Payment schedules: It's all in the detail...
Updated: Feb 20, 2021
The Court of Appeal decision in Style Timber Floor Pty Ltd v Krivosudsky  NSWCA 171 reinforces the requirement that a payment schedule issued under section 14 of the Building and Construction Industry Security of Payment Act 1999 (NSW) must sufficiently describe the dispute to apprise the recipient of the case it would have to meet in an adjudication.
Section 14 of the Act provides that a payment schedule must identify the payment claim to which it relates and must indicate the amount of the payment that the respondent proposes to make (the ‘scheduled amount’). Section 14(3) provides that: ‘(3) If the scheduled amount is less than the claimed amount, the schedule must indicate why the scheduled amount is less and (if it is less because the respondent is withholding payment for any reason) the respondent’s reasons for withholding payment.’
Style Timber Floor Pty Ltd (STF) engaged Mr Krivosudsky to perform floor grinding and topping work at various sites in Sydney. A dispute arose as to the quality of the work, and STF refused to pay certain invoices. On 28 November 2017, Mr Krivosudsky served a payment claim on STF for $106,166.50.
On 30 November 2017, STF replied by email, inviting Mr Krivosudsky to attend STF’s office, where ‘I will show you the working agreement …, many emails, photos, videos, back charges from builders and other trades, complains from my clients. You will understand why I can’t pay you. The damages you done is more than what you claimed. Then, it’s up to you want you want to do next.’ [sic]
Mr Krivosudsky commenced proceedings in the District Court, seeking summary judgment for the claimed amount. STF tendered a body of email correspondence between the parties, claiming that when read with that correspondence, its email of 30 November 2017 constituted a valid payment schedule. A Judicial Registrar gave summary judgment for Mr Krivosudsky, holding that STF’s email of 30 November was not a valid payment schedule as it did not indicate STF’s reasons for refusing to pay. STF sought leave to appeal to the Court of Appeal.
In dismissing the appeal, the Court held:
While payment schedules need not be as detailed as, say, a pleading, they must sufficiently describe the dispute to apprise the recipient of the case it would have to meet in an adjudication. STF’s email did not meet that standard: , -.
Section 14(3) of the Act can be satisfied by serving a document that incorporates other documents by reference, provided that such documents are identified with sufficient particularity. Here, STF’s reference to ‘many emails, …’ was insufficiently specific: -, .