This is an important and powerful Act because it imposes a very strict timeframe. Any attempt to contract out of this Act is void. This Act does not apply to residential building work within the meaning of the Home Building Act 1989 on part of any premises which the party for whom the work is carried out resides in or proposes to reside in.

A party who provides construction work under a contract (a claimant) may serve a payment claim on the other party to the contract (the respondent) for progress payments. If the contract does not provide for progress payments the claimant can seek monthly progress payments. This payment claim must identify the construction work, indicate the amount claimed, and state that it is made under this Act. The payment is then due 10 business days after the claim is served unless the respondent serves a payment schedule.

If the respondent wishes to respond they must serve payment schedule within 10 business days. It must identify the claim and include the payment (if any) that the respondent proposes to make. If the agreed amount is less than the claim the respondent must indicate in the schedule why and any reason for withholding payment.

If a respondent fails to serve a payment schedule within the timeframe, or fails to pay an amount admitted under a payment schedule, the claimant can apply to a court to obtain a judgment or apply to have the matter adjudicated. If the schedule served is for a lesser amount the claimant can apply for the matter to be adjudicated. The respondent cannot in those court proceedings bring any cross-claim or raise a defence under the contract even for defective work. As a result of their failure to respond in time by way of a payment schedule the respondent would need to pay the judgment debt and then commence subsequent court proceedings to pursue the cost of or loss from the defective work. The process of adjudication similarly has requirements for notifications, submissions and responses, and any decision of the adjudicator can also be submitted to the court to obtain a judgment.

It is crucial that any one who receives a payment claim under this Act responds by way of a payment schedule within ten business days, and ensures that this payment schedule sets out your case and is served properly, otherwise you could be faced with the prospect of having to pay the judgment debt, and then start separate proceedings. Strictly speaking the adjudicator also should not take into account a claim for defective work, as this Act is intended to ensure progress payments, and defective work should be the subject of negotiations or proceedings upon completion. There are many other considerations in these matters including the contract itself and other parts of the Act, but the take away point is this, if you receive a payment claim under this Act, respond quickly.