ADJUDICATION

Adjudication is the new buzz word in the construction industry after the introduction of legislation in Queensland,
NSW, Victoria, NT and WA designed to provide rapid resolution to payment disputes without the necessity to
revert to going through the courts. Over 3,500 claims have been submitted in the past three years totalling an
amount in excess of $3 billion, resulting in improved cash flow for businesses involved in building and construction
projects.
Adjudication is a process whereby a registered Adjudicator is appointed to decide the amount of a progress
payment under dispute. It provides speedy and inexpensive management of disputed claims. Contractors,
subcontractors, suppliers, plant and equipment hirers and consultants may all be eligible to submit a payment
claim. An adjudicator has ten business days to provide a written decision and will decide the amount, if any, to be
paid to the claimant, the due date of the payment and the rate of interest payable. The process is quick, and there
is no limit on the amount of the disputed progress claims that may be referred to adjudication. The payment claim
must:
be delivered after the date for submission of a progress claim under the contract; or if there is no contractual
provision, the last day of the month.
be delivered within 12 months from when the relevant construction work was completed, unless a longer period is
agreed.
identify the construction work or related goods and services to which the progress payment relates
state the amount of the progress payment claimed.
explain why the amount should be paid to the claimant.
include a statement that the payment claim is made under the relevant legislation. For example, in Queensland,
the statement reads This is a payment claim made under the Building and Construction Industry Payments Act
2004 (Qld).
Only one payment claim may be delivered for each progress payment period, which means that companies who
endorse all of their invoices as claims made under the relevant legislation risk delivering multiple payment claims
during each period, and may deny themselves an opportunity to refer disputed claims to adjudication.
However, the payment claim can include amounts claimed for work carried out in earlier periods.

A well prepared payment claim will also identify the contractual provisions that give rise to the claimed payment,
the facts that establish the entitlement to payment and show how the amount claimed is calculated (with
supporting documents and evidence).
After the payment claim has been submitted, the respondent can either pay the full amount, a lesser amount, or
nothing. The respondent may respond with a payment schedule stating the amount they are willing to pay and the
reasons why this is less than the amount claimed, or may not respond to the payment claim at all.
If the respondent did not supply a payment schedule, the claimant may either apply for judgement in the relevant
court or refer the claim to adjudication. If the claimant selects the adjudication process, the claimant must first
issue a notice of their intention to apply for adjudication under the relevant legislation and give the respondent five
further business days to respond with a payment schedule.
If the respondent did supply a payment schedule (or alternatively didnt, and the five business days noted above
have passed), the claimant can now make an adjudication application. As with all stages of the process there are
time limits within which the adjudication application must be lodged, and claimants should refer to the legislation
of the relevant state to confirm the applicable time limit. The adjudication application should include:
Submissions responding to reasons for non payment included in the payment schedule
A copy of the payment claim
A copy of the contract (or if the contract was oral, details or a description of what was agreed, especially in
relation to the agreed scope of work, the agreed price and the terms of payment)
Copies of any other relevant material, which might include statements detailing the extent of the work completed,
completion certificates, delivery dockets, photographs, independent reports and any other relevant
correspondence such as letters, faxes and emails.
The final step is to contact an Authorised Nominating Authority (ANA), such as the Institute of Arbitrators and
Mediators Australia (which operates nationwide), and submit all relevant documents to them for referral to a
suitable adjudicator. At the same time, the claimant must serve an identical set of documents on the respondent.
Once the ANA receives the documents, they have four business days to appoint an adjudicator. The respondent
has an opportunity to deliver an adjudication response. Once the date for delivery of any adjudication response
has passed, adjudicator then has ten business days to decide the adjudication and provide a written decision.
By Karyn Reardon and Sarah Montgomery, Institute of Arbitrators and Mediators Australia (Queensland Chapter).