Building Industry Fairness Act Part 3: The Adjudication Process

Building Industry Fairness Act Part 3: The Adjudication Process

This is the third article in our three-part series regarding the operations of the Building Industry Fairness (Security of Payment) Act 2017 (‘BIF Act), where we explore The Adjudication Process. The BIF Act was introduced primarily to simplify the procedure for recovering payments owing to contractors in the building and construction industry.

In this three-part article series, Ramsden Lawyers’ litigation team have shared their insights on the procedural and dispute resolution aspects of the BIF Act. Part one of the series focused on issuing a payment claim, part two discussed issuing a payment schedule, while this part will discuss the adjudication process and how adjudication operates under the BIF Act.

As discussed in part one and part two, once you have served a payment claim, you are referred to as the claimant and the party receiving the payment claim is referred to as the respondent. The respondent is the party responsible for payment of the relevant building and construction services. When responding to a payment claim, a respondent may elect to either pay the amount claimed or provide a payment schedule indicating what they believe to be the actual amount due and owing to the claimant.

If you are the respondent, you must serve a payment schedule. There are no second chances, and failure to serve a payment schedule may result in a fine or even disciplinary action from the Queensland Building Construction Commission (‘QBCC’). The claimant may then bring an adjudication application against the respondent to recover the amount of their payment claim and the BIF Act expressly prohibits respondents from making any adjudication response if no payment schedule is served within the timeframe specified in the BIF Act. It is therefore vital that your payment schedule is served within 15 business days of receiving the payment claim (or otherwise within the timeframe specified in the relevant construction contract, if that timeframe is less than 15 business days). Failure to do so may expose you to a significant liability if the claimant is ultimately successful (partly or otherwise) in adjudication.

 

 

WHAT IS ADJUDICATION

Adjudication is the legal process by which an adjudicator reviews the respective parties’ evidence, including legal reasoning provided by the claimant and respondent, and makes a decision on the basis of that evidence. The adjudicator is completely impartial and ultimately determines the parties’ respective rights and obligations. Under the BIF Act, the adjudicator’s decision is binding on both parties unless the dispute is finally and formally determined by legal proceedings.

 

WHO CAN BRING ADJUDICATION?

Claimants and respondents can apply for the adjudication process under the BIF Act. A claimant may bring an adjudication application upon the respondent’s failure to pay the payment claim, while a respondent may bring an adjudication application if they disagree with the amount claimed. Adjudicators will generally only consider the adjudication application and the relevant payment claim and / or payment schedule, as well as determining issues of jurisdiction (that is, for instance, that there was a valid reference date under the contract to serve the payment claim).

 

ADJUDICATION TIMEFRAMES

APPLICATIONS

The BIF Act provides strict and unforgiving timeframes for making an adjudication application.  The relevant timeframes depend on the matter and are as follows:

SCENARIO TIMEFRAME
If the respondent fails to serve its payment schedule / pay the whole amount claimedThe claimant will have 30 business days to file and serve its adjudication application.  That is, 30 business days after the due date for payment of the invoice / claim;  OR  the last day the respondent could have served a payment schedule; – whichever is the later.
If the respondent serves its payment schedule to the claimant, but fails to pay the amount proposed in its payment scheduleThe claimant will have 20 business days after the due date for payment to serve its adjudication application.
If the respondent serves its payment schedule, but the amount proposed to pay is less than the claimed amountThe claimant will have 30 business days after the respondent receives the payment schedule to serve its adjudication application.

 

Importantly, the above timeframes cannot be extended even with the express consent of all parties involved in the dispute, so if you are considering bringing an adjudication application, you must ensure you meet the above timeframes, or otherwise be statute-barred from bringing that application in the future

 

RESPONSE TO APPLICATIONS

The relevant time frame for providing your adjudication response will depend on whether the payment claim is considered a standard payment claim or complex payment claim. Those differences are explained below:

Standard payment claimsA standard payment claim is a payment claim for a claimed amount of no more than $750,000 (excluding GST).Where there is a standard payment claim in dispute, you must serve your response to the adjudication application within 10 business days after the adjudicator’s acceptance is served;  OR  7 business days after receiving notice of the adjudicator’s acceptance of the application; – whichever is the later.
Complex payment claimsA complex payment claim is a payment claim for a claimed amount more than $750,000 excluding GST. Where there is a complex payment claim in dispute, you must serve your response within 15 business days after receiving a copy of the adjudication application;  OR  12 business days after receiving notice of the adjudicator’s acceptance; – whichever is the later.

 

WHEN AND HOW TO APPLY FOR THE ADJUDICATION PROCESS

You may apply for adjudication under the BIF Act if you give a payment claim for construction work or related goods and services and any of the following occurs:

  1. You receive a payment schedule and you disagree with it;
  2. You receive a payment schedule but you are not paid in full by the due date; or
  3. You are not paid in full by the due date and you don’t receive a payment schedule.

If you decide to proceed to adjudication, you must ensure that you follow the timeframes set out above. You may make your adjudication application by either of the following ways:

  1. Completing the online adjudication form via the QBCC website; or
  2. Completing a hard copy adjudication application form.

When serving and notifying the other side of your application, you must provide a copy of the adjudication application and all supporting documents / submissions. This must be done as soon as reasonably possible after making the adjudication application. Fees for lodgement of an adjudication application also vary depending on the value of the payment claim; the higher the value, the more costly the adjudication application.  This information is readily available on the QBCC website, or alternatively, please do not hesitate to reach out to our litigation team here at Ramsden Lawyers to assist in your matter.

 

KEY TAKEAWAYS FROM THIS THREE-PART SERIES

  1. Proactively monitor your email to ensure that you do not miss any payment claim or adjudication applications. .
  2. All payment claims must be dealt with within the relevant timeframes under the BIF Act. If you fail to respond to a payment claim, payment schedule or adjudication application within those timeframes, you are necessarily exposed to fines and a considerable liability to the other side.
  3. Take a payment claim seriously; never forget to pay a payment claim or serve a payment schedule and always be fully aware of your rights and obligations. Seek legal advice if required.
  4. If you are unsure of your obligations under the BIF Act, you should seek legal advice. Additionally, if you have not had your contracts professionally drafted or reviewed, you may want to seek advice from Ramsden Lawyers’ commercial team.
  5. Always remember to comply with all relevant timeframes under the BIF Act, whether that be for filing and serving a:
  • payment claim;
  • payment schedule;
  • adjudication application; or
  • response to an adjudication applications.

 

OUR ROLE IN LITIGATION

Ramsden Lawyers’ litigation team are highly experienced in the adjudication process, having acted for a number of claimants and respondents over the years. If you are seeking legal advice regarding a building or construction dispute, Ramsden Lawyers are able to assist you in navigating the procedures set out under the BIF Act. There are strict timeframes that you must follow whether bringing or defending a claim in building and construction disputes. You must act without delay in order to protect your interests, so please do not hesitate to contact our experienced litigation lawyers to arrange a free, no obligation initial consultation.

The content of this article is intended to provide a general guide to the subject matter and must not be relied on as legal advice. Specific advice should be sought about your circumstances.

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