Building and Construction Law Basics – Part 4 – Adjudication

Welcome to part 4 of our series of articles discussing the basics of the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (BIFA).  This article will discuss the adjudication process.

So far in this series we’ve covered:

  1. Payment claims;
  2. Payment schedules; and
  3. Reference dates.

If you’ve missed these articles, be sure to read them here.

Adjudication is a dispute resolution process to help resolve disagreements about progress payments and money owed. It aims to be a quick, cost effective alternative to court proceedings.

A claimant may make an application for adjudication in circumstances where:

  1. the respondent fails to give a payment schedule and fails to pay the whole claimed amount by the due date for payment outcome;
  2. the respondent serves a payment schedule but fails to pay the amount proposed to be paid in the payment schedule; and
  3. the respondent serves a payment schedule and the amount proposed to be paid in the payment schedule is less than the claimed amount.

Timing of the adjudication application

There are strict time frames for making an adjudication application. An adjudication application must be filed with the registrar within the following time frames: 

  1. in the circumstances of point 1 above, within 30 business days after the due date for payment, or the last day the respondent could have served a payment schedule, whichever is the later;
  2. in the circumstances of point 2 above, within 20 business days after the due date for payment; or
  3. in the circumstances of point 3 above, within 30 business days after the respondent receives the payment schedule.

Adjudication application

An adjudication application:

  1. must be in the approved form;
  2. must identify the payment claim and the payment schedule, if any, to which it relates; 
  3. must be accompanied by the fee prescribed by regulation for the application; and
  4. may include the submissions relevant to the application the claimant chooses to include.

A copy the application must also be provided to the respondent.

Adjudication Response

Once an adjudication application is received by the QBCC, the registrar must refer the adjudication application to an eligible adjudicator. The adjudicator may then decide to accept or reject the referral.

If the adjudicator accepts the referral, the adjudicator will give the claimant and the respondent notice of the adjudicator’s acceptance of the adjudication application.

The respondent may give an adjudication response only if it gave the claimant a payment schedule in response to the payment claim.

The adjudication response:

  1. must be in writing; 
  2. must identify the adjudication application to which it relates; 
  3. may include the submissions relevant to the response the respondent chooses to include; and
  4. must not include any new reasons for withholding payment that were not included in the respondent’s payment schedule.

Timing of the adjudication response

If the adjudication response is in relation to a standard payment claim, the respondent must give the adjudicator the adjudication response within the later of the following:

  1. 10 business days after receiving a copy of the adjudication application; and
  2. 7 business days after receiving notice of the adjudicator’s acceptance of the adjudication application.

If the adjudication response relates to a complex payment claim, then these time frames are extended to the later of the following:

  1. 15 business days after receiving a copy of the adjudication application; and
  2. 12 business days after receiving notice of the adjudicator’s acceptance of the adjudication application.

If the respondent gives the adjudicator an adjudication response it must give a copy of the response to the claimant within 2 business days of it being lodged with the adjudicator.

Timing for an adjudication decision

BIFA requires the adjudicator to decide an adjudication application no later than:

  1. for a standard payment claim within 10 business days after the response date;
  2. for a complex claim (being for an amount over $750,000) within 15 business days after the response date. 

The response date is either the date on which the adjudicator receives an adjudication response from the respondent, otherwise, the last day on which an adjudication response could have been given.

BIFA allows an adjudicator to have an extension of time to decide the adjudication application if the parties agree or, in the case of an adjudication application of a complex payment claim, an additional 5 business days even if the parties do not agree.

Paying an adjudicated amount

If an adjudicator decides that a respondent is required to pay an adjudicated amount, the respondent must pay the amount to the claimant on or before 

  1. the day that is 5 business days after the day on which a copy of the adjudicator’s decision is given to the respondent; or
  2. a later date decided by the adjudicator.

Failing to pay an adjudicated amount within that time frame is an offence under BIFA and may attract disciplinary action under the Queensland Building and Construction Commission Act 1991 and/or a maximum penalty of 200 penalty units. 

 

 

With more than 15 years’ experience in the building and construction industry and as a commercial litigator with a focus on contractual disputes, debt recovery, building and construction for the last 10 years, our principal solicitor Sam Cohen brings a wealth of knowledge and experience in a complex area of law. If you would like more information about reference dates or any other matters relating to building and construction, please contact us today!

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