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Child Care Centre Owners and Building Contract Payment Disputes
On a number of occasions in the last year or so, Child Care Centre Owners in the course of having their Centre built have brought matters to us in which they have been served with payment claims under the Building and Construction Industry Security of Payment Act 1999 ("the Act") by builders.
This can be a very unfair thing for a builder to do as, usually, the Child Care Centre Owners have no idea of the importance of the the Building and Construction Industry Security of Payment Act 1999" .
What Child Care Centre Owners need to know is that if they do not take action within 10 business days they will end up being legally obliged to pay the full amount of the claim, no matter how inflated or unjustified it is, and there is no appeal.
What Child Care Centre Owners should do is to serve a payment schedule on the builder.
The payment schedule must be in writing and must identify the payment claim it is responding to.
e.g.. "We refer to your payment claim dated 23 May 2012." or "We refer to your progress claim number 6." . It should say how much of the claim you intend to pay and must indicate the reasons why you are not going to pay all or any part of it.
What should be in a payment schedule? The short answer is: everything. That is, everything which can justify your not paying the payment claim. That includes:
1. Any significant factual circumstance such as:
• That the work being charged for is not construction work within the meaning of the Act
• That the work is not within the ambit of the Act being residential building work in which the Owners reside or intend to reside (This may apply where the childcare centre is also the owner's residence)
• That the payment claim is being served more than 12 months after the last work was performed on the project.
• That the work is not adequately identified
• That the claim is premature under the contract
• That the work has a lesser value than that claimed by the builder
• That the Child Care Centre Owners have a counter claim arising under the contract such as a claim for liquidated damages or a backcharge.
2. That the claim of the builder in respect of delay costs is not justified:
• in terms of the period of the delay
• in terms of the cost of the delay
• that the builder has not properly applied under the contract for extensions of time
• that the builder has not properly applied under the contract for delay costs
• that the cause of delay was not a compensable cause under the contract.
Even if you have served the builder with a payment schedule in time, you are not out of the woods yet. The builder can then have the rights and wrongs of your refusal to pay his claim determined by an adjudicator, and if a reason has not been raised in a payment schedule, you cannot rely upon that reason in an adjudication, so in the payment schedule you must raise every possible reasonable objection you can.
If you need any help in this regard give us a call on (02) 9689 3992 or come and see us.
Peter Merity Solicitors
This can be a very unfair thing for a builder to do as, usually, the Child Care Centre Owners have no idea of the importance of the the Building and Construction Industry Security of Payment Act 1999" .
What Child Care Centre Owners need to know is that if they do not take action within 10 business days they will end up being legally obliged to pay the full amount of the claim, no matter how inflated or unjustified it is, and there is no appeal.
What Child Care Centre Owners should do is to serve a payment schedule on the builder.
The payment schedule must be in writing and must identify the payment claim it is responding to.
e.g.. "We refer to your payment claim dated 23 May 2012." or "We refer to your progress claim number 6." . It should say how much of the claim you intend to pay and must indicate the reasons why you are not going to pay all or any part of it.
What should be in a payment schedule? The short answer is: everything. That is, everything which can justify your not paying the payment claim. That includes:
1. Any significant factual circumstance such as:
• That the work being charged for is not construction work within the meaning of the Act
• That the work is not within the ambit of the Act being residential building work in which the Owners reside or intend to reside (This may apply where the childcare centre is also the owner's residence)
• That the payment claim is being served more than 12 months after the last work was performed on the project.
• That the work is not adequately identified
• That the claim is premature under the contract
• That the work has a lesser value than that claimed by the builder
• That the Child Care Centre Owners have a counter claim arising under the contract such as a claim for liquidated damages or a backcharge.
2. That the claim of the builder in respect of delay costs is not justified:
• in terms of the period of the delay
• in terms of the cost of the delay
• that the builder has not properly applied under the contract for extensions of time
• that the builder has not properly applied under the contract for delay costs
• that the cause of delay was not a compensable cause under the contract.
Even if you have served the builder with a payment schedule in time, you are not out of the woods yet. The builder can then have the rights and wrongs of your refusal to pay his claim determined by an adjudicator, and if a reason has not been raised in a payment schedule, you cannot rely upon that reason in an adjudication, so in the payment schedule you must raise every possible reasonable objection you can.
If you need any help in this regard give us a call on (02) 9689 3992 or come and see us.
Peter Merity Solicitors
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