A respondent is a person who is or who may be liable to make payment to a claimant under a construction contract. After receiving a payment claim from the claimant, a respondent may agree with the claim and pay the claimed amount, or disagree with the claim and issue a payment schedule, which sets out the reasons for withholding payment, and also the amount due (the scheduled amount). The payment schedule must be issued within the earlier of i) the requirements of the construction contract, or ii) ten (10) business days after reciept of the payment claim.

In addition to this information, it is mutually beneficial if respondent's understand the responsibilities of the >> The Claimant

The payment claim is the statutory mechanism by which a claimant makes a progress claim for work completed or goods supplied under a construction contract. A payment claim can be easily identified by the following factors.

• The claim identifies the construction work or related goods and services to which the progress payment relates
• The claim states an amount that the claimant claims to be payable
• The claim states that it is made under the Act - typically the claim must have these words on the claim - This is a payment claim made under the Building and Construction Industry Payments Act QLD 2004

Once a payment claim is submitted to a respondent, a number of responsibilities are placed upon the respondent. The respondent has a number of options when replying to a payment claim. These include:

• The respondent may agree with the claimed amount and choose to pay the claimed amount. There is no requirement for a payment schedule if this option is chosen.
• The respondent may dispute the claimed amount and issue a payment schedule which indicates the amount that the respondent deems to be payable. Reasons for withholding payment from the claimant must be included on the schedule. The schedule must also identify the payment claim to which it specifically relates to.
• The respondent may not produce a payment schedule and/or payment of the claim. Respondent then leave themselves open to the consequences as illustrated in sections 19 and 20 of the Act.

Consequences of not providing a payment schedule

Section 19 of the Act describes the consequences, and liability, of respondents not providing a payment schedule within the time required by the Act. If a respondent does not provide a payment schedule they become liable to pay the claimed amount, the claimant has access to the following resolutions:

• They may make an adjudication application to the RICS DRS under section 21(1)(b) of the act.
• They may serve a notice of their intention to suspend work or supply of related goods under the contract. The applicable section of the Act is section 33.
• They may begin recovery of the unpaid portion of the claimed amount from the respondent as a debt owning to the claimant, in any court of competent jurisdiction. If the claimant starts proceedings with this method, the respondent is not entitled to bring any counter claim against the claimant, or raise any defence in relation to matters arising under the construction contract

The case of Walter Construction Group Ltd V CPL (Surry Hills) Pty Ltd [NSWSC] is a good example of the potential consequences for respondents when they fail to provide a valid payment schedule.

Consequences of not paying of an amount set out in a payment schedule

Section 20 of the Act describes the consequences, and liability, of respondents not paying an amount set out in a payment schedule within the time required by the Act. If the respondent fails to pay an amount due to the claimant that has been set out in a payment schedule, then the claimant has the following options:

• They may make an adjudication application to the RICS DRS under section 21(1)(a)(ii) of the Act.
• They may serve a notice of their intention to suspend work or supply of related goods under the contract. The applicable section of the Act is section 33.
• They may begin recovery of the unpaid portion of the claimed amount from the respondent as a debt owning to the claimant, in any court of competent jurisdiction. If the claimant starts proceedings with this method, the respondent is not entitled to bring any counter claim against the claimant, or raise any defence in relation to matters arising under the construction contract

Effect of providing a valid payment schedule in regards to adjudication

A valid payment schedule is a valuable defence for respondents in the case of an adjudication application. Section 24(3) of the Act states, "the respondent may give the adjudication response to the adjudicator only if the respondent has served a payment schedule on the claimant withing the time specified. 24(4) of the Act states, The respondent can not include in the adjudication response any reasons for withholding payment unless those reasons have already been included in the payment schedule served on the claimant.

The Adjudication Response is the respondent's official response to a claimant's adjudication application, which functions as the respondent's reply to the adjudication application and can clarify issues of non-payment as per the payment schedule. For more information on the adjudication response go to >> Submitting the Adjudication Response

The payment schedule must have the following aspects in order to be considered valid (reference section 18 of the Act):

• The payment schedule must identify the payment claim to which it relates
• The payment schedule must indicate the amount the respondent proposes to pay (the scheduled amount)
• If the scheduled amount is less than the claimed amount, the payment schedule must specify the reasons why the amount differs. If the amount is less because the respondent is withholding payment for any reason, the respondent must include these reasons.

The payment schedule is to be served on the claimant, by the person liable to make payment. It is recommended that a respondent keep evidence of when a schedule was served, by what method, and to whom.

The RICS DRS have provided an example payment schedule which adheres to the strictures of the Act. Download >> Example Payment Schedule