Security of Payment Act & Adjudication
This page is an overview of the Security of Payment Acts in the Building and Construction industry. As every State and Territory has a different Act, procedures and timeframes differ based on where the work was performed. For help on using the applicable Act in your State or Territory, call us on 1300 760 297.
What is Security of Payment legislation?
Security of Payment legislation was created by governments to assist contractors, subcontractors, consultants and suppliers recover payments due under the terms of their construction contract. A contract can be written or oral or a combination of both forms.
In 2000, New South Wales was the first Australian jurisdiction to introduce this revolutionary reform to payment arrangements in the building and construction industry. Shortly afterwards, Victoria introduced legislation closely modeled on the New South Wales Act in its original form. Since that time, both the New South Wales and Victorian Acts have undergone significant amendments, simplifying the capacity of contractors, subcontractor, consultants and suppliers to make applications. All other States and Territories (not Northern Territory) have followed or are following with similar legislation albeit with timing and other differences.
Adjudicate Today nominates or appoints the adjudicators to determine payment disputes in New South Wales, Victoria, South Australia, Western Australia, Tasmania, and the Australian Capital Territory. We train adjudicators. We assist parties understand and comply with the procedures of the respective Acts. Our help is provided by professionally trained staff and there is no cost or obligation for receiving the help. However, we cannot help with the Queensland Act which has been retitled Building Industry Fairness (Security of Payment) Act. It is an Act which is most unfair to claimants. The right of claimants to choose the ANA to nominate an adjudicator has been replaced by a heavy-handed bureaucratic process which also prevents industry parties receiving free help from ANAs while introducing mandatory adjudication application fees.
Why was the Security of Payments Act introduced?
The Acts were developed to counter the practice of some principals and contractors in delaying payment, unduly reducing the value of payments, or withholding payment while using cash that is otherwise owed to their subcontractors and suppliers.
Generally, the object of the Acts “is to ensure that any person who undertakes to carry out construction work (or who undertakes to supply related goods and services) under a construction contract is entitled to receive, and is able to recover, progress payments in relation to the carrying out of that work and the supplying of those goods and services”.
To achieve this objective, the Acts have introduced new statutory rights for a party claiming a payment (the claimant), such as: a right to progress payments; a right to interest on late payments; a right to suspend work; and a right of lien. The Acts also renders void ‘pay-when-paid’ clauses in construction contracts and parties cannot contract out of the Acts.
What is adjudication?
Adjudication is an easy to use rapid payment process that follows the Security of Payment legislation. It is designed to replace expensive and time-consuming methods such as courts and arbitration to encourage prompt payment and provide much needed cash flow through the contracting chain within weeks.
Is adjudication expensive?
No, adjudication is a cost-effective process compared to courts and arbitration which can cost 20 times more. Adjudicate Today does not charge an adjudication application fee nor any administration fees. Our fees are paid by the adjudicator from their charge which is fully described on our fee page. There are low fixed fees for most small value disputes up to $50,000 and reasonable hourly rates thereafter.
Why is adjudication faster than other resolution methods?
Adjudication is much simpler to use and has strict but compressed statutory timeframes which provide rapid outcomes when compared to court and arbitration processes which have no set timeframes and are significantly more complex. Adjudication was designed to stop a party dragging out or delaying payments.
What is the role of an Adjudicator?
An adjudicator is an independent person who determines the amount due (if any) of a disputed payment claim.
How is an Adjudication Determination Enforced?
Once an adjudicator determines the claimant is owed money by the respondent to the adjudication application money, the respondent must pay the adjudicated amount by the relevant date. If payment is not made, the adjudicator’s determination can be registered as a judgement in a court of competent jurisdiction via a relatively straightforward administrative process.
The respondent’s right to challenge an adjudication decision requires either payment of the adjudicated amount to the claimant or payment of the amount into the Court, depending on the circumstances.
How to get started with adjudication?
To get started with using the relevant Act in your individual circumstances, select the State or Territory below in which the work was performed, our flowcharts are interactive and by clicking on each step, a popup box provides detailed information. For no obligation help, call us on 1300 760 297.