Who is a Respondent?
A Respondent is a person who is served a payment claim by a claimant under the Building and Construction Industry Payments Act 2004 ("the Act"). A payment claim is served by a claimant for the recovery of progress payments, final payments, retention moneys and other moneys due under a construction contract.
A Respondent is a party who has gained the benefit of building and construction work or related goods and services under a construction contract.
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What is a payment schedule?
A Payment Schedule is the notice in writing that a Respondent is required to serve on the Claimant if they do not intend to pay the full amount of a Payment Claim made under the Act.
A Respondent has a limited number of days in which to respond to the Claimant having been served a payment claim by serving the Claimant with a Payment Schedule.
This time limit is either 10 business days after the Payment Claim is served, or as per the time required by the relevant construction contract, whichever is the earlier period.
It is important for both Claimants and Respondents to keep accurate records in respect to recording dates of delivery and receipt of these documents, in the event the matter proceeds to Adjudication or legal proceedings.
Once served with a Payment Claim, the Respondent becomes liable to pay the entire claimed amount to the Claimant on the due date for the progress payment, unless the Respondent serves a Payment Schedule within the above mentioned time limits.
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What should the Payment Schedule contain?
The Respondent must prepare in writing a Payment Schedule addressed to the Claimant, which includes the following information:
- Clearly identify the Payment Claim to which the Payment Schedule has been prepared in response to;
- State the scheduled amount of the payment, if any, that the Respondent proposes to make to the Claimant;
- If the scheduled amount stated is less than the claimed amount (the amount stated in the Payment Claim as due for payment), the Payment Schedule must clearly state why it is less. If the reason for the scheduled amount being less is because the Respondent is withholding payment for any reason, these reasons must also be clearly explained in the Payment Schedule.
A Payment Schedule must be posted, delivered or faxed to the Claimant as specified under the contract or allowed under the Act.
It is important to note that the Respondent should pay the Claimant any undisputed amount on or before the due date for payment.
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What are the consequences for the Respondent if the Scheduled Amount (Payment Schedule) is less than the Claimed Amount (Payment Claim)?
If the Respondent serves a Payment Schedule on the Claimant within the 10 business day limit, however, the scheduled amount is less than the claimed amount; the Claimant has the option of applying for adjudication of the matter if they disagree with the reasons stated by Respondent for denying payment.
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What are the consequences for the Respondent if they serve a Payment Schedule on the Claimant; however fails to pay either whole or any part of the scheduled amount?
If the Respondent serves a Payment Schedule on the Claimant within the 10 business day limit, however, fails to pay either the whole or any part the scheduled amount on or before the due date for payment, the Claimant has the choice of:
- Applying for adjudication; or
- Suspending construction work or the supply of related goods or services until paid; or
- Seeking to recover the unpaid portion as a statutory debt created under the Act (liquidated claim) in a court of competent jurisdiction; or
- Applying for adjudication and suspending construction work or the supply of related goods or services; or
- Suspending construction work or the supply of related goods or services and seek to recover the unpaid portion as a statutory debt created under the Act (liquidated claim) in a court of competent jurisdiction.
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What are the consequences for the Respondent if they neither serve a Payment Schedule, nor pay either whole or any part of the claimed amount on or before the due date for payment?
Should the Respondent fail to serve a Payment Schedule on the Claimant and also fail to pay either the whole or any part the claimed amount on or before the due date for payment, the Claimant has the choice of:
- Applying for adjudication; or
- Suspending construction work or the supply of related goods or services until paid; or
- Seeking to recover the unpaid portion as a statutory debt created under the Act (liquidated claim) in a court of competent jurisdiction; or
- Applying for adjudication and suspending construction work or the supply of related goods or services; or
- Suspending construction work or the supply of related goods or services and seek to recover the unpaid portion as a statutory debt created under the Act (liquidated claim) in a court of competent jurisdiction.
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Can a Claimant suspend work or the supply of related goods or services under the Act?
Under the Act a Claimant has the statutory right to suspend construction work or the supply of related goods or services in the three specific circumstances where a statutory debt created under the Act has not been paid.
When a Claimant exercises their statutory rights in this regard, the Respondent cannot sue the Claimant for alleged liquidated damages due to this action.
The three circumstances where a statutory debt is created under the Act are when the Respondent fails to pay either:
- The whole amount claimed by the due date for payment, where the Respondent failed to serve a payment schedule within time;
- The scheduled amount by the due date for payment;
- The adjudicated amount within 5 days after the due date for payment or by such later date as the adjudicator determines.
A Claimant must give a Respondent 2 business days warning of their intention to suspend.
Once a Claimant has been paid, they must resume work within 3 business days.
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