ould you use them?

thousands of dollars and waiting months for a Court hearing, only to have the Court throw out your payment claim because you didn’t comply with all nine requirements.

You are supposed to “serve” your payment claim on your clients in the proper manner. Email is the best way, but you can only do that if your client has consented to receiving documents from you by email, or it’s clear from your past dealings that that’s the preferred method of communication. But you can also personally deliver the payment claim, post it to the clients’ usual or last known place of residence or business or leave it there instead, or fax it. Whatever method you use, make sure you have evidence of having done it, so your clients can’t later deny they received it.

Once you have served your payment claim, your clients have the opportunity to give you a payment schedule in response, but it is amazing how often they miss the deadline even though Form 1 spells it out in no uncertain terms. The deadline for a payment schedule is 20 working days after the payment claim is served, unless your contract with your client says something else. The standard-form building contracts in common use in New Zealand all specify shorter periods, but your contract may not.

Even if your clients make the deadline, their payment schedule may not be valid. There are six criteria they have to satisfy, and they are:

1. It must be in writing

2. It must identify the payment claim to which it relates

3. It must state the amount that they propose to pay

4. It must indicate the manner in which they calculated that amount

5. It must indicate their reason or reasons for the difference

6. Where the difference is because they are withholding payment on any basis, it must indicate their reason or reasons

Finally, just be aware that payment claims can also be used against you – by your subcontractors. So watch for the words “payment claim” on all incoming invoices, and train your staff to look for this immediately on receipt. Make sure you know what deadlines apply to each subcontract, because it may not necessarily be the CCA 20 working days. Have a payment schedule template ready to be completed, and send a payment schedule each time, even if the payment claim is repeated.

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