Section 16: Other frequently asked questions

I have heard that adjudication is too costly?

While there are costs involved with using adjudication, typically these costs are far less than those involved in commencing court action.

Do construction contracts need to be in writing?

No. There is no requirement that construction contracts be in writing, but it is good practice to do so. If you do not have a written contract then the Act will imply terms in your agreement. These terms cover how payment claims need to be made and assessed. Where there is no written contract:

  • a payment claim means a claim:

a) by the contractor to the head contractor (or principal) for payment of an amount in relation to the performance by the contractor of its obligations under the contract; or
b) by the head contractor (or principal) to the contractor for payment of an amount in relation to the performance or nonperformance by the contractor of its obligations under the contract.

  • A payment claim must be in writing and meet the requirements specified on page 8 of this guide.
  • A claim for a progress payment can be made at any time after the contractor has performed its obligations.
  • The amount of the payment claim is to be calculated by reference to a reasonable amount for the obligations performed and detailed in the claim.
  • Payment of any undisputed payment claims, or undisputed parts of payment claims, must be made within 28 days after the head contractor (or principal) receives a payment claim.

If a head contractor (or principal) that receives a payment claim disputes the whole or part of the claim they must within 14 days of receiving the claim give the contractor a written notice of dispute.

Can the Building Commission resolve my contractual dispute?

No. The Building Commission cannot resolve payment disputes under construction contracts. However, the Building Commission can provide advice on options to resolve the dispute.

Can I get assistance preparing my application for adjudication?

Yes. There are a number of professionals who specialise in managing contract claims and disputes. These include legal practitioners, adjudicators and contract claim managers. These services can be found through a simple web search. The Building Commission cannot prepare adjudication applications for you.

Can I lodge my application for adjudication online?

Some appointors allow you to serve the application on them via an internet form or email. However, service of the application on the head contractor or principal needs to occur by registered post, or by courier to their business address. If they are an individual then you should use a process server.

Can I only seek adjudication for disputes over progress payments?

No. The Act allows for adjudication of any dispute over a payment claim made under a contract. This could include disputes over claims for the balance of the contract sum, claims for interim payment on account, claims for payment for additional work or variations, claims for payment relating to extensions of time or delay, and claims upon termination.

What should I do if I have not been paid while working on a Government project?

If you are having trouble being paid on a Government-funded construction project, then the same options to resolve the dispute with the head contractor should be pursued. However, you should also inform the Government principal about the issue so they can carry out a ‘spot check’ on the head contractor.

The head contractor (or principal) has told me I need to sign a statutory declaration saying I have been paid?

You should only sign the statutory declaration if you have been paid up to that time.

What should I do if the head contractor has become insolvent?

The Act does not provide a means for recovering outstanding payment claims if the head contractor (or principal) has become insolvent or entered administration. Where this has occurred then the laws on insolvency and bankruptcy will apply. If the head contractor (or principal) has gone into administration this does not prevent you from lodging an application for adjudication. However, it is important to be aware that any claim you may be awarded could be subject to the priority payment provisions in the bankruptcy laws should the head contractor or principal enter into liquidation. You should seek professional advice on your options if a head contractor (or principal) has become insolvent and owes you money.

What services are available to carry out ‘due diligence’ on a head contractor before entering into a contract?

Carrying out due diligence on a head contractor before entering into a contract for works is good business practice. It allows you to better manage any risks. There are a number of financial reporting services available to assist with this including payment reports, credit checks and solvency information. The Australian Securities and Investment Commission provides access to a range of reporting services through the ASIC Connect Portal, alternatively a number of reputable firms offering these services can be found through a simple web search.

Can the timeframes for adjudication be extended?

The only time limit that can be extended under the Act is the 10 business days the adjudicator has to make a decision. This can only be extended with the consent of both parties.

Can liquidated damages be awarded as part of a determination?

Yes.

What should I do if I have not been paid for work carried out interstate?

All Australian States and Territories have legislation that allows for the rapid adjudication of payment claims under construction contracts. If the work was carried out in another State or Territory then an application for adjudication needs to be lodged in accordance with the legislation operating in that jurisdiction. It is important to be aware that the legislation operating in New South Wales, Queensland, Victoria, South Australia, Tasmania and the Australian Capital Territory is different from the Act in a number of ways. You should familiarise yourself with the legislation in the relevant State or Territory before commencing an application.

Can I lodge an application for adjudication if I reside in another State or Territory?

The Act applies to construction work carried out on site in Western Australia, or goods and services supplied for construction work carried out on site in Western Australia. This means that even if you reside in another State or Territory you can still lodge an application for adjudication of a payment dispute for work undertaken or goods and services supplied in Western Australia.

I have heard the Act is changing?

Yes, important changes to the Act commenced on 15 December 2016. A change to the maximum payment terms permitted in construction contracts also commences operation from 3 April 2017. Further reforms to the Act are also planned over 2017–18 Details about the reforms and regular updates will be provided on the Building Commission’s website.

 

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