Introduction to Victorian Adjudication

This document provides an introduction and brief overview of Security of Payment legislation within the jurisdiction of the state of Victoria, Australia.

On this page:

What is security of payment? What is adjudication?

Security of payment refers to a dispute resolution process in which parties to a construction dispute over a claim for payment may have their dispute resolved in a straightforward, interim and swift manner.
The process engages a methodology referred to as a statutory adjudication. This involves the appointment of an independent adjudicator who is empowered to make an evaluative judgment on the dispute at hand, usually with strict reference to the relevant legislative, contractual and procedural constraints.

Objectives of the Legislation

While the details of this process might differ from region to region, the objective is generally identical throughout Oceania: to provide a swift and interim measure method for resolving construction disputes and keep monies flowing throughout the industry.

How does it work?

Generally, a claimant serves a payment claim on a respondent under a relevant construction contract. If the respondent chooses to dispute the amount claim, they may do so with a payment schedule. If the respondent simply does not choose to respond to the claimant’s claim formally nor pays the claimed amount, the claimant has several options including adjudication or pursuing directly through the court as a statutory debt.

If the claimant disagrees with the respondent’s reasons for non-payment or wishes to proceed to adjudication following non-payment of a payment claim, they may apply for adjudication of the dispute by an independent adjudicator. The adjudicator delivers a decision or determination on the matter within a specified time period, usually stating the amount payable, the due date for payment and the interest rate that the amount attracts.

In some regions, there are the options for respondent’s to utilise a statutory adjudication system as detailed above. These include Western Australia, Northern Territory. There is some overlap with regards to Victoria, particularly with regards to adjudication certificates and the formal review processes set down by this legislation.

There is a range of ways to enforce of adjudication decision. This usually requires the use of an adjudication certificate which can be lodged at a court of competent jurisdiction as a judgment debt.

It should be mentioned that this process is statutory, and does not necessarily impinge on civil and contractual rights.

Meaning of ‘Construction Work’

Generally, ‘Construction Work’ applies to the following:

  • Construction, renovation, repair, demolition of building or structure.
  • Construction of infrastructure.
  • Installation of fittings (electrical, air-conditioning, drainage, fire protection) to building or structure.
  • Cleaning of building or structure.
  • Preparatory work (excavating, foundations, landscaping etc).
  • Painting of building or structure.

Meaning ‘Supply of Related Goods and Services’

Similar to the definition of construction work, ‘Supply of Related Goods and Services’ applies to the following:

  • Materials and components forming part of a building or structure.
  • Plant or materials (sold or hired) for use in construction work.
  • Labour hire.
  • Consultant services (architects, design, surveying, soil testing, engineering, project management).

Types of Contracts affected by the Act

Typically, contracts affected by the Act may include the following:

  • Contractors against principals/developers
  • Subcontractors against contractors
  • Suppliers against subcontractors/contractors
  • Plant and equipment hirers against subcontractors/contractors
  • Consultants against clients

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 the security of payment, and the BCISOP Act 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 specific details of the Building and Construction Industry Security of Payment Act. For information on these publications please click here

Alternatively, you can contact us directly.

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