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Guide to rapid adjudication system

On 1 January 2005 the Construction Contracts Act 2004 (the ‘Act’) commenced, with the Act introducing laws to facilitate prompt payment for building work. The information below provides an overview of the rapid adjudication system.

What is rapid adjudication?

Rapid adjudication is an informal and fast process for the interim resolution of payment disputes. An amount that is determined as being owed under rapid adjudication must be paid although the subject matter of adjudicated decision may later be decided differently by a court, tribunal or arbitrator.

In making a determination the adjudicator must consider the evidence of both parties, including any expert evidence, provided that evidence is given within the strict timeframes set out in the Act. The adjudicator may also inspect the work.

Who can seek rapid adjudication?

Rapid adjudication can be sought by any party who has a payment dispute in relation to a construction contract entered into from 01 January 2005 for construction work in Western Australia regardless of where the contract is signed and whether it is in writing or not.

An application for rapid adjudication can be made by an owner, a principal contractor (builder), a contractor/subcontractor, a supplier to the site where construction work is being carried out and by professionals whose services relate directly to the construction work being carried out (e.g. architect, engineer, project manager or surveyor, but not accountants, legal advisors or financiers).

When can rapid adjudication be sought?

Where a payment claim has not been paid in full, a written application for rapid adjudication may be given within 28 days of the date on which the payment claim became due. Any party to the contract may apply to have a dispute adjudicated.

The application must comply with the requirements of the Act and must set out the details of, or have attached to it, the contract involved or relevant extracts of it and any payment claim that has given rise to the dispute. The claim must also set out or have attached to it all the information, documentation and submissions on which the party making it relies in the adjudication.

The application must be served on the other party to the dispute and the adjudicator. An application cannot be brought where a previous application relating to the same subject matter has been brought or where the dispute is the subject of any order, judgment or finding by a court or arbitrator. The disputing parties can agree on an adjudicator. If they cannot agree, the applying party can apply to a prescribed appointer who will appoint an adjudicator to determine the payment dispute on their behalf.

Responding to an application for adjudication

A party served with an application must serve on the other party and the adjudicator a written response within 14 days of receiving the application.

The response must comply with the requirements of the Act and contain:

  • the details of the response with any documentation on the rejection or dispute of the payment claim to be attached to it
  • the name and contact details of the adjudicator or prescribed appointer
  • the name and contact details of the parties to the dispute
  • all information, documentation and submissions on which the party relies in the adjudication.

Determination by the adjudicator

An adjudicator is required to make a determination within 14 days of receiving the response or, where no response has been served, within 14 days of the last day for service of the response. The adjudicator in making a determination can dismiss the claim or order that an amount be paid by a specified date to either party. The adjudicator is also able to order interest to be paid. The determination is to be made in writing in the prescribed form and must contain reasons for the decision. 

The costs of adjudication are to be borne equally by both parties. However, if costs are incurred through vexatious or frivolous claims, the adjudicator has the ability to award costs to the affected party. 

Failure to comply with order

If a payment is not made in accordance with an adjudicator’s determination, the party affected may after giving written notice, suspend its performance of the contract without risk of liability.

To suspend the work a written notice is required to be given by the affected party under the Act. The notice must state the date on which the contractor intends to suspend the performance of its obligations and be given to the principal at least three days before that date. It must also contain the name of the adjudicator, the principal’s and contractor’s contact details, the date and identification number of the adjudicator’s determination, the amount to be paid and the date the principal was to have paid the amount. 

If on the date for suspension the principal has not paid the contractor the amount in accordance with the determination, the contractor may suspend the performance of its obligations until no longer than three days after the date on which the amount is paid. 

Unless the determination provides otherwise, interest at the rate prescribed under the Supreme Court Act 1935 section 142 is to be paid on such of the amount as is unpaid after the date specified in the determination. 

A party may also apply to the relevant court for the determination to be enforced as if it were a judgment of a court. 

A person aggrieved by an adjudicator’s decision has a limited right of review to the State Administrative Tribunal.

To find out more, contact HIA's Workplace Services team

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