Payment disputes are an all too common and recurring theme in the building and construction industry. Fortunately, the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (BIF Act)provides a legislative mechanism for the expeditious resolution of these disputes before an adjudicator with the primary object of the BIF Act being “to help people working in the building and construction industry in being paid for the work that they do” per section 3.
Payment Claims
The first step in the process is for the claimant to issue a compliant payment claim. Pursuant to section 68 of the BIF Act, a payment claim, for a progress payment, is a written document that; identifies the construction work or related goods and services to which the progress payment relates, states the amount of the progress payment that the claimant claims is payable by the respondent, and requests payment of the claimed amount. Before issuing a payment claim, a claimant must first have the right to do so. The right to issue a payment claim accrues on the “reference date” which is generally specified in the construction subcontract but if it is not, is the last day of the month in which the construction work was first carried out, or the related goods and services were first supplied, under the contract, and the last day of each month later under section 67 of the BIF Act. Only one payment claim can be issued in respect of each accruing reference date. A claimant must also identify whether the payment claim is a standard or complex payment claim, with a complex payment claim being one that is a claim for more than $750,000.00.
Payment Schedules
After being issued with a payment claim, a respondent is then required to provide the claimant with a payment schedule within 15 business days or such other timeframe as given in the subcontract. Pursuant to section 69 of the BIF Act, a payment schedule, responding to a payment claim is a written document that identifies the payment claim to which it responds, states the amount of payment, if any, that the respondent proposes to make, and if the amount proposed to be paid is less than the amount stated in the payment claim – states why the amount proposed to be paid is less, including the respondent’s reasons for withholding payment. If a respondent fails to serve a payment schedule within the prescribed timeframe, they will be taken to have committed an offence under section 76(1) the BIF Act and may be subject to disciplinary action under the Queensland Building and Construction Commission Act 1991 (Qld) (QBCC Act). The failure of a respondent to issue a payment schedule will also mean that they will be prevented from lodging an adjudication response to an adjudication application lodged by the issuer of the payment claim.
Adjudication Process
Adjudication in the context of the BIF Act is a process whereby an independently appointed adjudicator reviews the evidence advanced by the claimant and the respondent and makes a determination of the quantum of the monies payable (or not payable) to the claimant by the respondent. Both claimants and respondents are entitled to apply for adjudication. A claimant will generally bring an application where a respondent has failed to pay the amount claimed in the payment claim or has failed to provide a response to the payment claim. While less common, a respondent will generally bring an application where they dispute the amount claimed in the payment claim and they wish for an adjudicator to quantify this.
Adjudication applications are to be lodged with the Queensland Building and Construction Commission and can be lodged online through myQBCC or by hard copy and the claimant will be required to pay the prescribed fee which is dependent upon the quantum of the claim. The timeframes for making an adjudication application are strict. Under section 79(2) of the BIF Act an adjudication application must be made within:
- 20 business days from the due date for the progress payment where the application relates to a failure to pay the full amount claimed in a payment claim;
- 30 business days from the date of the payment schedule where the application relates to the amount stated in the payment schedule being less than the amount stated in the payment claim; or
- 30 business days from the latter of either the day of the due date for the progress payment of the last day the respondent could have given a payment schedule if no payment schedule is served in response to a payment claim.
These timeframes are fixed and cannot be extended under any circumstances and so it is imperative that a claimant lodges their adjudication application within time. A claimant must also ensure that an adjudication application is properly served on a respondent, including all supporting documentation and submissions. Under section 109X of the Corporations Act 2001 (Cth), a company may be served with a document by leaving it at or positing it to the company’s registered office or by delivering a copy personally to a director of the company.
The timeframes in which a respondent is required to respond to an adjudication application will depend on whether the payment claim to which the application relates is a standard or complex payment claim and are given in section 83 of the BIF Act. If the payment claim is a standard payment claim then the respondent must provide their response within the latter period of either 10 business days after receiving a copy of the adjudication application or 7 business days after receiving notices of the adjudicator’s acceptance of the adjudication application. If the payment claim is a complex payment claim then the respondent must provide their response within the latter period of either 15 business days after receiving a copy of the adjudication application or 12 business days after receiving notice of the adjudicator’s acceptance of the adjudication application.
While the adjudication process most often leads to favourable outcomes for claimants, the other contractual rights of the parties remain preserved and if dissatisfied, one may exercise these other contractual rights, or any other rights under the law in Court at a later point in time.
If you or anyone you know is currently embroiled in a payment dispute that relates to construction work, please feel free to contact the team at Cronin Miller who have extensive experience in applying for and responding to adjudication applications both in Queensland and New South Wales.
