Repercussions of not filing a payment response

Contrary to what is suggested in the title, the respondent in an adjudication proceeding would not be subject to repercussions if he were to not to file or serve a valid payment response.

This is because there is a provision under section 6(4) of CIPAA 2012 which stipulates that “a non-paying party who fails to respond to a payment claim in the manner provided under this section is deemed to have disputed the entire payment claim.” Unlike litigation, the respondent in adjudication proceedings would not be subjected to a default judgement against him if he does not file a payment response. The situation would be different, however, if he does not file an Adjudication Response (which is due later).

By not filing a payment response, the reasons for non-payment of the respondent would not be revealed. Consequently, the claimant would not be prepared to deal with the merits of the respondent’s defence when it is finally revealed at the stage of Adjudication Response.

At the stage of Adjudication Response, the claimant would only have 5 working days to reply. The Respondent could raise any possible defences, including file expert reports and still, the Claimant would only have 5 working days to respond unless time is extended by the Adjudicator. Even if the Adjudicator extends time, it is unlikely that there would be substantial extensions granted.

It is interesting to note that pursuant to section 27(1) of CIPAA 2012, the jurisdiction of the adjudicator is limited to what has been set out in the payment claim and payment response unless parties agree in writing to extend the jurisdiction of the adjudicator. However, as the Adjudicator must consider all defences raised in order not to be in breach of natural justice, this means that the effect of section 27(1) had been diluted by section 6(4).

If the respondent has got complicated and technical defences, it may serve the respondent’s interest well to retain it until the stage of Adjudication Response.

This article was contributed by Aaron Aiman, pupil-in-chambers with Messrs Razak & Lim.