The following information is designed for both claimants and respondent to get a basic grasp of the concepts and relevant requirements associated with the adjudication processes under both the Building and Construction Industry Payments Act (QLD) and the Building and Construction Industry Security of Payments Act (NSW).

The following information is not a substitute for professional legal advice and should not be taken as such. If in doubt about any of this information please consult with your local legal advisor or contact the RICS DRS directly.

What is Adjudication?

Adjudication is a method of alternative dispute resolution which on face value is related to arbitration and mediation in the sense that it attempts to pragmatically resolve dispute without the need to engage in court action.

Both the Building and Construction Industry Payments Act (QLD) and the Building and Construction Industry Security of Payment Act (NSW) provide methods of rapid adjudication.

Who can apply for adjudication? What are the conditions for submitting an adjudication application?

In both Queensland and New South Wales, only a claimant may apply for an adjudication of a payment dispute.

The claimant can only apply for adjudication in three specific circumstances:

1. If the claimant disagrees with the amount scheduled to be paid in a payment schedule which relates to their payment claim. Application to be made within 10 business days of the payment schedule.
2. If the respondent fails to pay the whole or any part of the scheduled amount by the due date for payment. Application to be made within 20 business days of the due date for payment.
3. Once 5 business days have passed after the service of a valid Notice of Intent to Apply for Adjudication. Application to be made within 10 business days of the notice period expiring.

Adjudication timeline.

The QLD and NSW Security of Payment legislation set out strict and non-flexible timeline for the adjudication of disputes. This timeline must be adhered to by all parties, including the claimant, respondent, authorised nominating authority as well as the nominated adjudicator.

Generally, once the claimant’s eligibility for adjudication arises, the following timeline is applicable

1. Claimant submits adjudication application to the RICS DRS and serves this very same application on the respondent.
2. The respondent is given a chance to supply an adjudication response. They can do this within the later of:
   1. 5 business days after the service of an adjudication application upon themselves.
   2. 2 business days after receiving notice of the appointment of an adjudicator.
3. The RICS DRS will refer the application to an appropriately registered adjudicator, who, if they accept the appointment, serves a notice on the parties advising them of this acceptance. They are then the appointed adjudicator.
4. Once the period for providing an adjudication response expires (see point 2) or the date on which the adjudicator receives the adjudication response (if it is early for some reason), the adjudicator has 10 business days in which to decide the application from this date.
5. During the adjudication period, the adjudicator has the power to:
   1. Request further submissions from the parties with specific deadlines
   2. Carry out an inspection of any matter to which the claim relates.
   3. Call an informal conference with the parties without legal representation.
   4. Request an extension of time to decide the application provided agreement has been sought and secured from both the claimant and respondent.
6. Once the application is decided, the adjudicator hands down their decision which is served on both parties.
7. If it is decided that the claimant is due money under the adjudication decision, the respondent has five business days from service of the adjudication decision to pay the adjudicated amount to the claimant.
8. If the respondent does not pay within the five business days, the claimant can apply to the RICS DRS for an adjudication certificate, which can be lodged as a judgment at a court of competent jurisdiction.

Generally, the adjudication process is relatively fast. In many cases, the parties to the adjudication can have a decision within 15 business days from application.

How much does adjudication cost?

Compared to court litigation, arbitration or mediation, adjudication of a payment claim dispute is relatively cost effective. Furthermore, often the cost of adjudication can be recoverable through the process, given that the adjudicator has the power to assign the proportions by which both parties are liable for the RICS DRS and Adjudicator costs.

The RICS DRS offer competitive options as well as a diverse choice of payment schemes for dealing with adjudication.

If your payment claim is under $1,500.00 including GST, may be able to claimant can take advantage of our pro-bono service (subject to a range of terms and conditions).

We also offer fixed fee adjudication for payment claims up to $100,000 including GST. This fixed fee covers all potential costs such as the adjudicator’s time, the cost of an adjudication certificate and other items. Again, such a service is subject to terms and conditions. The fixed fee is also applicable upon submission of the adjudication application. Our fixed fee bands are shown in the table below.

We also offer non-fixed fee adjudication. This option can be elected by the claimant. Simply put, the RICS DRS will nominate an adjudicator who’s hourly rate will be stated to both parties. There is no application fee required with the adjudication; however a fee will be applicable prior to the release of the decision. This fee will be made up of the cost of the adjudicator (number of hours x their hourly rate) plus any disbursement applicable (charged at cost). This scheme does not include the cost for an adjudication certificate, which is $220.00 inclusive of GST.

This scheme can be selected by the claimant at their discretion. It is also mandatory on all payment claims over $100,000.00 (including GST), as well as applications who do not meet the terms and conditions of the fixed fee or pro-bono schemes.

How to apply to for adjudication.

If you meet the criteria necessary for applying for adjudication, you can simply download and fill out one of our adjudication application forms and serve the application on the RICS DRS by hand, post or fax. Email applications are accepted through prior arrangement.

You can get a copy of an adjudication application by going to our adjudication forms and tools and selecting the appropriate jurisdiction.

It is essential that you send your application to the RICS DRS within the times stipulated by the relevant security of payment legislation.

It is important to note that a complete copy of this application must also be served on the respondent. It is also recommended that the claimant keep a copy of how and when the application was served upon the respondent.

What to put in an adjudication application.

Claimants are allowed to attach relevant submissions to their adjudication application. These submissions may come in many different forms. Generally, the RICS DRS recommends submissions such as the following:

• The completed RICS DRS adjudication application.
• A copy of the payment claim
• A copy of the payment schedule, should one exist.
• A copy of the relevant construction contract or supply contract. If a verbal contract, then a document which explains the terms of the contract, such as how and when payment was to be effected.
• Evidence of how and when and by what method the application was, or will be, served upon the respondent.
• If a notice of intent to apply for adjudication was issued, a copy of this notice.
• Copies of the relevant business details of both the claimant and respondent including details of their ABN and ACN.

Furthermore, the RICS DRS recommend supplying documentary evidence that specifically relate to items on the payment claim or payment schedule. This evidence can be in many forms but examples include:

• Statutory declarations or sworn statements
• Drawings
• Diary entries or notes
• Relevant correspondence between parties.
• Previous invoices.
• Legal submissions.
• Expert reports
• Photographs
• Test results

The relevant section of the legislation dealing with the formal procedures for adjudication application is section 21 of the BCIP Act (QLD) and section 17 of the BCISOP Act (NSW).

Submitting an adjudication response.

As written above, the respondent may serve an adjudication response in reply to the claimant’s adjudication application. This response must be made within the later of:

• Five (5) business days after the respondent has been served with a copy of the application.
• Two (2) business days after the respondent has been served with a notice of an adjudicator’s acceptance of the application.

The response must adhere to the following conditions:

• The adjudication response must be in writing.
• The adjudication response must identify the adjudication application to which it relates.
• The response may contain submissions
• The response must be served on the claimant

The respondent may only give a response if they have served a valid payment schedule. Furthermore, the response is generally only allowed to expand on reasons for withholding payment as raised in a payment schedule.

However, since the adjudicator must consider the construction contract, a response, in some cases, can refer to relevant contractual issues. The same applies to jurisdictional issues.

The RICS DRS have an example adjudication response pro-forma document available to download from our forms and tools area.

Appointment of the adjudicator.

Upon receiving a valid adjudication application, the RICS DRS will ensure that an appropriate adjudicator is appointed to handle the matter.

The RICS DRS will generally attempt to find the appropriate adjudicator and serve notice of an adjudicator’s acceptance on both parties within 2 business days of receiving the adjudication application.

The notice will confirm the adjudicator’s identity, including their registration number, the date the application was served on the RICS DRS, as well as the relevant fee structure elected by the claimant.

What the adjudicator decides and what they must consider.

The adjudicator is statutorily required to decide the following matters:

• Whether there is monies owing from the respondent to the claimant (the adjudicated amount)
• The due date for payment of this adjudicated amount.
• The appropriate rate of interest.

Furthermore, the adjudicator must give reasons for their decision unless otherwise requested by both parties.

In determining these issues, the adjudicator must consider:

• (QLD ONLY) The relevant provisions of the Building and Construction Industry Payments Act as well as the provisions of the Queensland Building Services Authority Act 1991 Part 4A.
• (NSW ONLY) The provisions of the Building and Construction Industry Security of Payments Act.
• The provisions of the construction contract relevant to the application
• The payment claim together with its submissions.
• The payment schedule together with its submissions
• The results of any inspections carried out by the adjudicator of any matter to which the claim relates.

During the adjudication: Further submissions, conferences and inspections.

While both the claimant and the respondent have the opportunity to place their case before the adjudicator, occasionally it arises that more information is required. The adjudicator has a range of methods available to gather such information. It should be noted that all these procedures are not mandatory and may be undertaken wholly at the adjudicator’s discretion.

It is fairly common for adjudicators to ask for further submissions on a specific point, or a range of points. Generally a request for further submissions will be served on both parties by the adjudicator through the RICS DRS.

This request will detail:

• The specific information required by the adjudicator.
• The date and time when the claimant is to provide their response.
• The date and time when the respondent is to provide their response.

Furthermore it is a statutory requirement that the adjudicator must give the other party to comment on the submissions of the corresponding party. Therefore, the request notice will also set:

• The date and time when the respondent is to provide their response to the claimant’s submission.
• The date and time when the claimant is to provide their response to the respondent’s submission.

The legislation allows the adjudicator to call a conference of the parties. If a conference is called, it is to be informal, and parties are not entitled to legal representation.

Furthermore, both pieces of legislation allow the adjudicator to carry out an inspection of any matter to which the payment claim relates.

Handing down the adjudication decision.

The adjudicator will complete the decision and send notice to the RICS DRS that the decision has been complete. The decision will be released to both parties with regards to the payment scheme elected by the claimant upon application.

• If the adjudication has been lodged under the fixed fee payment scheme, provided the fee has been paid along with any disbursement costs, the adjudication decision will be release immediately.

• If the adjudication has been lodged under the non-fixed fee payment scheme, the RICS DRS will provide a notice of the hours the adjudicator has spent upon the decision and provide both parties with an invoice for the relevant amount. In order to release the decision, the adjudicator’s and ANA costs must be paid. Once these costs are paid, the decision will be served on both parties by the appropriate means.

Apportionment of adjudication and ANA fees.

Under the legislation, unless the adjudicator decides otherwise, the claimant and respondent are both jointly and severally liable to pay for the fees of the adjudicator and the ANA.

The adjudicator has the power to decide how the fees are to be proportioned however these are not generally known until after the decision has been released. Fees can be recoverable through use of an adjudication certificate.

Respondent liable to pay the adjudicated amount.

If, in any adjudication decision, an adjudicator decides that a respondent is required to pay an adjudicated amount, the respondent must pay this amount to the claimant on or before the following dates:

• The date that is five (5) business days after the date on which the adjudicator’s decision is served on the respondent; or
• A later date, as per the adjudicator’s decision.

If the respondent fails to adhere to these dates, the claimant may request an adjudication certificate and/or suspend work or the carrying out of supply of related goods and services.

What is an adjudication certificate?

In a case where a respondent fails to pay the whole or any part of an adjudicated amount by the due date for payment of that amount, the claimant may request an adjudication certificate from the RICS DRS. The adjudication certificate is a document that formally states the adjudicator’s decision, and may be filed in a court of competent jurisdiction as judgement for debt.

A claimant can lodge the certificate at the Magistrates, District or Supreme Courts depending on the monetary size of the debt. The limits, as of July 2004, are as follows:

• Magistrates Court – not exceeding $50,000
• District Court – not exceeding $250,000
• Supreme Court – in excess of $250,000

Once the adjudication certificate is registered as a judgement, it becomes an enforceable money order of that Court. Claimants should file the certificate in a court within the district they carry out business or reside within. Claimant’s should consult the Uniform Civil Procedure Rules 1999 for further information.

Enforcing the adjudication with an adjudication certificate.

The certificate may be enforced in a number of different ways. It depends on whether the respondent is an individual or a company. A money order can be enforced in the Courts (pursuant to the provisions of the Uniform Civil Procedure Rules 1999 or pursuant to the provisions of the Corporations Act 2001)

Enforcement against an individual or corporation may involve:

• The seizure and sale of property
• Redirection of debts
• Redirection of earnings
• Payment of money order debt by instalments
• Charging orders
• Stop orders
• The appointment of a receiver

Queries on enforcement of statutory debts through the courts should be directed to the relevant Court Registrar.

Further information on how to enforce the adjudication certificate is provided with the certificate itself. If the amount on the certificate is substantial, legal advice might be worth considering.

A filing fee will be applicable when lodging the adjudication certificate.

Need more help?

Throughout the year, the RICS DRS run regular training courses for potential claimants, respondents and other interested parties.

These give detailed information on how Security of Payment operates and how it can be utilised effectively. Visit our training schedule for more information by clicking here.

Furthermore, the RICS DRS provides a number of publications which provide more detail on all aspects of the Building and Construction Industry Payments Act. For information on these publications please click here.

Alternatively, you can contact us.