BuildLaw Issue 27 March 2017 | Page 21

The court made some general comments regarding the purpose of the act observing at [16] that [I]t is sufficient for the purposes of this case to note that the Act focuses more on procedure than on proof and that it establishes a draconian “sudden death” regime if its payment procedures are not complied with. The scheme of the Act is to entitle a payee to prompt payment where the amount claimed is not disputed and to provide dispute resolution procedures for disputed claims.
The court observed that a payer who elects to provide a payment schedule stating an amount less than the claimed amount must respond to the payment claim by indicating the manner in which the scheduled amount has been calculated and give a reason or reasons for the difference between the amounts and for withholding any payment and these obligations correspond to those of the payee under section 20.
The court went on to say that although the validity of a payment claim will not be impeached due to purely technical deficiencies, a bare statement of the amount claimed for each item making up a total claim does not meet the requirements of the Act in the context of a contract where neither a contract price had been agreed nor terms relating to payment method, progress payments and payment claims. The court observed that keeping in mind the Act’s purpose of facilitating regular and timely payments in the construction industry, a pragmatic, common sense and contextual approach should be adopted when assessing whether a purported payment claim complies with s 20(2)(e).
The court held at [26] that [A] payment claim must be sufficiently detailed and comprehensible to enable a payer to understand the basis on which the claim is made. Only then can the payer decide whether to accept it or to put the payee on notice of a dispute by providing a payment schedule in response which explains the payer’s reasons for disagreeing with the claim. This requirement is implicit in the payee’s obligation to provide a claim that indicates “the manner in which the payee calculated the claimed amount” and in the payer’s obligation to respond by giving reasons for the difference between the amount claimed and the amount the payer is prepared to pay.
The Court observed that while each case falls for determination on its particular facts, the requirements for a valid payment claim under a construction contract that does not provide expressly for a contract price, labour rates or prices for materials and services (a section 17(4) contract) may be more onerous than in cases where the contract price or other prices are agreed. The court held that the payee must indicate to the payer an objectively understandable basis upon which the value of the work claimed is said to be “reasonable” and merely setting out general figures without some reference to ascertainable factors in their calculation will not be sufficiently detailed and comprehensible in most instances.