Payment disputes and the Construction Contracts Act
A claimant can be a person, body or organisation that presents a payment claim in the event of a payment dispute. The claimant can be:
- a contractor claiming against a principal;
- a subcontractor claiming against a contractor; or
- a supplier of goods claiming against a subcontractor.
A claimant starts the process by lodging an adjudication claim under the Construction Contracts Act 2004 (the CCA).If both the claimant and respondent have agreed on an adjudicator or appointor then the claim can be lodged directly with them. Otherwise, the adjudication claim may be lodged with a prescribed appointor of the claimant's choice. The claimant must lodge the claim within 90 business days from when the payment was due under the contract or from when it was rejected, either completely or in part. This may mean a claimant will lodge an application while discussions are happening in order to preserve the right to use rapid adjudication.
The adjudication claim must set out all the necessary details of the contract, the claim under the contract that is now in dispute and any other relevant facts. The claimant must provide the other party to the contract with a copy of the adjudication claim at the same time it is given to the adjudicator or prescribed appointor.
A claim for payment for work or the supply of goods and/or services must be made in accordance with the written contract.
In the case of an oral contract the payment claim must:
- be in writing;
- be addressed to the other party to which the claim is made;
- state your name, the date of the claim and the amount claimed;
- if you are the contractor – itemise and describe the obligations performed and to which the claim relates in sufficient detail for the principal to assess the claim;
- if you are the principal – describe the basis of the claim in sufficient detail for the contractor to assess the claim; and
- be signed by the claimant and given to the party to which the claim is made.
To make an application for adjudication, please download the following form:
Form 2 - Application for adjudication
The response to the claim
A respondent is the party that benefited from the claimant's construction work, service or materials.
You must send a copy of your response to the adjudicator and the claimant within 10 business days of receiving the adjudication claim. The adjudicator can only take into account your side of the story if you respond in time.
Your response must be relevant to the dispute and should:
- challenge any statements or claims you believe are wrong or not properly described;
- make a clear statement about why you haven’t paid the claim or why you are disputing the amount claimed; and
- where possible, show how your actions relate to your rights under the contract and include any relevant information or documentation.
If you are unsure about your claim or what you need to do, you should seek advice from a lawyer or a construction industry expert. Registered adjudicators may help on claims in which they are not involved. You can contact them directly or through a prescribed appointor.
The following information is available to assist respondents:
Form 4 - Response to application for adjudication
The adjudicator's determination
When the adjudicator has received the response, or if after 10 business days no response has been received, the adjudicator has another 10 business days to consider the matter and make a determination. The adjudicator has wide powers under the Act to decide how to assess the claim, whether to seek more information, to invite the parties to meet in a conference or to inspect or test the work.
The adjudicator must act informally and keep the cost of the adjudication in proportion to the value of the claim. The adjudicator's determination sets out how much, if any, money should be paid in respect of the claim and the date the money must be paid. Where no money is payable under the dispute the determination may still deal with payment of the adjudicator's fees. If the money is not paid after the determination the person owed the money may apply to the relevant court to have the debt recovered as a judgement of the court.
After the determination
The determination is final and cannot be appealed. In effect, the adjudicator decides who should hold the money while the dispute is handled through arbitration or the courts. In most cases the parties will be satisfied with the adjudicator's determination and end the dispute. Where a party is not satisfied, that party can continue to use the dispute resolution processes in the contract or the courts to finally resolve the dispute.
Role of the Building Commissioner
From 29 August 2011, the Building Services (Complaint Resolution and Administration) Act 2011 amends parts of the Construction Contracts Act 2004 (the CCA).
The Building Commissioner performs the functions of the former Construction Contracts Registrar.
The functions of the Building Commissioner in the administration of the CCA include:
- registering suitably qualified and experienced practitioners as adjudicators;
- maintaining a register of adjudicators, which is available to the public at large;
- publishing maximum rates by adjudicators;
- maintaining a database of adjudications, for which certain material may be made available; and
- providing a written report to the Minister about the operation and effectiveness of the Act at the end of each financial year.
Correspondence in these matters should be addressed to:
Construction Contracts Matters
Locked Bag 14
CLOISTERS SQUARE WA 6850
For more information, please phone the Building Commission on 1300 489 099 or email email@example.com.
Every day, individuals and organisations enter into contracts for building and construction work. Sometimes disputes arise over payment.
The Construction Contracts Act 2004 (the CCA) provides a rapid adjudication process to resolve these disputes, whether they are written or oral contracts. The Act allows for the appointment of an adjudicator and sets strict time limits on the process so that decisions can be made quickly and payment is not held up.
Work that the CCA covers:
- Most building work
- Civil engineering
- Demolition work
- Electrical work
- Plumbing and gas work
- Painting and decorating work
- Supply of building materials
- Hire of plant or equipment
- Earthworks and landscaping
- Professional services (eg architectural design, surveying)
Adjudicators are registered, trained professionals who are experienced in construction contract administration and dispute resolution. Where a claim has been lodged, parties to a contract may agree on a registered adjudicator who can then review the issue and expedite payment.
Where agreement on a registered adjudicator is not possible, parties to the contract may apply to a registered appointor who will assign an adjudicator for them.
Construction Contracts Act fact sheet
Information for subcontractors – if you are not being paid fact sheet
Please note that the adjudication process under the Construction Contracts Act 2004 does not cover salary or wage disputes. For help resolving a salary or wage dispute please contact the Fair Work Ombudsman by telephoning 13 13 94.
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