A late payment schedule did not count, and a $314,463.49 adjudication stood

What happened

Source: the judgment on NSW Caselaw. Numbers in [brackets] are the judgment’s paragraphs.

1. 31 January 2018 — Forte, the head contractor on an apartment project at Ryde, engages Lin Betty, a subcontractor, to do the Hebel block and Gyprock work [1].
2. 25 May 2018 — Lin Betty serves a payment claim on Forte [2].
3. 8 June 2018 — by this date at the latest, Forte’s time to serve a payment schedule (the written reply that says how much the payer will pay and why) has run out. Forte has not served one [2].
4. 15 June 2018 — Forte provides a payment schedule. It is out of time [2].
5. 17 July 2018 — Lin Betty gives notice under s 17(2) of the Act that it intends to apply for adjudication and gives Forte 5 more business days to provide a payment schedule [3].
6. 24 July 2018 — the 5 business days after the notice end. Forte has provided no payment schedule in that time [4].
7. 10 August 2018 — the adjudicator decides that $314,463.49 is payable. He treats the 15 June schedule as invalid, and treats Forte as having no right to lodge an adjudication response [6], [7], [21].
8. 19 September 2018 — the court decides Forte’s application to quash the adjudicator’s decision, which relied on three grounds. The court rejects all three grounds and dismisses the case with costs. The $319,573.89 that Forte had paid into court goes to Lin Betty [8], [47].

The rule

If the respondent provides no payment schedule within 10 business days of the claim, or any shorter time the contract sets, the respondent becomes liable to pay the claimed amount (s 14(4)) [13].

The claimant can then sue for that amount or apply for adjudication (s 15(2)) [14]. Before it applies for adjudication, the claimant must give the respondent notice. The respondent then has 5 business days after receiving the notice to provide a payment schedule (s 17(2)) [17].

The court followed an earlier decision, Taylor Projects v Brick Dept. Under that decision, the 5-day opportunity opens when the respondent receives the notice and closes 5 business days later. A schedule the respondent served earlier, out of time, does not count as its answer to the notice [26], [34]–[36]. The respondent may serve the same schedule again, but it must actually serve it within the 5 business days [26].

A respondent that provided no schedule within either time limit cannot lodge an adjudication response (s 20(2A)) [18]. The adjudicator must still consider the merits of the claim, but does not have to invent arguments that nobody made [39]–[41]. In this case, the adjudicator’s short reasons were enough [42]–[45].

What it means for you

If you’re paying: serve your payment schedule within 10 business days of the claim. If you miss that time and then receive a notice under s 17(2), serve a schedule within 5 business days of receiving the notice. Do this even if it is the same document you sent late [26]. If you do not, you lose the right to put your side to the adjudicator [18].

If you’re the trade: if the other side’s payment schedule is late, it does not count. On this decision, after you give notice under s 17(2), only a schedule served in the 5 business days that follow counts [34]–[36].