Responding to a Payment Claim – NSW Court of Appeal again confirms the importance of getting the schedule right

This week, the NSW Court of Appeal confirmed the need to ensure a schedule [in response to a Payment Claim under the Act] complies with the Act and details all reasons for withholding payment.

 In Witron Australia Pty Ltd v Turnkey Innovative Engineering Pty Ltd [2023] NSWCA 305 the Court  held:

There are three criteria for a document to be characterised as a payment schedule for the purposes of the Act:

a. That it identifies the Payment Claim to which it relates;
b. That it indicates the Payment Claim (if any) that the respondent proposes to make;
c. That it indicates why the payment that the respondent proposes to make is less than the amount claimed, that is, the reason or reasons for the amount claimed not being payable in the whole or part.

1. A payment schedule need not be a formal document and need not identify itself as a payment schedule. The requirements in s 14 are undemanding, although vague, generalised objections to payment will not suffice. What is sufficient is to be assessed in a purposive manner, taking account of the significance of the payment schedule in the statutory scheme.
2. A failure to address some distinct component of a payment claim may not be significant when viewed in context. It might still be possible to say that in substance the response had given reasons indicating why the scheduled amount was less than the amount claimed, sufficiently to enable the claimant to make a decision whether or not to pursue the claim and to understand the nature of the case it will have to meet in an adjudication. However, in general a failure to provide any reason or reasons directed to a distinct and substantial component of a payment claim will constitute a failure sufficiently to indicate why the scheduled amount is less than the amount claimed for the purposes of the Act.
3. The Schedule gave no reasons which can reasonably be seen as answering the distinct and substantial component of the claim relating to variations. An email stating that “we will review your variations” once progress had been achieved means that the Respondent  would not even consider the variations yet, and refused to grapple with the claim made. That does not serve to apprise the parties of the real issues in dispute. Insofar as it is a reason at all, it does not constitute a reason of the kind required by the Act.
4. A schedule must detail all reasons for non-payment of the amount claimed and new reasons cannot be relied on in an adjudication response.

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