ACT: Payment Schedule Served - Claimant NOT Paid
Despite the claimant accepting the payment schedule, the respondent may fail to pay the scheduled amount by the due date for payment.
The due date for payment under the Act is the date on which a payment claim becomes due and payable either in accordance with the terms of the contract or, if there is no such valid provision, 10 business days after the payment claim is made.
In such circumstances, the claimant can:
- Apply in writing to Adjudicate Today for adjudication of the full claimed amount regardless of whether the claimant was prepared to accept a lesser scheduled amount. The adjudication application must be made to Adjudicate Today within 20 business days of the due date for payment; or
- Sue in court or commence any dispute resolution process permitted by the construction contract; and
- Give notice of intention to suspend work on giving 2 business days' notice. Further details on suspending work are provided here.
Why go to adjudication?
Adjudication is quick and cost effective dispute resolution for industry participants to recover all progress payments that are due, including final payments and retention monies. It was created by government at the request of industry groups to "keep the money flowing in the building and construction industry". It represents an alternative to the often slow, expensive and difficult process of litigating payment disputes through the courts.
The Act permits claimants access to adjudication whether the construction contract is written or oral and even when the contract has no provision for progress payments and/or the contract is for a single supply at a fixed price.
Adjudication provides claimants with a quick determination on their claim for payment. Subject to very limited injunctive rights, a respondent must comply with the adjudicator's determination (i.e. pay the money) if it wishes to commence proceedings in court. In effect, the traditional roles of court are reversed. Rather than the claimant litigating in court seeking to be paid, the claimant has possession of the money and the respondent must commence court proceedings to attempt to recover some or all amounts determined by the adjudicator. In practice, few respondents challenge the adjudicator's determination.
The process is simple and rapid. The adjudicator must make the determination within 10 business days (unless the parties agree to extend the time) from when the adjudicator notifies the parties of acceptance of the adjudication application. If the respondent's reasons for not paying are without merit, the respondent is generally liable for all adjudication fees. The process is usually entirely in writing. It was designed to be simple so as most parties would not require a lawyer.
After adjudication, and if the respondent does not pay any determined amount by the relevant date, the claimant takes the adjudication certificate (available on application to Adjudicate Today) to the appropriate court and registers it as a judgment debt.
Unlike litigation or arbitration, adjudication cannot result in a determination that the claimant must pay the respondent money. The maximum liability of the unsuccessful claimant is the amount of the adjudication fees. Even then, the fees are shared by the parties unless the adjudicator determines otherwise.
Prompt payment is vital to the stability and efficiency of the construction industry. Too often the party (the respondent) liable to pay for construction work or related goods or services, manufactures a dispute to deny, or try to delay, payment. In other situations, respondents try to string out the time for payment with promises of future work if only the claimant just waits a bit longer. The Act bars "pay when paid" and/or "paid if paid" as reasons for withholding a payment and overturns them even if they are allowed by the contract. It also provides a minimum rate of interest on late progress payments.
The right to make an adjudication application or to suspend work only arises after the due date for payment has passed. A common reason for an adjudication application not being properly made is that the claimant gives notice of adjudication either too early or too late because they have wrongly calculated the due date for payment.
Please move to the next step on the ACT flowchart being "Claimant has 20 business days from Due Date for Payment to prepare & serve Adjudication Application on Adjudicate Today".