Strata Managers Beware – Emails can be a Payment Schedule?

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The recent Magistrate Courts case of Wetlock Industries Pty Ltd trading as Wetlock Waterproofing v Body Corporate for City Link [2016] QMC 9 demonstrates why Strata Managers must not only be vigilant in responding to all payment claims pursuant to the Building and Construction Industry Payments Act 2004 (BCIPA), but should also ensure that any amounts admitted in the payment schedule is paid by the due date.

Facts

  • The respondents, City Link Body Corporate engaged Wetlock Industries(Wetlock) to perform remedial waterproofing works;
  • Wetlock served a tax invoice on City Link that was endorsed as a payment claim pursuant to BCIPA on 4 March 2016;
  • City Link’s representative responded on 11 March 2016 by email and admitted that an amount of $25,770.25 is due, but denied that any amount is due in relation to variations, because City Link was not aware of and had not authorised any “significant cost increases” for variation work.

Issue

  1. Wetlock exercised its rights pursuant to s 19(3)(a)(i) of the BCIPA by seeking summary judgment for the unpaid portion of a progress claim and the Court in the amount of $123,394.78.;
  2. The Court was required to inter alia consider whether City Link issued a payment schedule in response to the payment claim[i].

Emails can be Payment Schedules

  1. The Court considered the requirements for a valid payment schedule in s 18 and found that the only requirements are:
  • the relevant document must identify the relevant payment claim;
  • propose a different payable amount; and,
  • give reasons why an amount is being withheld;
  1. The Court held that there is no prescribed form or format for a Payment Schedule and that a party does not have to intend for a document to be a payment schedule at the time of preparing  the document, as long as it is a payment schedule in effect.
  2. The Court found that a number of “email threads” together satisfied the statutory requirements for a payment schedule in s 18 of the BCIPA and rejected Wetlock’s claim for the total amount, but allowed summary judgment for a lesser amount that was admitted in the payment schedule.

Lessons for Strata Managers

Strata Management can be a high pressure environment with demands from tradesmen coming thick and fast.  Be mindful that a number of emails in any “email thread” may be construed as a payment schedule and if there are any concessions made of amounts owing, such amounts should be paid by the due date, otherwise the contractor can seek summary judgment for payment of amounts admitted as a debt owing pursuant to s 20(2)(a) of BCIPA.

These traps may be avoided by limiting your response to a two step process:

Step One :  Consider if you have sufficient information to assess the payment claim upon receipt of the payment claim and if not request further information early (before expiry of the 10 business day period to provide a payment schedule);

Step Two:–  Irrespective of whether you have received sufficient information to assess the claim, issue a formal payment schedule within 10 business days (calculated from the day of receipt of the payment claim) which clearly identifies the payment claim, states the amount of any payment and give reasons for any amounts withheld[ii].

For more information regarding a property schedule

Please contact our Business Development Team or call us on (07) 3252 0011 to book an appointment with one of our specialist Commercial & Construction Litigation Lawyers today.

[i] Citi Link also unsuccessfully argued that the payment claim was invalid and that Wetlock was unlicensed.

[ii] Remember it is no excuse to say that you do not have enough information to assess the claim, you must still do the best you can with the information available.