sydney, Melbourne, and Brisbane are three of the most expensive cities for building and construction in the world, it is no question that the building and construction industry in the Land from Down Under requires an equivalent just process to enforce the right of contractors (and their employees) to acquire the payment that they deserve.

  1. Payment claims indicate the work completed for the building project. Contractor clients (the respondents) will be able to review first the progress of the work that has been done before deciding to issue a payment schedule.
  2. There is transparency with payment claims. With the breakdown of the amount that each construction work costs, the respondent is able to properly assess the claimed amount.
  3. It is a contractor’s RIGHT to claim the corresponding payment to his/her work. As mentioned earlier, issuing a payment claim is required under the Security of Payment Act. It is important for the client to know that such a law exists to avoid payment disputes like late payment, short payment, and non-payment.

CONTRACTS SPECIALIST

How can Contracts Specialist help with payment claims?

Contracts Specialist is focused on making sure that builders’ and contractors’ rights are enforced in accordance to the Security of Payment Act. We can help you from the planning phase until the completion of your building project and ensure you that you are rightfully paid for your construction work.

Our specialist building and construction lawyer has vast knowledge and experience in construction contracts and disputes, including on the application of the Security of Payment Act.

Because we have been doing this for a long time, we:

 

  • are able to assist clients quickly;
  • provide specialist advice;
  • are knowledgeable in all aspects of construction law and compliance;
  • inform clients of our costs without any hidden charges; and
  • offer qualified clients a “no win, no fee” option.

With Contracts Specialist, you can be assured that you will be in good hands.