Section 6: How do I start the process?

The first step in the process, if you have not already done so, is to make a claim for payment under your contract. Most written contracts contain provisions detailing how and when claims for progress payment, final payment or return of security are made, and how the head contractor (or principal) determines them. If you have a written contract then it is important to follow the terms that prescribe how payment claims are to be made and dealt with.

If you do not have a written contract then the Act implies a right to make payment claims and details how claims must be made. A payment claim must:

  • be in writing;
  • be addressed to the party to which the claim is made;
  • state the name of the claimant;
  • state the date of the claim;
  • state the amount claimed;
  • if the claim is made by the contractor, itemise and describe the obligations that the contractor has performed and to which the claim relates in sufficient detail for the principal to assess the claim;
  • if the claim is made by the principal, describe the basis for the claim in sufficient detail for the contractor to assess the claim;
  • be signed by the claimant; and
  • be given to the party to which the claim is made.

The second step is for the head contractor (or principal) to assess and respond to your payment claim. Again, most written contracts contain provisions on how long the head contractor has to assess and respond to your claim and then make payment.

If you do not have a written contract, or your contract does not have a written provision dealing with the assessment of payment claims, then the Act implies the length of time the head contractor has to respond to your payment claim and/or to make payment.

The Act provides the head contractor (or principal) must, within 14 days of receiving a payment, notify you if they reject or dispute the whole or part of the claim. This notice must:

  • be in writing;
  • be addressed to the claimant;
  • state the name of the party giving the notice;
  • state the date of the notice;
  • identify the claim to which the notice relates;
  • if the claim is being rejected, state the reasons for the belief that the claim has not been made in accordance with the contract;
  • if the claim is being disputed, identify each item of the claim that is disputed and state, in relation to each of those items, the reasons for disputing it; and
  • be signed by the party giving notice.

If no notice of rejection or dispute is given, then under the Act the payment claim must be paid within 28 days of receipt.

‘Tick-Tock’

It is important that you are aware of the time limits that apply under the Act.

All time limits for the adjudication process are counted in business days. Business days are all days except weekends, public holidays and any day between the period of 25 December and 7 January (inclusive). Once a payment dispute occurs the 90 business day limit will begin running from the next business day. The following examples illustrate how the time limit for adjudication applications work.

Example 1: Payment claim under the contract is submitted on 9 January 2017. The payment claim is then certified by the head contractor 14 calendar days later, but only part of the amount claimed is certified as owing.

In this example, the payment claim has been partly disputed on 23 January 2017, triggering a “payment dispute” This means the time limit to lodge an application for adjudication starts on 24 January 2017 and ends on 6 June 2017.

Example 2: The parties have a written contract that was executed on 4 April 2017. The payment claim is made under the contract on 25 April 2017. The contract provides that within 60 calendar days after receiving a claim the head contractor must make payment.

Irrespective of the party’s written agreement, from 3 April 2017 the Act stipulates that where a contract requires a payment to be made more than 42 calendar days after it is claimed it shall be amended to require payment within 42 calendar days after it is claimed. This means that the Act provides that the time for payment of the claim ends on 6 June 2017. If payment of the claim is not made by 6 June 2017 then the parties are in a payment dispute. This means that the time limit to lodge an application for adjudication of the payment dispute starts on 7 June 2017 and ends on 11 October 2017.

NEXT – Section 7: What happens if my payment claim is disputed or not paid?

BACK – Section 5: How does it work?

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