SA: Claimant Prepares Adjudication Application
When the respondent serves a payment schedule for less than the amount claimed, the adjudication application may be lodged with Adjudicate Today (or other ANA) within 15 business days from either receipt of the payment schedule or after the section 17(2) notice has expired (if applicable). A contract provision which seeks to pre-select the ANA is void and has no effect.
Why go to adjudication?
Adjudication is a quick and informal process introduced by government 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.
Adjudication was introduced in response to requests from industry groups for government intervention because their members were either being paid too slowly or not at all.
Adjudication does not limit the rights of parties to litigate outstanding issues. It provides claimants the opportunity to have a quick decision on the merits of their claim for payment. Subject to limited injunctive rights, a respondent must comply with the adjudicator's determination (ie pay the money) if they wish to commence proceedings in court. In effect, the traditional roles in court are reversed. Rather than the claimant litigating in court seeking to be paid, the claimant has possession of the money. The respondent must commence court proceedings to attempt to recover some or all the money paid. In practice, few respondents challenge the adjudicator's determination.
What happens now?
Once the claimant decides on adjudication, it is important that the correct procedures under the Act are followed. The first step is to check that the payment schedule complies with the Act. This means the payment schedule must:
- Be in writing and addressed to the claimant;
- Be served on the claimant within 15 business days of receipt of the payment claim by delivery in person or lodged during normal business hours at the claimant's ordinary place of business or posted or faxed to the claimants ordinary place of business (or as otherwise provided by the contract or common usage, such as email);
- Identify the payment claim to which it relates;
- State the scheduled amount of payment that it is proposed to make (it may be "nil");
- If that amount is less than the amount claimed may state the reasons why. The Act precludes the adjudicator from considering issues not included in the payment schedule. Certain reasons for refusing to pay are void under the Act, including "pay if paid" and "pay when paid".
The adjudication application must be prepared and served by the claimant on Adjudicate Today either:
i) within 15 business days of receipt of the payment schedule; or
ii) within 15 business days after the 5 business days from receipt of the second opportunity (s17.2) notice expires, if applicable*
*Due to a drafting "quirk" in the Act, a claimant who receives a payment schedule after serving a second opportunity s17(2) notice must wait until the notice expires (5 business days after receipt) before the 15 business days for service of the adjudication application commences. Service of an adjudication application on Adjudicate Today before the 5 business days after receipt has elapsed may render the application invalid or at the least require that it be resubmitted.
An adjudication application must:
- Be in writing addressed to Adjudicate Today (or other ANA) requesting the nomination of an adjudicator;
- Be lodged with Adjudicate Today within 15 business days from the date of receipt of the payment schedule or after s17(2) notice has expired, if applicable;
- At the same time be served upon the respondent;
- Attach a copy of the payment claim;
- Attach a copy of the payment schedule (if any);
- Contain a written submission evidencing that the claimed amount is due and unpaid and the value of the work, materials or services for which payment is claimed. The submission must also respond to the reasons, if any, given by the respondent for not paying and must provide evidence or arguments to refute the respondent's grounds for withholding payment.
- Have attached to the written submission all the information (including certificates, test results, delivery dockets, invoices, photographs, statutory declarations, expert reports, written statements and arguments) which the claimant wants to put to the adjudicator in support of the written submission and refuting any reasons, given by the respondent in the payment schedule, for withholding payment; and
- Include a copy of the contract or all relevant contract terms and conditions. This may be a formal contract document, an exchange of letters, a quotation, an acceptance or a record of an oral agreement under which the payment claim is made.
An adjudication application should NOT speculate on possible reasons for non-payment of a claim if they are not included, or alluded to, in the payment schedule. A contract provision which seeks to pre-select the ANA is void and has no effect.
Download the Adjudication Application form *Note: This form is interactive. This means it can be EITHER filled out on screen and printed OR downloaded and printed for manual completion.
The Act requires the payment of an ANA's prescribed application fee when the application is lodged. The prescribed application fee charged by Adjudicate Today is NIL ($0:00) dollars.
It is usually not sufficient for the claimant to merely refer to the payment claim and the respondent's payment schedule and state that he/she is entitled to payment. The submission should clearly state why the monies are owed and include supporting material as to why the claimant is entitled to the particular amount claimed.
In relation to preparing the adjudication application:
Show that the work was in fact done and/or related goods and services were supplied as required by the provisions of the contract or agreement between the parties in accordance with the identified items and conditions of the contract (if possible, refer to the specific paragraph in contract).
Ensure a copy of the contract is attached. If the contract or agreement is wholly or partly oral, set out the precise terms of the oral agreement, when it was made and the named person who entered the contract on behalf of the respondent. Attach a copy of the written part of the contract or agreement.
If the contract is not a formal contract but the result of letters or other correspondence, attach copies of the relevant letters and/or correspondence which constitute the contract or agreement.
Show the nature and extent of the work done (including any rectification work of alleged defects) and/or related goods and services provided by the claimant under the contract and quantify their value.
Clearly set out calculations showing how the amount claimed is made up by items/value with a total, including GST.
If possible obtain witness statements or other technical report, test results, photos, invoices (from suppliers, quality assurance statements, statutory declarations of payment of workers subcontractor etc) or other documentation which supports the claim, attach these as numbered attachments. This is particularly important for larger claims. These attachments should show that the work was properly done and completed in line with the contract and/or that related goods and services were provided as per the progress claim. Statutory declarations are not necessary. Because an adjudicator can not test the contents of a statutory declaration, they are given no greater weight than unsworn witness statements.
Set out in separate numbered paragraphs the arguments with logical reasons as to why the claimant is entitled to receive the amount claimed as a progress claim. Refer back to any relevant material supporting each argument and quote the specific attachments (e.g. see Report dated... Attachment A etc).
Any legal advice and/or opinion which supports the claim may be attached as an annexure and should be referred to in the submission (a legal opinion is not necessary to make a claim).
Ensure that submissions do not contain emotional words or language derogatory or defamatory of the respondent.
The overall submission should be concise, clearly written and set out the claimant's arguments and reasons. Remember the submission should always link back to any agreement/documentation, photos, technical/legal reports which support the claimant's entitlement as set out in the payment claim.
A copy of the adjudication application and all attachments or other things accompanying it must be served on the respondent at the same time as it is served upon Adjudicate Today.
Please move to the next step on the flowchart which is "Claimant serves Adjudication Application on Adjudicate Today and Respondent". Ensure you remain in the area of the flowchart with blue background.