Understanding what happens when a claimant lodges an application for adjudication of a payment claim is perhaps the most important part of the entire adjudication lifecycle.
The Building and Construction Industry Security of Payment Act 1999 (“BCISOP Act”) sets out a form of alternative dispute resolution called adjudication. This allows for swift resolution of disputes involving progress payments under a construction contract.
After reading the information below you should:
- Understand the conditions under which an adjudication application can be submitted.
- Know when to submit key documents.
- Be able to provide the appropriate information for adjudication applications and adjudication responses
- Understand how an adjudicator is appointed and what an adjudicator determines.
- Determine how an adjudication determination is reached and what happens after the determination is released.
- Understand what enforcement options are available.
On this page:
- What is adjudication?
- Who can apply for adjudication and how do they do it?
- Key milestones in the adjudication process
- The adjudication application
- The adjudication response
- What the ANA and adjudicator does
- Conferences, inspections, requests for information and extensions of time
- Handing down the adjudication determination
- Respondent liable to pay an adjudicated amount
- Enforcing an adjudication determination
- Need more help?
Please be aware that the information on this webpage is intended as a general guide only and does not constitute formal legal advice.
ABC DRS does not provide legal advice. ABC DRS always recommends seeking professional help when preparing the required documentation for pursuing adjudication under the BCISOP Act.
The BCISOP Act describes a specific mechanism of statutory adjudication that is used to determine disputed payment claims between claimants and respondents.
Simply put, adjudication is form of alternative dispute resolution that allows a qualified individual (an adjudicator) to determine a dispute between parties without the need to involve the court system.
It’s generally considered a fast process and relatively cheap when compared to traditional litigation and bears resemblance to other forms of alternative dispute resolution such as mediation and arbitration.
Once a claimant has lodged an adjudication application and an Authorised Nominating Authority (“ANA”) has appointed an adjudicator, the adjudicator usually has ten business days in which to determine the dispute.
Under the BCISOP Act, only the claimant may apply for adjudication of a dispute arising from a payment claim.
The process is kicked off when they serve an adjudication application on an ANA, such as ABC DRS.
The claimant may only apply for adjudication under three specific scenarios.
- If the claimant disagrees with the scheduled amount the respondent has stated on a valid payment schedule. Application is to be made within ten business days of being served the payment schedule.
- If the respondent has provided a payment schedule but failed to pay the full or any part of the scheduled amount by the due date for payment. Application to be made within 20 business days of the due date for payment.
- If the respondent hasn’t provided a valid payment schedule, the due date for payment has passed without full payment of the claim and the claimant has served a Notice of Intent to Apply for Adjudication. Application to be made within ten business days of the expiry of the relevant notice period or the provision of a valid payment schedule within the five days stated on the notice.
In the case of item three (3) above, this can be complex and bears further explanation.
Example: Adjudication application via the Notice of Intent route.
Subcontractor Jim Smith has served a payment claim on Bolts and Sons Construction. The respondent doesn’t provide a payment schedule within ten business days and the due date for payment comes and goes without full payment of the claim.
Smith then serves a Notice of Intent to Apply for Adjudication on Bolts and Sons Construction stating that they have five business days in which to provide a valid payment schedule or full payment.
Bolts and Sons Construction provides a valid payment schedule three days later.
Smith then can apply for adjudication within ten business days of receiving this payment schedule should they disagree with the respondent’s valuation.
To apply for adjudication, the claimant must supply a copy of their payment claim, the details of the construction contract, the payment schedule and Notice of Intent to Apply for Adjudication (should it exist) and any other supporting evidence they can rely on to support their claim.
Usually Authorised Nominating Authorities require a claimant to provide a completed adjudication application form. ABC DRS has a pro-forma adjudication application document available for your use.
The BCISOP Act sets down a strict timeline for the adjudication process. The various milestones and requirements are not flexible and require both parties, as well as adjudicators, to adhere to deadlines.
Generally the process follows the following timeline:
- Claimant lodges an adjudication application to an Authorised Nominating Authority (“ANA”) and serves the same application on the respondent.
- If the respondent has given a payment schedule, the respondent can submit an adjudication response within the later of:
- Five business days after being served with an adjudication application; or
- Two business days after being served with a notice that an adjudicator has been appointed.
- The ABC DRS appoints a registered adjudicator who in turn serves a notice of their appointment on both parties.
- Once the time period for providing an adjudication response has expired, the adjudicator has ten business days in which to determine the matter. However, with the parties’ permission, the adjudicator may request an extension of time.
- The adjudicator decides the matter within the required time and notifies the parties of the determination.
- If the adjudicator determines that the respondent is liable to make some amount of payment to the claimant, the respondent has five business days in which to make payment to the claimant. If they fail to do this, the claimant can then enforce the adjudication determination in a court of competent jurisdiction.
To apply for adjudication, the claimant simply has to undertake the following tasks:
Complete the ABC DRS adjudication application and attach the following:
- A copy of the payment claim
- A copy of the construction contract. If the contract is an oral contract, or part-oral, a document defining the terms of the oral contract.
- A copy of the payment schedule should one exist.
- Evidence of how and when service of payment claim was undertaken.
- A copy of the Notice of Intent to Apply for Adjudication (should one have been necessary or exist).
- Copies of the business details of both parties – such as their ABN/ACN details.
- Items relevant to the construction contract or other documents that support the payment claim, such as statutory declarations, diary notes, correspondence, previous invoices or claims
ABC DRS adjudication application pro-forma can be downloaded via this website.
The complete adjudication application, including all submissions, must be lodged on an authorised nominating authority, such as the ABC DRS, and the exact same copy must be served on the respondent.
Delays in serving the full adjudication application on the respondent will delay the adjudication process.
An adjudication response is the respondent’s formal response to the claimant’s adjudication application.
It must be made within the later of: five business days after being served with a copy of the adjudication application; or two business days after the respondent has been served with the notice detailing the appointment of an adjudicator.
The adjudication response must:
- Be in writing.
- Identify the adjudication application to which it relates.
- Be served on the claimant.
- Only expand on issues previously detailed on the payment schedule.
The adjudication response may contain submissions.
As noted above, the adjudication response may only expand on issues detailed on the payment schedule. If a payment schedule was not provided, or a payment schedule is not considered valid by the adjudicator, the adjudicator may decide to not consider the adjudication response in making their determination.
However, the respondent may be able to raise issues relating to the validity of the payment claim, the construction contract and other issues that impact on the jurisdiction of the adjudicator.
ABC DRS adjudication response pro-forma can be downloaded via this website.
When claimants serve their adjudication application on an Authorised Nominating Authority, such as ABC DRS, the primary role of the ANA is to appoint an appropriate adjudicator.
Once an adjudicator is found, the ANA will inform both parties of the adjudicator’s identity, the date the application was served on the ANA and also the relevant costs for undertaking the adjudication.
When considering the adjudication application and adjudication response, the adjudicator is asked to determine three things:
- Whether there are monies owing from the respondent the claimant. This is the ‘adjudicated amount’.
- The date when these monies became payable
- The applicable rate of interest.
In nearly all cases, the adjudicator provides reasons for their decision unless specifically asked not to by the parties.
The adjudicator must rely on the following in making their decision:
- The construction contract relevant to the adjudication application.
- The payment claim along with its attachments.
- The payment schedule along with its attachments.
- The results of any inspections carried out by the adjudicator.
The adjudicator has statutory power to undertake the following when deciding an adjudication application.
Ask for further submissions.
A fairly common request, the adjudicator may ask both parties to provide further submissions with regards to specific issues within specific deadlines.
Request an extension of time.
The BCISOP Act allows 10 business days to decide an adjudication application. However, some cases require substantial amount of work and the adjudicator can request further time. Both parties must agree in order for the extra time to be granted under the legislation.
Call a conference.
While not common, the adjudicator has the power to request a conference between the parties without legal representation.
Conduct an inspection.
Similar to the above, the adjudicator has the statutory right to carry out an inspection of work to which the payment claim relates.
Once the nominated adjudicator completes the adjudication determination, the ABC DRS will inform the parties that a determination has been made.
The determination will then be released to the parties once the relevant adjudication fees have been paid.
In the scenario where the adjudication application has been lodged under the ABC DRS fixed fee scheme, the determination will be released immediately to both parties.
If the adjudicator determines that the respondent must pay some amount to the claimant (the adjudicated amount), then the respondent must pay that amount, plus the relevant amount of interest owing. This payment must occur within five business days of being served with the adjudication decision unless the adjudicator has stated otherwise.
Often the adjudicator will apportion the liability for paying their fees between the claimant and the respondent. This can be often stated as a percentage.
Any fees that the respondent is liable to pay to the claimant can be enforced via an adjudication certificate.
If the respondent hasn’t paid the adjudicated amount and other relevant fees owing to the claimant, the claimant may request the ANA to produce an adjudication certificate.
The adjudication certificate is a formal legal document that states the adjudicator’s determination including the adjudicated amount, the amount of interest owing as well as any adjudicator fees owed to the claimant.
If the adjudication certificate requires a cost to produce, the fee for this amount may also be included (should the adjudication decision state this).
The claimant can then enforce the adjudication certificate at a court of competent jurisdiction.
Where to enforce is dependent on the size of the debt owing. The following guide may be relevant.
- Small Claims Division of Local Court – claims up to $10,000
- General Division of the Local Court – Claims up to $100,000 (or $120,000 in some limited circumstances)
- District Court or Supreme Court – Claims over $100,000 (or $120,000 in some limited circumstances)
Once the adjudication certificate is lodged, claimants may be given options on how to enforce the outstanding debt. Some options include:
- The seizure and sale of property
- Redirection of debts
- Redirection of earnings
- Payment of money order debt by instalments
- Charging orders
- Stop orders
- The appointment of a receiver
The claimant should put any queries about the enforcement of statutory debts to the relevant court registrar.
ABC DRS always recommend consulting your legal practitioner on the best options on enforcing outstanding debts.
A filing fee will be applicable when lodging the adjudication certificate.
We appreciate that much of the information presented above may be complex and hard to understand. However, our trained staff members are more than willing to help you through the process. Feel free to get in touch.
The ABC DRS also offer specific training for grasping the operation of the BCISOP Act.