What is a QBCC Adjudication?
The adjudication process is a mechanism established under the BIF Act to resolve payment disputes in the construction industry. It allows parties to refer disputes regarding progress payments to an independent adjudicator for a binding decision. Adjudication is a quicker and less formal alternative to litigation or arbitration.
The process to follow is that:
- the party alleging they are entitled to payment must have a valid reference date under the contract or BIF Act to issue a payment claim to the party liable to claim make payment;
- the party liable to make payment must either pay in full or issue a 'payment schedule' setting out reasons why they are withholding a specified amount;
- the party who is entitled to be paid then files an adjudication application with the Queensland Building and Construction Commission;
- the party liable to make payment files an adjudication response; and
- an adjudicator makes a binding decision in relation to the adjudication application.
Requirements of a valid payment claim
A reference date is a crucial element in the adjudication process. It is the date on which a payment claim can be made by the party seeking payment. Reference dates can be specified in a construction contract or determined by the BIF Act. Each reference date triggers the opportunity for a payment claim to be submitted.
To make a valid payment claim under the BIF Act, the claimant must ensure that it includes the following elements in its claim:
- The claim must be in writing and identify the relevant construction contract.
- It should clearly state the amount claimed for construction work or related goods and services.
- A contractor's declaration should be supplied.
- The claim must be served on the party responsible for making the payment, known as the respondent.
Requirements of a Valid Payment Schedule
Upon receiving a payment claim, the respondent is required to provide a payment schedule within the specified timeframe. A payment schedule is a written response that indicates the amount the respondent proposes to pay and any reasons for withholding payment. The requirements for a valid payment schedule include:
- It must be in writing and identify the relevant payment claim.
- The payment schedule must state the amount the respondent proposes to pay and the reasons for any lesser amount than claimed including any statutory or contractual rights that you have to withhold such payment;
- It must be served on the claimant within the prescribed time, which is generally the shorter of 15 business days or the timeframe under the contract, from the receipt of the payment claim.
It is important that you list all reasons for withholding payment in the payment schedule. You will be unable to list new reasons in an adjudiction response. If you do, they will be disregarded.
Timeframe to lodge an adjudication application
Timeframe to lodge an adjudication application
If a respondent fails to provide a valid payment schedule or fails to pay the claimed amount by the due date, the claimant may proceed to lodge an adjudication application. The timeframe for lodging an adjudication application is generally:
- within 30 business days for an application relating to a failure to give a payment schedule and pay the full amount stated in the payment claim after the later of. the 30 business days is calculated from the later of:
- the day of the due date for the progress payment to which the claim relates;
- the last day the respondent could have given a payment schedule;
- 20 business days for or an application relating to a failure to pay the full amount stated in the payment schedule;
- 30 business days for an application relating to the amount stated in the payment schedule being less than the amount stated in the payment claim.
What to include in an adjudication application
When preparing an adjudication application, the claimant should ensure it contains the following:
- A copy of the payment claim and any supporting documents such as subcontractor invoices, timesheets, variation orders, site directions, day labour dockets, scope of works documents and the contract
- A copy of the payment schedule (if provided) and any reasons given for withholding payment.
- Any other relevant information or documents that support the claimant's case
We also suggest preparing a statutory declaration so that you can provide sworn evidence as a part of your adjudication application for the adjudicator to consider.
What to include in an adjudication response
Upon receiving an adjudication application, the respondent has the opportunity to provide an adjudication response. This must usually be provided to the claimant and the adjudicator within 15 business days of reciept of the adjudication application.
The response should address the claimant's arguments and may include the following:
- A detailed response to each of the claimant's assertions.
- Any additional information, documents, or evidence supporting the respondent's position.
- Any legal or factual arguments disputing the claimant's entitlement to the claimed amount.