SA: Claimant Chooses 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.

Adjudication 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 the date of receipt of the adjudication response or the date the response would have been due or, if the respondent has no right to serve adjudication response, 10 business days after the respondent receives a copy of the adjudication application. This contrasts with months and potentially years for court proceedings. 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. Also the respondent (in court the respondent is known as "defendant"), doesn't have the same opportunity to place unreasonable pressure on the claimant to accept a financial settlement for less than may be realised by adjudication, simply to avoid financial hardship or worse.

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.

Regardless of whether the claimant chooses adjudication or litigation, in certain circumstances there is a statutory right to suspend work. Respondents cannot sue for damages because of suspension of work under the Act. Also, claimants can be paid for loss of any construction work or related goods and services should the respondent remove them from the contract because of the suspension.

That is interesting, tell me more about my right to suspend work

Please move to the next step on the SA flowchart being "Claimant has 20 business days from Due Date for payment to prepare and serve 2nd opportunity Adjudication [s17(2)] Notice on Respondent re no Payment Schedule".