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IMPORTANT AMENDMENTS TO ACT COMMENCE 28 FEBRUARY 2011. SUBCONTRACTOR NOW HAS MAJOR NEW RIGHT TO FREEZE PAYMENTS PAYABLE BY PRINCIPAL CONTRACTOR TO CONTRACTOR. |
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The procedures and timeframes which apply for adjudication under the NSW Building and Construction Industry Security of Payment Act 1999 vary based on whether the claimant has served a valid payment claim and, in reply, received a valid payment schedule (response).
The Act's procedures remain the same to this point. Therefore either flowchart can be followed until the processes diverge based on whether the respondent has or has not provided a valid payment schedule to the claimant. Therefore information on reference dates and preparing the payment claim is the same regardless of which flowchart is selected.
The respondent who fails to provide a payment schedule must be given a second opportunity to provide one. If they fail a second time, the Act effectively punishes the respondent by denying them the right to participate in the adjudication process. This results in the two different procedures.
Adjudicate Today has prepared two simple flowcharts to explain the procedures. To use these flowcharts and this website effectively, we strongly recommend you refer to "Navigating this website" (below).
- Procedure 1 – Respondent serves a valid payment schedule within 10 business days after receipt of the claimant’s payment claim
A valid payment schedule has been served when a claimant provides a payment claim to a respondent and the respondent provides the claimant with a payment schedule within 10 business days of receipt of the payment claim. (Note: Service by the respondent of a payment schedule after 10 business days renders the payment schedule invalid – go to procedure 2).
The claimant seeks adjudication because either there is a dispute over the respondent's reasons for withholding some or all of the claimed amount; or the claimant has accepted the payment schedule but the respondent fails to pay the scheduled amount by the due date of payment.
The payment schedule served flowchart describes how to proceed in these circumstances.
- Procedure 2 – Respondent does NOT serve a valid payment schedule within 10 business days after receipt of the claimant’s payment claim
When a respondent fails to serve a valid payment schedule within 10 business days after receipt of the claimant’s payment claim, the Act requires the claimant send the respondent a notice under section 17(2). The effect of this notice is to provide the respondent with a second opportunity to serve the claimant with a payment schedule; however within the shorter period of 5 business days.
Once the claimant serves the section 17(2) notice, there are two mutually exclusive possibilities. Either the respondent provides or does not provide a valid payment schedule within 5 business days after receipt of the claimant’s notice.
The payment schedule not served flowchart describes both the procedures and timeframes of serving the section 17(2) notice and how to proceed to adjudication if the respondent again fails to issue a valid payment schedule.
(*Note: If the respondent now serves a valid payment schedule – this must be within 5 business days after receipt of the claimant’s notice under section 17(2) - the procedure reverts to that described in the payment schedule served flowchart [procedure 1]).
Parties must comply with the statutory procedures and timeframes of the Act. Failure to comply may have serious consequences. Some examples of common errors which can't be corrected by either Adjudicate Today or the adjudicator:
- The respondent provides the payment schedule after 10 business days (e.g. day 11). As it is invalid, the claimant must serve the section 17(2) notice and the respondent must provide (again) the payment schedule (within 5 business days).
- The claimant prepares and serves the adjudication application after 10 business days (e.g. day 11) of receipt of a valid payment schedule. As the statutory time has passed, the payment claim has expired and the application can't proceed.
- The claimant prepares and serves an adjudication application on Adjudicate Today and/or the respondent prior to the expiry of the 5 business days permitted to a respondent under section 17(2). The application is invalid as it has been served early. The claimant should have waited the elapse of the fifth business day. The application may be served again after the fifth business day and before the twentieth business day expires.
The lesson from each of these examples is to count business days carefully, remembering that the first business day is the first day after service (excluding Saturday, Sunday, public holidays and all days between Christmas and New Year) i.e. the day of service is day 0.
Based on your actual circumstances, our professional staff are available to advise on how to comply with each statutory step and date under the Act.
Most users of this website are engaged or are proposing to engage in adjudication. The process may seem difficult when read for the first time. Actually it is not.
We have attempted to explain the process in a simple interactive manner by using flowcharts of the process while alerting claimants and respondents (parties) under the Act to their major rights and obligations.
When an important term of by the Act is first encountered it is underlined. Moving the mouse over each box in a flowchart provides brief details. Clicking in the box provides important related information. The simplest way to return from a pop-up is to close it by clicking on the small 
located on the top right corner of the pop-up.
We suggest users less familiar with the Acts and/or this site use the applicable flowcharts to navigate. Advanced users may choose to use either the blue menu system at the top of each page or the link to the next applicable information page at the bottom of most pages.