In New South Wales, respondents may receive payment claims from claimants under the Building and Construction Industry Security of Payment Act 1999 (“BCISOP Act”).
However, there are a number of key concepts that respondents need to understand in order to make sense of the dispute resolution system set up by this piece of legislation.
Without a firm understanding of the BCISOP Act, respondents may be vulnerable to the often-severe consequences of not dealing with payment claims appropriately.
ABC DRS provides a neat summary of the key areas of the BCISOP Act that a respondent should be familiar with in the text below.
After reading this information, you should be able to:
- Understand the role and responsibilities of the respondents with regard to the BCISOP Act.
- Realise the importance of payment schedules and know the process of serving valid documents.
On this page:
- What exactly is a respondent?
- Identifying a payment claim and what to do if you receive one
- The consequences of not responding to a payment claim correctly
- Providing a valid payment schedule
- What is a ‘Notice of Intent to Apply for Adjudication’?
- What happens after a valid payment schedule is served
- Find out more
Please be aware that the information on this webpage is intended as a general guide only and does not constitute formal legal advice.
ABC DRS does not provide legal advice. ABC DRS always recommends seeking professional help when preparing the required documentation for pursuing adjudication under the BCISOP Act.
Essentially the respondent is the person or entity required to make payment to a claimant for work completed under a construction contract in New South Wales.
Claimants may be of a variety of different types including main contractors, subcontractors, consultants, or suppliers of related goods and services.
A payment claim is the method that claimants use to engage the mechanisms of the BCISOP Act.
It’s a progress claim for work made under a construction contract but with certain features that signal to the respondent that the claimant may, in the future, rely on the provisions of the BCISOP Act in order to settle a progress payment dispute.
A payment claim only has to have the follow features to be considered valid.
The claim must
- Identify the construction work or related goods and services to which the progress payment relates
- Indicate the amount payable.
- State that it is made under the BCISOP Act (if the construction contract was entered into on or after 21 October 2019).
Furthermore, a payment claim may be considered valid if the document itself refers to other documents or invoices that may be attached.
A respondent should always satisfy themselves as to the validity of payment claims and should seek professional legal help if there are doubts.
After receiving a valid payment claim from a claimant, the respondent may choose to:
- Agree with the claim and pay the amount due by the due date for payment.
- Disagree with the claim and provide the claimant with a payment schedule that identifies the payment claim, indicates the amount they are going to pay and the reasons why the full amount is not being paid.
Generally, the payment schedule must be served on the claimant within ten business days of receiving the payment claim.
The respondent may choose to do none of the above but risks heavy consequences should the claimant pursue adjudication under the BCISOP Act.
Under the BCISOP Act, if the respondent does not provide a valid payment schedule within the required timeframes, or doesn’t provide a valid payment schedule whatsoever, the entire claimed amount becomes payable (presuming the claim satisfies the minimum criteria set out in the legislation).
The claimant may then:
- Serve the respondent with a Notice of Intent to Apply for Adjudication of the claim.
- Suspend work or the supply of related goods and services with immunity.
- Recover the unpaid portion of the payment claim in a court of competent jurisdiction as a debt owing.
It should be noted that the reasons set out on a payment schedule become the only reasons a respondent can rely upon for disputing the claim in any future adjudication applications. Except in very limited cases, no new issues may be raised as reasons for non-payment.
To provide a valid payment schedule, the respondent must:
- Explicitly identify the payment claim to which the payment schedule relates.
- Indicate the amount payable (the “scheduled amount”).
- If the scheduled amount is less than the claimed amount, the schedule must state the reasons why the amount is less.
- Serve the payment schedule within ten business days of being served with the payment claim.
It should also be understood that the claimant may contest the scheduled amount in adjudication proceedings should the claimant disagree with the respondents valuation of the payment claim.
Regardless, any amount scheduled on a payment schedule must be paid by the due date for payment, even if the claimant decides to engage adjudication proceedings.
The respondent should keep good records of when and how payment schedules have been served in case they are required to demonstrate service in future adjudication cases.
ABC DRS have provided an example payment schedule for consideration.
A ‘Notice of Intent to Apply for Adjudication’ is a document provided by the claimant to the respondent after the respondent has:
- Failed to provide a valid payment schedule.
- Also failed to pay the full amount of the payment claim by the due date for payment.
In these cases, the claimant essentially gives the respondent a second chance to provide payment or a valid payment schedule.
All the same rules apply except that the respondent now only has five business days in which to provide a valid payment schedule should they choose to dispute the claim.
There is a chance the claimant may simply accept the respondent’s reasoning and accept the amount indicated on the payment schedule.
However, as explained above, the claimant may choose to dispute a payment schedule should they disagree with the scheduled amount.
They may dispute this by lodging an adjudication application on an Authorised Nominating Authority (“ANA”) such as ABC DRS. The very same adjudication application must also be served on the respondent.
If the respondent has provided a valid payment schedule and the claimant engages the adjudication process, the respondent is then allowed for their adjudication response to be considered.
Further information on the adjudication process can be found in the relevant section in the New South Wales Adjudication Centre.
We appreciate that much of the information presented above may be complex and hard to understand. However, our trained staff members are more than willing to help you through the process of navigating the BCISOP Act. Please feel free to get in touch.
ABC DRS also offer specific training for understanding the BCISOP Act and also the pitfalls for respondents to avoid.