How do you respond to a payment claim?

Serve a payment schedule on the claimant before the deadline. It has to identify the claim, state the amount you propose to pay, and give your reasons for paying less than was claimed. If you do not serve one in time, you become liable to pay the whole amount claimed, whatever you think the work was worth.

This page is for the party a claim is served on, usually the head contractor answering a subcontractor. It sits under payment schedules, which describes the document itself, and it is the other side of responding to a payment schedule.

First, work out when the clock started

The time to respond runs from when the claim was served on you. The date typed on the claim does not start it, and neither does the date somebody opened the email. If a claim sat in an inbox nobody watches, the clock ran anyway.

So the first thing to record about a claim is the day it reached you, and how it arrived. That date decides everything after it.

How long you have depends on the act your contract is under. The timing summary gives each jurisdiction's deadline beside the section of the act it comes from. Business days are not calendar days, and several acts exclude a Christmas period as well. Under most of the acts your contract can shorten the window but not lengthen it, because they take the earlier of the contract's time and the statutory one. New Zealand's act is the exception: there the time your contract sets applies, and the statutory period applies only where the contract sets none.

Then decide what you will pay, line by line

A payment schedule is not a letter saying the claim is under review. The acts prescribe what it must contain, set out in what it has to contain:

• which claim it answers;
• the scheduled amount, which is what you propose to pay. If that is nothing, the schedule has to say so; and
• your reasons, wherever the scheduled amount is less than the claimed amount. If you are withholding payment, say why.

Go through the claim line by line. Mark each line accepted, reduced or rejected, and write the reason beside every line you did not accept in full. A reason written against the line it explains is easier to defend than a general statement at the end.

Write the reasons as if you will be held to them

You probably will be. In most jurisdictions the reasons in the schedule are the only ones you can rely on later if the claimant applies for adjudication. A reduction you did not explain is hard to defend afterwards, even when there was a good reason for it at the time.

The reasons need to be specific enough for the claimant to understand what you disputed and why. "Not accepted" is not a reason. "Work not complete at the claim date: level 3 slab poured after the period end" is.

Serve it, and keep the evidence

A schedule only counts once it has been served, so serve it by a method the act and your contract allow, before the deadline. Then keep a record of when, how and to whom it went. If the claimant later says it never arrived, that record is your answer.

If you miss the deadline

If no schedule has been served when the deadline passes, the respondent generally becomes liable to pay the full claimed amount on the due date for payment. The claimant can then pursue it as a debt, or apply for adjudication, depending on the act. When no schedule arrives describes this from the claimant's side, and the timing summary gives the consequence in each jurisdiction, with its citation.

If a deadline has passed, or is about to, get advice promptly. Some acts give a respondent a second, short chance in particular circumstances, and those rules are strict.

The schedule is not the payment

Serving a schedule answers the claim. It does not pay it. The scheduled amount still has to be paid by the due date for payment, which is a separate statutory date (see the timing summary). A schedule that certifies an amount you then do not pay leaves the claimant with the same recovery routes as a claim nobody answered.