How to Respond to a Payment Claim in New Zealand (CCA Ss 20–21): Timeframes, Form 1 & Adjudication Risk

Knowing how to respond to a payment claim correctly is one of the most time-critical obligations a New Zealand construction business faces. Under the Construction Contracts Act 2002 (CCA), a payer who is served with a valid payment claim must either pay the amount claimed or provide a compliant payment schedule within strict statutory timeframes, or risk adjudication proceedings that can produce an enforceable judgment. With the widespread adoption of NZS 3910:2023 across the industry and recent High Court commentary reinforcing the consequences of non-compliance with sections 20 and 21, the margin for procedural error has narrowed considerably.

This guide sets out every step a New Zealand payer must take in 2026, from verifying the claim document through to serving a defensible schedule, together with sample wording, practical templates and the adjudication risks of getting it wrong.

Last reviewed: 27 May 2026

Quick Answer: How to Respond to a Payment Claim

If you have just been served with a payment claim under the CCA, your response must be prompt and procedurally correct. The core process can be distilled into five steps:

1. Receive and record. Note the exact date you received the payment claim, every deadline runs from this date.
2. Verify validity. Confirm the document meets section 20 requirements and is accompanied by the prescribed Form 1 notice.
3. Decide your position. Determine whether you will pay the full amount, pay a lesser amount, or dispute the claim entirely.
4. Prepare a payment schedule (s 21). If you are not paying in full, draft a compliant construction contracts act payment schedule that states the scheduled amount, identifies each disputed item and gives reasons for withholding.
5. Serve the schedule within the deadline. Deliver the payment schedule to the claimant before the contractual or statutory timeframe expires.

Warning: If you do nothing, that is, you neither pay nor provide a payment schedule, the claimant may refer the unpaid amount directly to adjudication and, if successful, enforce the adjudicator’s determination as a judgment debt. The consequences of inaction are severe and largely irreversible.

Step 1: Immediately Check the Document, Is It a Valid Payment Claim?

Before you draft any response, confirm that the document you have received actually qualifies as a payment claim under the Construction Contracts Act 2002. Section 20 of the CCA sets out mandatory requirements that a claimant must satisfy. If the claim is defective, your response strategy, and your exposure to adjudication, may differ significantly.

A valid section 20 payment claim must identify itself as a payment claim made under the CCA, state the claimed amount, and relate to a specific progress payment that the claimant says has become due under the construction contract. The claim must also be accompanied by a prescribed notice, commonly referred to as the Form 1 payment claim notice, which alerts the payer to their rights and obligations under the Act. For an overview of the key terminology used in construction payment disputes, see our construction law glossary.

What Form 1 / Payment Claim Notice Must Contain (Claimant Obligations)

The Form 1 notice is a prescribed document that must accompany every payment claim. According to guidance published by Building Performance (building.govt.nz), the notice must include specific wording that informs the payer of their obligation to respond with a payment schedule and warns of the consequences of failing to do so. The standard Form 1 text begins with the declaration: “This is a payment claim made under the Construction Contracts Act 2002.” It goes on to outline the payer’s right to issue a payment schedule and the adjudication process that follows non-response.

Quick Checklist: 6 Items to Confirm Validity

• Express identification. Does the document expressly state it is a payment claim under the CCA?
• Claimed amount. Is a specific dollar amount clearly stated?
• Payment period or stage. Does the claim identify the construction work or contract stage to which it relates?
• Form 1 notice attached. Is the prescribed notice included or annexed to the claim?
• Correct addressee. Is the claim addressed to the correct contracting party (the payer under the relevant construction contract)?
• Service method. Was the claim served in a manner permitted by the contract or the CCA?

If any of these elements is absent, record the deficiency carefully. Industry observers expect that defective claims may still trigger adjudication risk if the payer fails to respond, but the deficiency may provide grounds for a challenge. Seek legal advice promptly where a claim appears materially non-compliant.

Step 2: Decide Whether to Pay or Respond With a Payment Schedule (Section 21 Obligations)

Once you have confirmed the payment claim is valid, you face a binary choice under the CCA: pay the claimed amount in full, or provide a section 21 payment schedule within the prescribed timeframe. There is no middle ground. Partial payment without a schedule is treated the same as no response, it exposes you to adjudication for the full balance.

Section 21 of the Construction Contracts Act 2002 provides that a payer who does not intend to pay the full amount claimed must provide the claimant with a payment schedule indicating the amount that the payer proposes to pay (the “scheduled amount”) and, where the scheduled amount is less than the claimed amount, the reasons for the difference and how the scheduled amount was calculated.

The statutory timeframe for providing a payment schedule is set by the construction contract itself. Where the contract is silent, the CCA default applies. Critically, the schedule must be provided within the period for responding stipulated in the contract, or, where no period is stipulated, within 20 working days after the payment claim is served.

Section 21: Required Contents of a Construction Contracts Act Payment Schedule

A compliant payment schedule must contain the following elements:

• Identification of the payment claim. Reference the specific payment claim to which the schedule responds (by date, number or description).
• Scheduled amount. State the amount the payer proposes to pay. This can be any figure, including zero, provided it is stated expressly.
• Reasons for withholding. Where the scheduled amount is less than the claimed amount, the schedule must set out the payer’s reasons for each item of difference.
• Calculation methodology. Explain how the scheduled amount was calculated, referencing contract rates, measurement records or valuations as appropriate.

Sample schedule wording: “This is a payment schedule provided under section 21 of the Construction Contracts Act 2002 in response to [Claimant]’s payment claim dated [date] for $[amount]. The scheduled amount is $[amount]. The reasons for the difference are set out in the attached schedule of contested items.”

When a “Nil” Schedule Is Appropriate and Consequences

A payer is entitled to provide a payment schedule showing a scheduled amount of zero (a “nil” schedule). This is appropriate where the payer genuinely disputes that any amount is owed, for example, where the work is defective, not yet due, or the subject of a valid set-off or counterclaim. However, a nil schedule must still comply with the requirements above: it must state $0 as the scheduled amount and provide clear reasons. A nil schedule without adequate reasons may be treated as non-compliant in subsequent adjudication proceedings.

Timing and Deadlines: How to Calculate the Section 21 Timeframe and NZS 3910:2023 Implications

Understanding how to respond to a payment claim within the correct timeframe is perhaps the single most important compliance point. Missing the deadline, even by a day, can convert a defensible dispute into an uncontested adjudication.

The starting point is always the construction contract. Review the payment clause to identify whether the contract prescribes a specific period for providing a payment schedule. Common industry contracts, including NZS 3910:2023, contain express provisions on payment timing that override the statutory default.

Where the contract is silent, the CCA default under section 21 applies: the payer must provide a payment schedule within 20 working days after the payment claim is served. “Working days” excludes Saturdays, Sundays, public holidays and the period from 25 December to 15 January inclusive, a distinction that matters greatly for claims served in late November or early December.

The NZS 3910:2023 standard conditions, now widely adopted across New Zealand commercial and infrastructure projects, introduced clarified measurement and claim periods that directly affect when payment claims may be served and when responses fall due. Parties using NZS 3910:2023 should check the specific clause governing progress payment claims in their contract, as the timeframes for assessment, certification and payment are linked to defined measurement periods that may differ from the CCA default.

Practical tip: On the day you receive a payment claim, immediately calendar the response deadline. If there is any ambiguity in the contract about which timeframe applies, respond within the shorter period to eliminate risk.

How to Draft a Compliant Payment Schedule: Practical Template, Dos & Don’ts

Drafting a payment schedule that satisfies section 21 of the CCA is not merely an administrative exercise, it is your primary legal defence if the matter proceeds to adjudication. A poorly drafted or incomplete schedule can result in the adjudicator disregarding your reasons and awarding the full claimed amount. The following guidance and payment claim template NZ practitioners routinely use will help you produce a defensible document.

Required elements (recap):

• Clear identification of the payment claim being responded to (date, reference number)
• The scheduled amount expressed as a specific figure
• An item-by-item breakdown of each disputed element, with the payer’s valuation and the reason for any difference
• Supporting calculations or cross-references to measurement records, contract rates and any relevant correspondence

Sample annotated schedule (copyable text):

“PAYMENT SCHEDULE, Section 21, Construction Contracts Act 2002
In response to: Payment Claim No. [X], dated [DD/MM/YYYY], from [Claimant Name]
Claimed amount: $[amount]
Scheduled amount: $[amount]

Total scheduled amount: $72,000.”

Common Drafting Traps Identified in 2025 High Court Decisions

High Court commentary published in 2025 reinforced the principle that payment schedules must contain sufficient particularity to allow a claimant to understand the basis of each dispute. Schedules that stated bare conclusions (for example, “amount not agreed” or “work defective”) without supporting detail were found to be non-compliant, with the practical effect that the payer’s defences were unavailable in the subsequent adjudication. Industry observers expect this line of authority to continue tightening the compliance standard for schedules in 2026 and beyond.

Key drafting traps to avoid:

• Generic reasons. Vague statements such as “disputed” or “under review” are insufficient. Identify the specific factual basis for each disputed item.
• Missing calculations. Failing to show how the scheduled amount was derived, even where the arithmetic is straightforward, may render the schedule non-compliant.
• Late amendments. A payer cannot supplement or amend a payment schedule after the response deadline. Anything omitted from the original schedule cannot be raised later in adjudication.

When to Include Supporting Documents

There is no statutory requirement to attach supporting documents to a payment schedule. However, best practice, particularly for high-value or complex claims, is to include or cross-reference measurement records, internal valuations and relevant correspondence. Keep attachments minimal but defensible: the goal is to demonstrate the factual basis for your position without overwhelming the document. For guidance on structuring contractual documents and commercial agreements, see our international commercial contracts guide.

Form 1: The Required Notice That Must Accompany Payment Claims, What Claimants Must Do and Why It Matters to You

The Form 1 payment claim notice is a statutory requirement imposed on the claimant, not on the payer. However, understanding its role is essential for any party assessing how to respond to a payment claim, because defects in the Form 1 may affect the enforceability of the claim itself.

Under the CCA, every payment claim must be accompanied by a notice in the prescribed form. Building Performance (building.govt.nz) publishes the official Form 1 template, which includes mandatory wording informing the respondent (payer) of their right to provide a payment schedule, the timeframe for doing so, and the consequences of failing to respond. The standard Form 1 wording includes the declaration: “This is a payment claim made under the Construction Contracts Act 2002.”

From a payer’s perspective, the absence or material deficiency of the Form 1 notice is a significant matter. While the courts have not universally held that a missing Form 1 invalidates a payment claim, the likely practical effect is that a payer may have grounds to challenge enforcement or adjudication if the claimant cannot demonstrate that the prescribed notice was served. Always record whether the Form 1 was included, and retain a copy for your records.

If you are the party making payment claims NZ, ensure you use the current prescribed form and include it with every claim, failure to do so can undermine your entire enforcement pathway. Detailed guidance on making a compliant claim is available in our separate claimant guide.

If You Fail to Schedule or Miss the Deadline: Adjudication Risk and Commercial Consequences

The consequences of failing to provide a payment schedule, or providing one after the deadline, are among the most significant risks in New Zealand construction law. Understanding this risk is central to knowing how to respond to a payment claim effectively.

Where a payer fails to provide a payment schedule within the prescribed timeframe, the claimant may refer the payment claim to adjudication under the CCA. Critically, in this scenario, the adjudicator’s role is limited: they must determine the dispute on the basis of the payment claim alone, without considering any reasons the payer may later wish to raise. The payer effectively forfeits the right to contest the claimed amount.

If the adjudicator determines in the claimant’s favour, the determination can be enforced as a judgment debt in the District Court or High Court. The Building Disputes Tribunal, the most commonly used nominating authority for construction adjudication in New Zealand, administers a streamlined process designed to deliver rapid outcomes, often within 20 working days of referral.

High Court decisions examined in 2025 commentary further confirmed that courts will not readily allow payers to re-open arguments that should have been raised in a timely payment schedule. Early indications suggest the judiciary views the payment regime as a “pay now, argue later” mechanism that prioritises cashflow in the construction industry. For a deeper understanding of the hearing process in dispute resolution, see our practical guide to arbitration hearings.

Adjudication Risk Mitigation: Immediate Steps

• Act within hours, not days. If you realise you have missed or are close to missing a deadline, seek legal advice immediately, there may still be options available.
• Negotiate an interim payment agreement. Where the parties maintain a working relationship, a negotiated interim payment can sometimes pause or avoid the adjudication referral.
• Preserve all evidence. Retain measurement records, correspondence and internal valuations. Even if you cannot rely on them in the immediate adjudication, they will be relevant in any subsequent court proceedings or final account dispute.
• Consider the broader contractual position. A payer who loses an adjudication retains the right to commence court or arbitration proceedings to recover any overpayment, but recovery is always more difficult than prevention.

Practical Examples and Templates

The following three short scenarios illustrate the most common responses to payment claims NZ payers encounter. Each is designed to show the practical application of section 21 requirements.

Example 1, Pay in full. A subcontractor serves a payment claim for $45,000 for completed groundworks. The head contractor’s QS confirms the measurement and rates. The head contractor pays $45,000 by the due date. No payment schedule is required.

Example 2, Partial payment with schedule. A subcontractor claims $120,000. The head contractor agrees $95,000 but disputes a $25,000 variation. The head contractor prepares a payment schedule: scheduled amount $95,000, with a line-by-line explanation of the disputed variation (not approved in writing, measurement discrepancy). The schedule is served within the contractual response period. The scheduled amount of $95,000 is paid by the due date.

Example 3, Nil schedule with reasons. A supplier claims $60,000 for materials allegedly delivered. The contractor’s records show the materials were never received on site. The contractor serves a nil schedule ($0) within the deadline, attaching delivery records and site logs as reasons. The supplier may refer the dispute to adjudication, but the contractor’s reasons, if adequately detailed in the schedule, will be considered by the adjudicator.

For downloadable payment claim and schedule templates tailored to New Zealand law, see our payment claim and schedule templates resource (coming soon).

When to Involve Lawyers: Red Flags and Recommended Next Steps

Not every payment claim requires legal input, but certain red flags should trigger immediate consultation with a specialist construction lawyer:

• Material procedural defects in either the claim or the Form 1 notice
• Claims exceeding $100,000 or involving complex variations or delay-related costs
• Repeated or escalating claims that suggest a pattern of dispute on the project
• Insolvency concerns, either party showing signs of financial distress
• Tight deadlines where fewer than five working days remain to respond
• Cross-border or multi-contract issues where overlapping contractual regimes apply

If any of these apply, find a New Zealand construction lawyer through our directory and seek advice before the response deadline expires.

Sources

1. Construction Contracts Act 2002 (s 20–s 21), New Zealand Legislation
2. Building Performance, CCA Requirements & Form 1
3. MinterEllisonRuddWatts, High Court Decisions Clarify Payment Disputes
4. Building Disputes Tribunal, Understanding the Payment Regime
5. Norling Law, What Should I Do If I Receive a Payment Claim?
6. ElementalQS, How to Submit a Legally Valid Payment Claim in NZ
7. Standards New Zealand, NZS 3910:2023
8. Cavell Leitch, The Need to Get It Right: Payment Claims and Schedules