Security of payment - adjudication

In South Australia, the Building and Construction Industry Security of Payment Act 2009 (the Act) covers those carrying out construction work under a construction contract.

This information sheet sets out the process for adjudication of unpaid payment claims made under the Act.

What is adjudication?

Adjudication is an alternative process to going to court.  It is intended to be quick and cost-effective, in order to keep the money flowing through the contracting chain.

Prior to application

The claimant must notify the respondent of their intention to apply for adjudication within 20 business days of the payment being due.

If the respondent hasn’t provided a payment schedule, they must be given an additional 5 business days after receiving notice of the claimant's intention to apply for adjudication.

Making an application

The application must:

• be in writing;
• be made to an authorised nominating authority;
• be accompanied by the application fee;
• identify the payment claim and schedule to which it relates; and
• Include all relevant documents on which the claimant relies, such as a copy of the construction contract, any reports, photos, etc.

Timing of the application depends on the events prior to the application.  If:

• a payment schedule was issued and the amount was reduced, then within 15 business days of the date of the schedule;
• a payment schedule was issued and payment is overdue, then within 20 business days of the due date for payment;
• a payment schedule was not issued and payment is overdue, then within 15 business days of the end of the additional 5 business day period.

Once received, the authorised nominating authority will refer the application to an adjudicator.  If the adjudicator accepts the nomination, they will notify the claimant and the respondent in writing.

Responding to an application

A response to an application may be served on the claimant and the adjudicator by the later of either:

• 5 business days after receiving a copy of the application; or
• 2 business days after receiving notice of an adjudicator's acceptance of the application.

The response must:

• be in writing;
• identify the payment claim and schedule to which it relates; and
• Include all relevant documents on which the claimant relies, such as a copy of the construction contract, any reports, photos, etc.

Adjudicator’s determination

The adjudicator has 10 business days from the date the response was received, or due to be received, in which to make a determination.  The determination will be provided to both parties and will detail:

• any amounts to be paid;
• the due date for payment;
• the rate of interest on unpaid amounts; and
• the reasoning for the determination.

Payment

If the respondent fails to pay the determined amount by the due date, the claimant has the option to suspend the work by written notice, in accordance with the Act.

The claimant may also request an adjudication certificate from the authorised nominating authority.  The certificate can be filed as a judgment for a debt in court and will then become enforceable.

The adjudicator’s fees are typically shared between the parties, however the adjudicator has the power to determine the proportion of the fees to be paid by each party.  If one party fails to pay their share of the fees, the adjudicator may make a determination for costs.

Appeals

If a party disagrees with a determination, they have the option to take the matter to court, but not as a part of the initial filing for a judgment debt.

To find out more, contact HIA's Contracts and Compliance team

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