How
should I respond to a payment claim?
What
can be claimed in a payment claim?
What
is a claimable variation?
What
is an excluded amount?
What
happens if I don't pay the claimed amount?
What
happens if I don't submit a payment schedule?
What
should be included in a payment schedule?
How
do I serve a payment schedule?
What
if the claimant disputes the payment schedule?
When
can the claimant apply for adjudication?
What
do I do if I receive an adjudication application?
What
should be included in an adjudication response?
What
happens if I don't pay an adjudicated amount?
Can
I ask for review of the adjudication?
How
do I apply for adjudication review?
Can
a claimant suspend work?
When
can an adjudicated amount be recovered from
the contract principal?
What
is a 'relevant principal'?
You may respond to a payment claim in one
of 2 ways.
- If you agree with the payment claim,
pay the amount claimed in full, on or before
the due date.
- If you do not agree to pay the full amount
by the due date, give the claimant a payment
schedule within 10 days (or sooner, if
the contract sets a shorter deadline) setting
out what you are willing to pay and why
it is any different from the amount claimed.
A 'paid when paid' provision in a construction
contract has no effect.
The claimant cannot be required to wait until you are
paid by someone else under another contract before being entitled
to claim the money owed to them.
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All payments for the original contract sum
may be claimed in a payment claim. The
payment claim may also include any variation
agreed to by the parties to the contract
by which the contract price, or any other
rate or price set out in the contract is
to be adjusted by a specific amount.
Variations which may be claimed are called
'claimable variations'. These include
all agreed variations and some disputed variations.
A progress payment may include final payments,
single payments and milestone payments.
Claims for damages, delay costs and latent
conditions are excluded.
See
Fact Sheet 4: Claimable variations and
excluded amounts
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All agreed variations and some disputed
variations may be claimed in a payment claim.
If the original contract value is less than
$150,000, the Act applies to all claims for
disputed variations.
If the original contract value is between
$150,000 and $5 million, the Act applies
to claims for disputed variations up to 10%
of the original contract sum.
If the original contract value is more than
$5 million, disputed variations must be resolved
by the dispute resolution methods specified
in the contract.
See
Fact Sheet 4: Claimable variations and
excluded amounts
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The Act expressly excludes certain amounts
from being claimed in a payment claim. These
are called 'excluded amounts'. An adjudicator
may not consider an excluded amount in a
payment claim, and their determination will
be void to the extent they do so.
An excluded amount is
- Any amount of the contract that is not
a claimable variation as described above
- Compensation due to the happening of
an event, such as latent conditions, time
related costs and changes in regulatory
requirements
- Damages for breach of the contract or
for any other reason related to the contract
- Any claim arising at law other than under
the contract.
While a dispute about an excluded amount
cannot be the subject of a payment claim
under the Act, it may still be resolved in
accordance with any dispute resolution provisions
in the contract or by going to court.
See
Fact Sheet 4: Claimable variations and
excluded amounts
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The Act requires a respondent who receives
a valid payment claim to pay the amount claimed
in full by the due date or give the claimant
a payment schedule within 10 days. If
the respondent does not do one of these things
within the required time, they become liable
for the amount claimed.
The claimant may apply for adjudication
or go to court to recover the unpaid amount. The
claimant may also exercise a lien in respect
of the unpaid amount over any unfixed plant
or materials they have supplied to you for
use in connection with carrying out construction
work under the contract. They may also
suspend works, or the supply of goods and
services under the contract, until the amount
payable has been paid.
A 'paid when paid' provision in a construction
contract has no effect. The claimant
cannot be required to wait until the respondent
is paid by someone else under another contract.
The claimant also has these options if you
- Provide a payment schedule and the scheduled
amount is less than the claimed amount,
or
- Provide a payment schedule but do not
pay the scheduled amount by the due date.
See
Fact Sheet 11: If the respondent doesn't
pay, and Fact
Sheet 12: Lien over unfixed plant and materials
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If you do not provide a payment schedule
on time you will become liable to pay the
full amount claimed. Interest may be
payable on the unpaid claimed amount. The
claimant may go to court to recover the full
amount as a debt or apply for adjudication.
The claimant is entitled to suspend work
or cease supplying related goods and services
under the contract until the amount payable
has been paid. If the claimant exercises
this right in accordance with the Act they
will not be liable for any loss or expense
you suffer as a consequence of the suspension.
The claimant also has the right to exercise
a lien in respect of the unpaid amount over
any unfixed plant or materials that they
have provided in connection with carrying
out construction work.
For more information
see Fact
Sheet 8: Responding to a payment claim and Fact
Sheet 12: Lien over unfixed plant and materials
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A payment schedule is the respondent's reply
to a payment claim when they do not agree
to pay the amount claimed by the due date. It
states how much the respondent will pay the
claimant and why. To be valid the payment
schedule must:
- Identify the payment claim to which the
payment schedule relates.
- Identify the amount (if any) that the
respondent proposes to pay ('the scheduled
amount').
- Provide any reason why the scheduled
amount is less than the claimed amount,
including any reason why the respondent
may be withholding payment.
- Identify any amount of the claim that
the respondent alleges is an excluded amount.
A sample
payment schedule is available. It
can be filled in or used as a guide.
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The respondent has 10 days after receiving
the payment claim to serve the payment schedule
on the claimant, unless the contract allows
less time.
A document may be served under the Act in
one of the following ways:
- Delivered in person. It is 'served' when
the respondent receives it.
- Lodged during business hours at the respondent's
ordinary place of business. It is 'served'
when it is received at that address.
- Sent by post to the respondent's ordinary
place of business. It is 'served' 2 business
days after the day it is posted.
- Faxed to the respondent's ordinary place
of business. It is 'served' at the time
it is received unless it is received after
4pm. If it is received after 4pm, it is
taken to have been 'served' on the next
business day.
Provided in any other manner specified in
the contract.
See
Fact Sheet 8: Responding to a payment claim
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If the claimant has served a valid payment
claim and you provide a payment schedule
which shows that the amount that you propose
to pay (the 'scheduled amount') is less than
the amount claimed on the payment claim (the
'claimed amount'), the claimant can apply
for adjudication. The claimant has
10 business days after receiving the payment
schedule to apply.
The claimant applies
for adjudication by lodging an application
with an Authorised Nominating Authority (ANA)
such as BAV. An ANA is an organisation
authorised by the Building Commission to
nominate adjudicators under the Act.
See
Fact Sheet 5: Applying for adjudication
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The claimant may apply for adjudication
when they have served a payment claim on
a respondent under the Act and, as a result,
one of the following circumstances has arisen.
- The respondent has provided a payment
schedule which shows that the amount that
they propose to pay (the 'scheduled amount')
is less than the amount claimed on the
payment claim (the 'claimed amount').
- The respondent provides a payment schedule
but does not pay any or all of the 'scheduled
amount' when it is due.
- The respondent fails to provide a payment
schedule or pay any or all of the 'claimed
amount' when it is due.
See
Fact Sheet 11: If the respondent doesn't
pay
See also FAQ 'What
happens if I don't pay the claimed amount'
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If you receive an adjudication application
you may provide an 'adjudication response'
if you have previously provided a payment
schedule in accordance with the Act. An
adjudication response is the respondent's
reply to the claimant's adjudication application.
Your adjudication response must be lodged
with the nominated adjudicator 5 business
days after receiving a copy of the adjudication
application from the claimant, or 2 business
days after receiving notice of an adjudicator's
acceptance of the application - whichever
is later. A copy of the response, including
any attachments, must also be served
on the claimant.
See
Fact Sheet 10: Responding to an adjudication
application
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An adjudication response is not required
to be in any particular form. To be
valid, an adjudication response must:
- Identify the adjudication application
to which it relates
- Include the name and address of any relevant
principal of the respondent
- Include the name and address of any other
person who the respondent knows has a financial
or contractual interest in the matters
that are the subject of the adjudication
application and
- Identify any amount of the payment claim
that the respondent alleges is an excluded
amount.
The adjudication response may contain any
relevant submissions the respondent chooses
to include.
The Building Commission
has prepared a sample
form which can be
filled in or used as a guide.
See
Fact Sheet 10: Responding to an adjudication
application
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If the payment dispute is referred to an
adjudicator, the adjudicator may determine
that the respondent must pay an amount to
the claimant (the 'adjudicated amount'). If
the respondent fails to pay the adjudicated
amount on time, the claimant has the following
options.
- Go to court to recover the adjudicated
amount
The claimant can recover the adjudicated
amount by filing an adjudication certificate
and supporting affidavit in the appropriate
court.
The adjudication certificate is available
from the Authorised Nominating Authority
(ANA) to which the adjudication application
was made. It sets out the names
of the parties, the amount payable and
the date on which it was due to be paid. The
affidavit attests to the fact that the
amount is still outstanding. The
adjudicated amount will become a judgment
debt, which is enforceable in the same
way as any court judgment. Fees will
be payable to the ANA for the adjudication
certificate and to the court for registration
of the debt.
- Recovery from the principal
If the adjudicated amount is for work,
goods or services that are incidental to
or part of a contract between the respondent
and a third party (the principal), the
claimant may recover the adjudicated amount
from the principal. This option is
not available in relation to a domestic
building contract with a building owner,
unless the building owner is in the business
of building residences.
To recover payment from the principal,
the claimant must obtain an order from
a court for the adjudicated amount. The
court will issue a Debt Certificate, which
must be served on the principal with a
Notice of Claim. The Notice of Claim
and Debt Certificate must be in the prescribed
forms, which are set out in the Building
and Construction Industry Security of Payment
Regulations 2003.
Until the debt is paid, the claimant retains
the right to suspend work or the supply
of goods and services and to exercise a
lien over unfixed plant and materials.
See
Fact Sheet 11: If the respondent doesn't
pay
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The adjudication process established by
the Act is intended to provide a quick and
inexpensive way to resolve payment disputes
arising under construction contracts. In
support of this aim, adjudicator's decisions
are generally not reviewable. However,
an adjudicator's determination may be reviewed
by another adjudicator in limited circumstances. This
process is available to both parties.
A determination may be reviewed only where
the contract was entered on or after 30 March
2007, and the adjudicated amount exceeds
$100,000.
The grounds for review are limited. A
respondent may seek review of a determination
on the ground that the adjudicator wrongly
included in the determination amounts which
are 'excluded amounts'. A claimant
may seek review of a determination on the
ground that the adjudicator failed to include
in the determination an amount or amounts
wrongly identified as 'excluded amounts'.
See
Fact Sheet 7: Adjudication review
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The application must be made to the Authorised
Nominating Authority (ANA) to which the adjudication
application was made. Applicants (whether
respondent or claimant) have 5 business days
after receiving the adjudication determination
to apply for review.
There is no prescribed form for an adjudication
review application. It must be in writing
and must be accompanied by the ANA's application
fee (if any).
A respondent may for review only if they
have taken all of the following steps
- They provided the claimant with a valid
payment schedule on time.
- They identified an 'excluded amount'
in their payment schedule or adjudication
response.
- They have paid the claimant all the undisputed
amounts determined by the adjudicator.
- They have paid any amounts they have
identified as 'excluded amounts' into a
designated trust account, and given the
claimant details of the account.
See
Fact Sheet 7: Adjudication review
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The claimant has a right to suspend works,
or supply of goods and services to the respondent
until the amount payable has been paid. The
respondent must be given 3 business
days' written notice of the suspension. The
notice must state that it is made under the
Act. A claimant who exercises this
right in accordance with the Act is not liable
for any consequential loss or expense suffered
by the respondent.
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If the adjudicated amount is for work, goods
or services that are incidental to or part
of a contract between the respondent and
a third party (the principal), the claimant
may recover the adjudicated amount from the
principal. This option is not available
where the principal is a homeowner who lives
in, or intends to live in, a house where
the work is being carried out.
To recover payment from the principal, the
claimant must obtain an order from a court
for the adjudicated amount. The court
will issue a Debt Certificate, which must
be served on the principal with a Notice
of Claim. The Notice of Claim and Debt
Certificate must be in the prescribed forms,
which are set out in the Building and
Construction Industry Security of Payment
Regulations 2003.
Service of the Notice of Claim assigns to
the claimant the debt owed by the principal
to the respondent. The principal must
then pay the claimant the money that the
principal owes the respondent until the debt
is discharged or the principal is no longer
required to pay the respondent. If
the principal fails to make the payment as
required, the claimant may sue for recovery
of the debt.
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The adjudicator must notify any relevant
principal of an adjudication application.
A relevant principal is any person who has
engaged the respondent under a contract to
provide construction work, goods or services,
if the work that the claimant has done or
the goods or services that the claimant has
supplied under contract to the respondent
is, or is part of or incidental to, the construction
work, goods or services that the respondent
was engaged to carry out or supply.
This does not include
the principal in a domestic building contract
to which the Act doesn't apply. For more
information about this exemption See
Fact Sheet 1: The Security of Payment scheme
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