The Security of Payment Adjudication course of action (Step 1 – The Payment Claim)

The Security of Payment Adjudication course of action (Step 1 – The Payment Claim)




If you are in the building and construction industry in Australia and you believe you are entitled to receive payment from a client or another contractor/supplier and you are getting no joy in receiving that payment then you may be able to use the security of payment adjudication course of action under the various state and territory legislations (the applicable Act).

This article is based on the NSW Building and Construction Industry Security of Payment Act (1999), QLD Building and Construction Industry Payments Act (2004) and the ACT Building and Construction Industry (Security of Payment) Act (2010).

When you claim for monies you are the “Claimant” and the other party is the “Respondent”.

Timeframes under the applicable Act are very strict and you must be careful to to comply with them precisely otherwise the whole course of action could be deemed to be invalid and time will be wasted.

There are a number of possible paths to adjudication all of which starts off with the service of a “Payment Claim” from a Claimant to a Respondent.

The Payment Claim is the first and foremost document on which the complete adjudication course of action is based upon. past invoices and payment claims do not govern the timing of the adjudication course of action. You can only claim at the time allowed in your contract (see Reference Date below) and if that is not agreed or stated then the applicable Act allows you to claim once per month from the end of each month and up to 12 months after the works and/or supplies were provided.

The time starts ticking when the Respondent receives the Payment Claim.

A Payment Claim is based on works, goods and sets provided under one contract/arrangement. The contract/arrangement may be verbal and/or in writing and may be for one project site or many project sites depending on how you were engaged.

already if the contract/arrangement is verbal in character it is suggested that you will nevertheless need to have evidence of the contract/arrangement in the form of written documentation between the parties (emails, faxes etc).

What the Payment Claim should show? – A Payment Claim can be a normal invoice but it should:

* clarify and describe the construction work or related goods and sets to which the progress Payment Claim relates; and

* state the amount of the progress payment that the claimant claims to be payable (the claimed amount); and

* state that it is made under the applicable Act. For example in QLD words are additional onto the invoice such as “This is a Payment Claim under the Building and Construction Industry Payments Act 2004 QLD.”

What can be claimed? – The Claimant may wish to claim for numerous past unpaid invoices in relation to the contract together under the one Payment Claim. You can do this by attaching all the invoices on the back of a Payment Claim cover sheet which covers all the criteria above and making sure that it is plain as to what sum you are truly claiming (for example that would be the total of the past claims, less any amount paid where they have been part paid). You can claim for any money that is due and payable under the contract including where applicable retentions, approved variations and interest.

Giving the Payment Claim to the Respondent – The Claimant should serve the Payment Claim on the Respondent and keep evidence of how they served the Payment Claim. An example might be facsimile receipt, registered post receipt etc.

Reference Date (when the Payment Claim can be made) – The Payment Claim can only be served when the contract states you have a right to make a claim for payment, if the contract does not state this or it is a verbal contract and no date for issuing payment claims has been agreed. Where no date for making a Payment Claim is stated or agreed the Act requires that claim be issued after the last day of the month including work up to the last day of the month.

What happens next? – Having provided a Payment Claim when the contract allowed and claiming for the money due and payable you have initiated the time of action requiring the Respondent to issue a Payment Schedule within 10 Business Days of the date they receive the Payment Claim. You are now potentially on the path to enforcing your right to payment using the Adjudication legislation.

Conclusion and Pathways – The three paths to adjudication are:

1. Where the Respondent replies in writing (within 10 business days) with a Payment Schedule and disputes the claimed amount, states an amount they are willing to pay and gives reasons for not paying;

2. Where the Respondent replies in writing (within 10 business days) and states an permissible amount they are willing to pay but nevertheless refuses to pay that amount;

3. Where the Respondent fails to reply in writing (within 10 business days).

If Path 1 occurs and you want to apply for adjudication then you have 10 business days to do so (no later) to an authorised nominating authority (ANA).

Paths 2 & 3 indicates that there may be a liability on the Respondent to pay either the scheduled amount (Path 2) or the claimed amount (Path 3) and in such circumstances the Claimant must wait until the due date for payment occurs before proceeding on to the next steps to adjudication.

Able Adjudication Pty Ltd is an Authorised Nominating Authority (ANA) in QLD, NSW and ACT and appoints independent adjudicators to make decisions on payment disputes in those legislatures.




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