What is a Payment Claim?

A Payment Claim is a builder or contractor’s claim for payment under the Construction Contracts Act. It is not the same as an invoice and is a more powerful tool for getting paid on time.

A Payment Claim must:

• Be in writing;
• Contain sufficient details to identify the contract to which it relates;
• Identify the work and relevant period to which the Payment Claim relates;
• State the claimed amount and the due date for payment;
• Indicate how the claimed amount was calculated (for example, by attaching or incorporating a spreadsheet table); and
• State on the document that it is a payment claim made under the Construction Contracts Act.

The Act requires all payment claims to be accompanied by:

• An outline of the process for responding to that claim; and
• An explanation of the consequences of—
  
  • Not responding to a payment claim; and
  • Not paying the claimed amount, or the scheduled amount, in full (whichever is applicable).

The outline and explanation must be in writing, and in the prescribed form (“Form 1 – Information that must accompany all payment claims”). The Form is freely available from www.building.govt.nz.

When can a Payment Claim be made?

Payment Claims can be made once per month unless the contract specifies other times.

When is a Payment Claim payable?

Payment Claims must be paid within 20 working days after the Payment Claim is delivered, unless the contract provides a different time frame. The date for payment must always be on the Payment Claim for it to be valid.

What happens if a Payment Claim is not paid?

If a Payment Claim is not responded to on time by a Payment Schedule and if the amount under the Payment Schedule is not paid on time the claim becomes due and must be paid. No defence can be raised as a reason for non-payment, so it is a very powerful way to make sure you get paid.

For our full article on Payment Claims.

Alan Knowsley
Construction Lawyer
Wellington, New Zealand