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Builders protected under the Security of Payment Act | Contracts Specialist

What is Adjudication Process?

An adjudication process can be a helpful method for anyone involved in a Security of Payments dispute. With the help of a legal expert, the dispute can be resolved in no time.

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Adjudication is a procedure for resolving disputes without resorting to lengthy and expensive court procedure.

Aside from enforcing the rights of builders and contractors under the Act, one of the benefits of the Security of Payment Act is that it provides builders and contractors a quick and inexpensive process of obtaining theor rightful payment. An adjudication is, firstly, not a court process. Rather, it is a quicker method in resolving disputes than lengthly and costly court process where an adjudicator is appointed to settle the dispute.

Upon the Security of Payment Act’s legislation, its primary objective is to make sure that contractors and subcontractors get paid. If payment disputes or problems arise such as late payment, short payment or non-payment, the contractor’s right to file for adjudication is enforced.

Contractors may file for adjudication if:​

  1. The amount given by the client is less than what is being claimed by the contractor.
  2. The client did not pay any of the disputed amount.
  3. The client failed to provide a payment schedule.

If an adjudication process isn’t a court process,
then how are payment disputes settled?​

By written submissions. However, there are turn of events that can eventually lead to a court trial.

Order of escalating disputes:

Contractor and owner negotiation leading to adjudication under the Security of Payment in Sydney | Contracts Specialist

Negotiations between the two parties​

Application for adjudication under the Security of Payment in Sydney | Contracts Specialist

Adjudication​

Courthouse for adjudication appeals as per the Security of Payment Act in Sydney | Contracts Specialist

Court

Negotiations between the two parties​

Adjudication​

Court

ORDER OF ESCALATING DISPUTE

negotiations
Negotiations between the two parties​
adjudication
Adjudication
court
Court

Strict timeframes

  • Under NSW’s Building and Construction Industry Security of Payment Act 1999, non-conformity with the law may be deemed invalid. 
  • A certain of another party may no longer be available if the party conformed past their given time.
How adjudication works photo - Adjudication Process | Contracts Specialist

If Payment Schedule is not served:

  • The respondent did not provide a payment schedule within the given number of days (10 business days).
  • The claimant may file for adjudication and is allowed to suspend work for two business days’ notice.
  • The claimant shall serve and prepare Adjudication Notice within 20 business days since due date of the payment.
  • The respondent shall serve the payment schedule within five days since the receipt of the Adjudication Notice.
  • If the respondent did not issue a payment schedule within five business days, the claimant has 10 business days (after the expiry of the five-day deadline) to apply for adjudication.
  • The adjudicator shall come up with a decision within 10 business days since the receipt of the application.
Price on the contract icon – Adjudication Process | Contracts Specialist

If payment schedule is served, but the full amount or part of the payment was not paid:

  • Claimant accepts the payment.
  • Respondent did not pay the full amount or any part of the scheduled amount.
  • Claimant has 20 business days from the due date of the payment to apply for adjudication or may suspend work for two business days’ notice.
  • Respondent must serve the Adjudication Response within 5 business days since the receipt of the Adjudication Application or within 2 business days after receiving the notice of the Adjudicator’s acceptance of the application.
  • The adjudicator shall come up with a decision within 10 business days since the receipt of the application. 
Residential building contract icon – Adjudication Process | Contracts Specialist

If payment schedule is served, but the claimant disputes the
Payment Schedule:​

  1. The claimant may apply for adjudication within 10 business days since the receipt of the payment schedule.
  2. However, if an Adjudication Notice was served, the claimant shall apply for adjudication within 10 business days after the expiry of the five-day deadline.
  3. Respondent must serve the Adjudication Response within 5 business days since the receipt of the Adjudication Application or within 2 business days after receiving the notice of the Adjudicator’s acceptance of the application.
  4. The adjudicator shall come up with a decision within 10 business days since the receipt of the application.
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Related Links: Security of Payment Lawyer | What is Security of Payment Act? | Security of Payment NSW Flowchart | Payment Claim under BCIA | Contractors Debt Recovery 

You can be confident that you are getting the right legal advice.

Contracts Specialist is a Sydney-based construction law firm that deals with Building Disputes, Construction Contracts, Debt Recovery, and Security of Payment. With Contracts Specialist, you are ensured that you are in good hands.

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