New South Wales
Building and construction payment disputes - contracts before 21 April 2014
CONTRACTS ON OR AFTER 21 APRIL 2014
The object of the NSW Building and Construction Industry Security of Payment Act 1999 is to ensure that any person who undertakes to carry out construction work (or who undertakes to supply related goods and services) under a construction contract is entitled to receive, and is able to recover, progress payments in relation to the carrying out of that work and the supplying of those goods and services.
This ensures that a person is entitled to receive a progress payment by granting a statutory entitlement to such a payment regardless of whether the relevant construction contract makes provision for progress payments.
The process of adjudication under this Act begins when the Claimant serves a payment claim on the Respondent. Timeframes are very strict under the act and if the Claimant fails to meet these timeframes, they risk the application being deemed invalid.
Resolution Institute has provided flowchart to assist both parties through the adjudication process to ensure that there is a good understanding of the timeframes under the legislation which are dependent on the actions taken by either party. Parties should also be familiar with the methods of serving documents.
Complete the online form to use the Resolution Institute nomination service to appoint an adjudicator for you.
The process includes the following:
The Adjudication process starts when a Claimant issues a payment claim on the Respondent. It is important that all the criteria in the legislation for this document are met and your payment claim is served correctly on the Respondent.
A payment claim is a tax invoice that must:
- Be in writing
- Include the words “This is a payment claim under the Building and Construction Industry Security of Payment Act 1999 (NSW)”, or words to the same effect
- Describe in detail the construction work, related goods or services which are the subject of the claim
- Be addressed to the Respondent
- State the claimed amount.
Ways that a claimant can serve a payment claim on a respondent include:
- Hand delivery
- Post to the Respondent’s ordinary place of business address
- Fax to the Respondent’s ordinary place of business.
The payment schedule is due by the Respondent by:
- The date in accordance with the terms of the contract or
- If the contract does not specify a date, then according to the Act, you are entitled to be paid 10 business days after the payment claim has been issued on the Respondent
A payment schedule is a response to a payment claim by the Respondent.
It must (as per the Act):
- Be in writing
- Be addressed to the Claimant.
- Identify the payment claim to which it relates
- State the scheduled amount that the Respondent proposes to pay (even if that amount is $NIL)
- Provide detailed reasons for withholding payment if the amount proposed to be paid is less than the claimed amount.
The payment schedule should be served:
- Within the time required by the relevant construction contract or
- Within 10 business days after the payment claim is served
- Whichever time expires earlier
Please note, that the due date for the payment and the due date for the payment schedule may not be the same, depending on what is specified within the relevant construction contract.
A 17(2) Notice is issued if the Respondent does pay or send a payment schedule in response to the Claimant's payment claim. The 17(2) Notice is a notification by the Claimant to the Respondent of the intention to apply for Adjudication if the claimed amount remains unpaid.
The 17(2) Notice must:
- Be made in writing
- State that no payment schedule was received in response to the payment claim
- Refer to and include the original payment claim
- State that it is "a 17(2) notice according to the Building and Construction Industry Security of Payments 1999 NSW"
- State that you intend to apply for adjudication
The Claimant has 20 business days after the due date for payment of the payment claim to issue a 17(2) Notice. A 17(2) Notice gives a Respondent five business days within which to provide payment or a payment schedule.
Once the five business days following the service of the 17(2) Notice on the Respondent have expired, the Claimant has 10 business days within which to bring forward an Adjudication Application to an Authorised Nominating Authority (ANA), such as Resolution Institute. The Respondent does not have the right to respond to the adjudication application.
An Adjudication Application must (as per the Act):
- Be in writing
- Be addressed to the ANA
- Be accompanied by the appropriate application fee
- Must identify the payment claim and the payment schedule (if any) to which it relates
- Contain submissions relevant to the Claim, such as the history of the relationship between the parties, and all correspondence and documentation that will support your case. The content included in your application is to be decided by the Claimant.
- Be sent to the Respondent at the same time that the Application is sent to the ANA. .
Evidence of service of the Application to the Respondent should be provided to the ANA, for example a copy of fax transmission report.
You may apply for adjudication if:
- You disagree with the amount the Respondent offers in the payment schedule and it is less than 10 business days since you received the payment schedule
- The Respondent offers to pay $Nil in the payment schedule and it is less than 10 business days since you received the payment schedule
- The Respondent fails to pay the whole or part of the amount due and it is less than 20 business days since the due date for payment has past
- The Respondent fails to issue a payment schedule and it is less than 10 business days since the end of the five business days of the 17(2) notice
Applications can be submitted via Fax: 9251 3733 or post:
C/- Compass Offices
Level 17, 9 Castlereagh St
Sydney NSW 2000
If the Respondent has issued a payment schedule they will be given the option to lodge an adjudication response. This should be lodged with the ANA handling the application within five business days of receiving a copy of the application or two business days of receiving notice of an adjudicators acceptance, which ever is later.
An Adjudication Response must (as per the Act):
- Be in writing and
- Identify the adjudication application to which it relates
- May contain such submissions relevant to the response as the respondent chooses to include
- A copy of the adjudication response must be served on the claimant at the same time it is served on the ANA.
The 17(2) notice is an intention to apply for adjudication if the claimed amount remains unpaid. This notice gives the Respondent five business days within which to provide payment or a payment schedule.
If the respondent has not paid or provided a payment schedule by the expiry of the five business days period, the claimant has the right to lodge an adjudication application within 10 business days. Under these circumstances the Respondent does not have the right to make an adjudication response.
The decision is due 10 business days from the date that the adjudicators acceptance is sent to the parties. The parties are jointly and severally liable for the full amount of the adjudicators fees. It is the responsibility of the parties to determine between themselves who will pay the total amount due so that the determination will be released. The precise allocation between the parties in respect of these amounts is specified in the determination.
After release the Respondent is required to pay the adjudicated amount (if any) within five business days from the release of the determination to the parties. Failure to make this payment entitles the Claimant to request (in writing) an Adjudication Certificate from Resolution Institute to file a Judgment Debt in the appropriate court of jurisdiction.
Resolution Institute is not at liberty to advise the Respondent or any of its representatives whether or not an adjudication certificate has been requested or issued.
- Claims under $5,000, fixed rate of $660.00 (inclusive of GST)
- Claims over $5,000, adjudicator hourly rate applies. Variation between $250 to $500 per hour (exclusive of GST) – depending on the adjudicator allocated.
The relevant fees are payable at the time the parties to an adjudication are notified of a decision by the adjudicator.
The fees stated above are inclusive of the Authorised Nominating Authority Fee.
Adjudication Certificate Fees