Security of Payment Definitions ACT

These definitions summarise and simplify what are often complex provisions under the Act.  The definitions are not necessarily exhaustive and should not be relied on in the event of a dispute.  Detailed definitions are contained in the Act. 

"Adjudication"also known as "Security of Payment" refers to compulsory rapid adjudication a new and unique form of statutory dispute resolution that has revolutionised the building and construction industry. The process is designed to be quick, informal and inexpensive. It is proving to be extraordinarily popular in ensuring money continues to flow in the industry quickly and fairly between parties.

"Adjudicated Amount" is the amount of the progress payment, if any, to be paid by the respondent to the claimant [section 24(1)] .

"Adjudication Application" is an application made by a Claimant to Adjudicate Today or other ANA for adjudication of a payment dispute under a construction contract.  In order to be valid strict timeframes must be followed.  The staff of Adjudicate Today will assist parties in complying with the procedures and timeframes of the Act but, as they must be independent of the parties, can't help develop submissions which address the merit issues of the payment dispute [section 19(1)].

"Adjudication Certificate" is a certificate provided by Adjudicate Today or other ANA on application by a Claimant when the Respondent fails to pay the whole or any part of the adjudicated amount in a decision [section 26].

"Adjudication Response" is the response of a Respondent to the Claimant's adjudication application.  In order to be valid strict timeframes must be followed [section 22(1)].

"Business Day" is any day other than a Saturday, Sunday or public holiday or 27,28,29,30 or 31 December.

"Claimant" is a person who has carried out construction work, or supplied related goods and services, and is or claims to be entitled to a progress claim under a construction contract [section 15(1)].

"Claimed Amount" is the amount of the progress claim that the Claimant claims is payable [section 15(2)].

"Construction Work" is work defined in section 7 of the Act.  The construction work must be carried out in ACT after 1 July 2010.  The term does not apply to domestic building work if a resident owner is party to the contract and to the extent the the contract relates to a building or part of a building where the resident owner resides or intends to reside [section 9(2)(b)]. A 'resident owner' does not include a person who is licensed or should be licensed as an owner builder [s 9(7)].

"Decision" is the Adjudicator's decision [section 24].

"Due Date for Payment" is the date on which a payment claim becomes due and payable, being the earlier of 15 business days** after a payment claim is given to a Respondent, and the day when the payment becomes payable under the contract [section 13(1)]. 

"Intention to Suspend Work" means the right of a Claimant  to suspend construction work or the supply of related goods and services.   This right arises on the Respondent's failure to provide a payment schedule and claimed amount by the due date [section 19(2)(b)]; or provision of a payment schedule but failure to pay the scheduled amount by the due date [section 18(2)(b)]; or failure to pay or provide security for an adjudicated amount [section 26(2)(b)].  The notification to suspend work will be in writing and provide 2 business days notice.

"Payment Claim" is a claim for a progress payment under a construction contract.  It must identify the construction work or related goods and services and the amount that the Claimant claims to be payable.  In order to be a valid claim under the Act it must also state that "This is a payment claim made under the Building and Construction Industry (Security of Payment) Act 2009 ACT" or words to that effect. [section 15(2)].

"Payment Schedule" is the response served by a Respondent to a payment claim.  It must identify the payment claim to which it relates and state the amount of the payment claim, if any, that the Respondent proposes to make [section 16]. 

"Progress Payment" is a payment to which a person is entitled including a payment that is based on an event or date, a single or one-off payment or the final payment for construction work or supplying related goods and services [section 10].

"Related Goods and Services", in relation to construction work, includes materials, components, plant or material forming part of, or for use in connection with, the construction of any building, structure or work; and services including the provision of labour, professional services and related goods and services [section 8].

"Respondent" is a person who has received a valid payment claim and is liable, or may be liable, to make a payment under a construction contract [section 15(1)] or for related goods or services.

"Scheduled Amount" is an amount of money that the respondent proposes to make in response to a payment claim.  If the scheduled amount is less than the claimed amount, the schedule must state why the scheduled amount is less and, if it is less, the respondent's reason for withholding payment [section 16(2)(b)].

"Section 19(2) Notice" (also known as "Optional Adjudication" or "the Second Notice") is a notification that the Claimant has both not received the payment response within the time allowed by the Act nor the claimed amount and stating that the Respondent has 5 business days in which to serve a payment schedule or pay the payment claim in full before the Claimant applies for adjudication [section 19]. 

**We note that the ACT Government has advised that the “the changes to the Building and Construction Industry (Security of Payment) Act 2009, which commenced on 11 March 2024 (and relevantly change the timeframe from 10 business days to 15 business days), apply to any progress claim made under the Act from 11 March 2024, regardless [of] when the contract was signed.” This issue will remain unsettled until it is considered by the Courts.