Introduction to Security of Payment and Adjudication in NSW
This page is an introduction to Adjudication under the NSW Security of Payment Act, if you are an experienced user please proceed directly to the NSW flowchart.
The NSW Government has recognised that prompt payment is vital to the stability and efficiency of the building and construction industry. Too often the party liable to pay for construction work or related goods or services (the respondent), has manufactured a dispute to deny or delay payment. In other situations, respondents have tried to string out the time for payment with promises of future work if the claimant just waits a bit longer.
The objective of the NSW Building and Construction Industry Security of Payment Act 1999 (‘the Act’) is to ensure that any party that contracts to carry out construction work, or supply related goods or services, on projects for the private and public sectors in NSW is entitled to promptly receive and recover all progress payments that are due, including final payments and retention monies.
The Act applies to:
- Any construction contract;
- A construction contract that is written or oral;
- A construction contract that is partly written and partly oral;
- A construction contract that says it is to be governed by a law of a State or Territory outside of NSW but the work is carried out in NSW;
The Act creates a statutory dispute resolution process (adjudication) that allows a party (the claimant) alleging they are owed monies under a construction contract to promptly obtain payment from the respondent, based on an assessment of the merits of the claim by an appropriately qualified and independent adjudicator. Adjudicate Today nominates the adjudicator and conducts training and mentoring programs.
The adjudication process is simple and rapid. Adjudicators must make their determination within 10 business days (unless the parties agree to extend the time) of their acceptance of an adjudication application. If the respondent’s reasons for not paying don’t pass the adjudicators independent assessment, the respondent is generally liable for the progress claim, interest and the adjudication fees. If a respondent does not comply with an adjudication determination, the claimant may obtain from Adjudicate Today an adjudication certificate for lodgement at the appropriate court which registers it as a judgment debt. For most claims referred to adjudication, a lawyer should not be necessary.
In order to commence a claim under the Act, there must be a written Payment Claim made against a party to a construction contract (either written or oral) in relation to construction work or the supply of related goods and services for construction work in NSW.
Time frames under the Act are all important. Claimants must take different actions based on whether a respondent serves or fails to serve a written response to the payment claim (the Act calls this the payment schedule) within defined times. Failure by the claimant to follow the strict requirements of the Act will cause an adjudication application to fail.
The information and flowcharts we publish on this website clearly describe how parties should proceed in preparing and responding to payment claims, what steps should be taken based on the actions of the other party and other steps required by the Act. In addition, our highly trained staff are available to answer questions about how the Act works and what parties need to do to comply with it. We provide this information for free and without obligation. If parties proceed to adjudication, the adjudicator pays us a service fee from his/her fees to cover our costs. Neither party is asked to pay the adjudicator's fee until after the determination is provided to Adjudicate Today.
If you are not familiar with our website, we suggest you read “Navigating this website” below. Otherwise let’s get started.
Navigating this website
There are two simple ways to navigate this NSW based website:
1. Click here to go to our interactive flowchart. Clicking once in any flowchart box provides brief details. Clicking on ‘Read More’ in the new pop-up box provides detailed information about the step;
2. Use the menu on the left hand side of the page "Start; Schedule Served; Schedule Not Served; Adjudication Process; Application Forms; and Resources;". We recommend you commence by clicking on a menu item under Start as it provides necessary information which is crucial for making or responding to an adjudication application.
The adjudication process may seem difficult when first encountered. Actually it is not. When an important term used by the Act is first encountered in the text, it is highlighted in blue. Passing the mouse over the term causes a grey box to "pop-up" with a simple explanation of the term.
We explain each step under the Act in a simple manner by using our unique flowchart. The flowchart is interactive. This means that when you click on a box in the flowchart brief details are provided in a pop-up overlay. Clicking the 'Read More' button at the bottom of the overlay provides much more information on a new web-page. The simplest way to return from the information web-page to the flowchart is to click on the back arrow key located on the top left of all browsers.