Adjudication Abroad and Lessons that can be Exchanged

Victoria (VIC)

• Building and Construction Industry Security of Payment Act 2002
• Construction Industry Security of Payment Regulations 2013

New South Wales (NSW)

• Building and Construction Industry Security of Payment Act 1999
• Building and Construction Industry Security of Payment Regulation 2020

Australian Capital Territory (ACT)

• Building and Construction Industry (Security of Payment) Act 2009

Queensland (Qld)

• Building Industry Fairness (Security of Payment) Act 2017
• Building Industry Fairness (Security of Payment) Regulations 2018

South Australia (SA)

• Building and Construction Industry Security of Payment Act 2009
• Building and Construction Industry Security of Payment Regulations 2011

Tasmania (TAS)

• Building and Construction Industry Security of Payment Act 2009

Western Australia (WA)

• Building and Construction Industry (Security of Payment) Act 2021 (applicable to contracts entered into after 1 August 2022)
• Construction Contracts Act 2004 (applicable for contracts entered into prior to 1 August 2022)

Northern Territory (NT)

• Construction Contracts (Security of Payments) Act 2004
• Construction Contracts (Security of Payments) Regulations 2005

Published statistics for adjudication outcomes in Australia (December 2023)

The published statistics reviewed by Lorine Liu, Senior Consultant, DGA Australia, highlight the wide use of adjudication in Australia:

• Around 400 adjudication applications per year in VIC and QLD between 2018 and 2023.
• Well ahead was NSW, with an average 886 application per year, no doubt partly related to the significant government spending on transport infrastructure projects.
• Over the five years between 2018 and 2023, NSW reported the highest total claim amount among the three States, at $5.5 billion. This figure represents around 74% of amounts claimed in adjudications across NSW, VIC and QLD.
• The average claimed amount in NSW is almost seven times higher than that in VIC.
• Interestingly across the States the proportion of applications reaching adjudication determinations is around 60% (in VIC 1303 determinations for 2122 applications).

This table has been extracted from “Review of Adjudication Outcomes Across Australian States (NSW, Vic and Qld): Are the regimes effective?” by Lorine Liu, Senior Consultant, DGA Australia. Read the article here.  Lorine Liu’s further article dated February 2024 is recommended reading, it highlights:

• Analysis over the period 2018 to 2023 showed that in NSW and QLD, the Success Ratios are 12% and 18%, respectively. By contrast, the Success Ratio for VIC is notably higher at 35%. In practical terms, this means that a claimant in an adjudication process in VIC could expect to recover approximately 35 cents in the dollar on average (page 2).
• In Victoria:  Success Ratios generally decrease as claim values increase. This may suggest that even where a claimant may have access to better advice, and financial capabilities, the recoveries in adjudication determinations do not improve markedly (page 4).

A payment claim, for a progress payment, is a written document that –

1. 1. identifies the construction work or related goods and servicesinclude all property (except for real property) and all types of services including building and construction services, and infrastructure. to which the progress payment related; and
   2. states the amount (the claimed amount) of the progress payment that the claimant claims is payable by the respondent; and
   3. requests payment of the claimed amount; and
   4. includes the other information prescribed by regulation.

Note: a written document bearing the word ‘invoice’ is taken to satisfy ‘requests payment of the claimed amount’.

If the claim is a a final payment claim, it must be served within the later of:

1. 1. date under contract;
   2. 28 days after last defects liability period; or
   3. 6 months after work/supply.

You cannot be served with more than one Payment Claim in respect of each Reference Date under the contract. A payment claim may include an amount that was included in a previous payment claim.

A payment schedule, responding to a payment claim, is a written document that –

1. 1. identifies the payment claim to which it responds; and
   2. states the amount of the payment, if any, that the respondent proposes to make; and
   3. if the amount proposed to be paid is less, including the respondents reasons for withholding any payment; and
   4. include the other information prescribed by legislation.

A payment schedule must be served within the later of:

1. 1. the time required by the contract; or
   2. 15 business days after the payment claim is served.

If you are served with a Payment Claim and do not provide a Payment Schedule within the time required by the contract or within 15 business days after the Payment Claim is served (whichever is earlier), you become liable to pay the claimed amount. You are not required to provide a schedule if you pay the whole of the claimed amount before the due date.

Queensland is one of the most regulated jurisdictions in the world when it comes to the construction industry. The Queensland Building and Construction Commission (QBCC) oversees the licensing regime which requires any entity undertaking building work to hold a licence.

Failure to hold a licence means no entitlement to payment and no access to the rapid adjudication process in Queensland.

[Helix SOP Training Module 3 first published March 2020]

Section 42(2) of the QBCC Act holds that if a person carries out or undertakes to carry out building work without holding the appropriate licence they are liable to a maximum penalty of 350 penalty units or 1 year’s imprisonment.

According to Zullo Enterprises P/L & Ors v Sutton [1998] QCA 417 “undertaking” under this section can also include making or entering into a construction contract. In this case, McPherson JA states that-

“The statutory provision embodies two separate and distinct prohibitions. One is that the person must not “undertake” to carry out building work unless appropriately licensed. The other is that such a person must not “carry out” building work. The first of these two prohibitions is directed at an element in the formation or making of a contract to do building work. One cannot (except perhaps in a case of a rare and most unusual kind) make a contract to do building work without at the same time “undertaking” to carry out that work.”

Additionally, section 42(3) of the QBCC Act holds that a person who contravenes section 42 (does not have a relevant licence and is unlawfully carrying out building work) is not entitled to any monetary or other consideration for doing so. This means that working without a licence or holding the incorrect licence under the QBCC Act also affects a Claimant’s ability to utilise security of payment in Queensland.  

Queensland is the only jurisdiction in Australia with full transparency and searchability of adjudication decisions. Helix has its own home-grown tech that reports on adjudication in the Queensland jurisdiction. Diligence by Helix allows you in one search obtain details of all adjudications an entity has been involved in – perform your own search here.

You can also access Adjudication Decisions on the QBCC Website.  Follow this demonstration from Michael Chesterman of Helix Compliance on how to navigate the search capability:

In Queensland the number of adjudications in on the decline:

Over these 18 years, there have been three eras of SOP in Queensland:

BCIPA 2004 era:

This was the most popular era for adjudication in Queensland spanning over 10-year years.

• In 2008/2009 754 adjudication decisions were handed down.
• In 2013/2014, 471 adjudication decisions were handed down.

BCIPA 2014 era:

There were 3 full financial years of published adjudication statistics concerning this amended version of BCIPA.

• Adjudication decisions peaked at a high of 363 in 2015/2016.
• 268 decisions were handed down in 2017/2018 (lowest year).

QLD SOP Act 2017 era:

• Adjudication decisions peaked at 300 in 2018/2019.
• 171 decisions handed down in 2022/2023 (lowest year), representing a 43% decline in adjudication decisions in this era

Over this 18-adjudication period in Queensland:

• Adjudication decisions peaked in 2008/2009 with 754 decisions handed down.
• 171 decisions handed down in 2022/2023 (lowest year), representing a 77% decline in adjudication decisions over this entire period.

In January 2022 Helix asked a Panel of Adjudicators – “Is Adjudication out of Vogue?”, see what they had to say here:

In Queensland there is a distinction between ‘standard payment claims’ (being claims for less than $750,000 (excluding GST)) and ‘complex payment claims’ (being claims for more than $750,000 (excluding GST)).

If you are dealing with a claim of more than $750,000 in Queensland:

• 15 business days for an Adjudication Response (as compared with 10 Standard)
• you can request an extension of up to an additional 15 business days but the request must be made quickly (5 or 2 business days)
• your Adjudicator will have 15 business days to make a decision

There have only been 20 Complex Adjudication Decisions (where the claim was for an amount of over $750,00) released by registered Adjudicators for the period 1 July 2022 to 30 June 2023.

Number of Adjudication Decisions Released by Registered Adjudicators in 2022-2023:

Data extracted from Queensland Building and Construction Commission (QBCC) Annual Report 2022 – 2023. See pages 16 to 18 for further data on adjudications in Queensland from the Adjudication Registry.

Adjudicators come from a variety of backgrounds and experience and bring that history to the determination of the dispute. Some Adjudicators are engineers, some are architects and some are lawyers or barristers.

The Journal of Legal Affairs and Dispute Resolution in Engineering and Construction in Volume 14, Issue 4 published the following research on this issue by Samer Skaik and Kelly Fernandez Monsalvo –

Mandating the Continuing Professional Development in Statutory Adjudication: Adjudicators’ Perspectives:

“Queensland introduced major reforms in 2017 and imposed several conditions on adjudicator registration. One of the imposed conditions was the requirements of continuing professional development (CPD) to maintain the quality and competencies of registered adjudicators. In November 2018, the Queensland government released Continuing Professional Development for Adjudicators Policy, hereafter “CPD policy.” In 2019, New South Wales (NSW) also mandated similar CPD requirements in its reform and released Continuing Professional Development GuidelinesA document detailing information and guidance that assists a user to fulfil a policy requirement or understand concepts about a related process.
• Guides may include specific steps that should ... for Adjudicators, which has been in effect since September 2020.”

The Continuing Professional Development for Adjudicators Policy sets out CPD requirements for Adjudicators. Adjudicators are required to comply with the Code of Conduct for Adjudicators (the Code) (PDF) as a condition of their registration.  If you believe an Adjudicator has breached the code you can make a complaint using this Adjudicator Complaint Form (PDF).

Registration as an Adjudicator is subject to the following conditions.

• The Adjudicator must comply with chapters 3 & 5
• The Adjudicator must complete continuing professional development as prescribed by the BIF Regulation and the Continuing Professional Development for Adjudicators Policy (PDF)
• The Adjudicator must comply with any reasonable conditions that the Registrar considers appropriate to give effect to this chapter, if stated in the certificate of registration or in an information notice
• The Adjudicator must comply with the Code of Conduct for Adjudicators (PDF)

At Helix we asked some local adjudicators what Queensland can learn from the other states [First Published January 2022]:

Where to find information about fees you will pay using Adjudication in Queensland

You can access information about Registry and Adjudicator fees in Queensland here.

The cost of Adjudication in Queensland

What is the real cost of Adjudication? Here, Michael Chesterman explains that while Adjudication is quick it still can have a substantial cost. In respect of Payment Claims over $750,000, the average Adjudicator fee was $55,901 of which 54.33% of the cost was paid by Respondents.

[Published: March 19, 2020]

In NSW, the Payment Claim:

1. 1. “must identify the construction work (or related goods and servicesinclude all property (except for real property) and all types of services including building and construction services, and infrastructure.) to which the progress payment relates; and
   2. must indicate the amount of the progress payment that is claimed to be due (claimed amount); and
   3. must state that it is made under the NSW Act.”

A Payment Claim must be served on the Respondent within the later of:

1. 1. the period determined under the contract; or
   2. the period of 12 months after the construction work (or the related goods and servicesinclude all property (except for real property) and all types of services including building and construction services, and infrastructure.) to which the claim relates was last carried out.

You cannot be served with more than one Payment Claim in respect of each Reference Date under the contract. However, you may be asked to assess an amount that has been the subject of a previous claim.

If you are a head contractor, you cannot serve a Payment Claim on the principal unless the claim is accompanied by a “supporting statement that indicates that it relates to that Payment Claim.” The supporting statement cannot be false.

If a Payment Claim has been served, you may respond to the claim by providing a Payment Schedule to the Claimant.

The Payment Schedule-

1. 1. “must identify the payment claim to which it relates, and
   2. must indicate the amount of the payment (if any) that the respondent proposes to make (the ‘scheduled amount‘).”

If you are served with a Payment Claim and do not provide a Payment Schedule within the time required by the contract or within 10 business days after the Payment Claim is served (whichever is earlier), you become liable to pay the claimed amount.

For a Payment Claim to be valid in Victoria, it-

1. must be in the relevant prescribed form (if any); and
2. must contain the prescribed information (if any); and
3. must identify the construction work or related goods and servicesinclude all property (except for real property) and all types of services including building and construction services, and infrastructure. to which the progress payment relates; and
4. must indicate the amount of the progress payment that you claim to be due (‘claimed amount’); and
5. must state that it is made under the Building and Construction Industry Security of Payment Act 2002.

A Claimant cannot serve more than one Payment Claim in respect of each Reference Date under the contract, however, you may include an amount from a previous claim if it has not been paid.

A Claimant cannot include the following a Payment Claim because of the ‘pay now, argue later’ rationale that underpins the Act:

• variations that are not claimable;
• costs concerning latent conditions;
• time-related costs;
• costs arising from changes in regulatory requirements;
• damages arising under or in connection with the contract;
• any claim arising at law other than under the contract; or
• any amount of a class prescribed by the regulations as an excluded amount.

A claimable variation is divided into a number of classes, the first of which is where the variations are wholly agreed to by both contracting parties – i.e. both parties have agreed that the work was done, that it constitutes a variation and the amount that it is worth.

The second class of claimable variations occurs when the parties agree that an item of work has been performed, however, they disagree on the amount it is worth or that it constitutes a variation. Disputed variations may be claimed in a payment claim if the parties do not agree about one or more of the following things:

• the work or supply of goods or services is a variation to the contract;
• the claimant is entitled to be paid for the variation;
• the value of the variation or the method of valuation; or
• the time for payment.

There are limits on disputed variations that may be claimed. These are outlined here.

Where the contract sum is less than $150,000:

If the original contract value is less than $150,000, the VIC Act applies to all claims for disputed variations. That is, there is no limit.

Where contract sum more than $5 million:

If the original contract value is more than $5 million, disputed variations must be resolved by the dispute resolution process under the contract. If the contract does not specify a method for resolving disputes, then there is no limit.

Where contract sum between $150,000 and $5 million:

If the contract value is between $150,000 and $5 million, the VIC Act applies to claims for disputed variations up to 10% of the original contract sum. If the total value of the disputed variations amounts to more than 10% of the original contract sum, the dispute must be resolved by the dispute resolution process under the contract. If the contract does not specify a method for resolving disputes, then there is no limit.

If the Payment Claim is not a final, single or one-off payment, then the Claimant must serve the Payment Claim within the later of:

a. the period, if any, worked out under the construction contract in respect of the carrying out of the item of work; or

b. the period of 3 months after the Reference Date that relates to the progress payment.

If the Payment Claim is a final, single or one-off payment, then the claimant must serve the Payment Claim within the later of:

a. the period, if any, worked out under the construction contract; or

b. if no period applies, within 3 months after the Reference Date.

Where a Payment Claim has been served, you may respond with a Payment Schedule.

Under the VIC Act, the Payment Schedule must-

1. Identify the Payment Claim to which it relates; and
2. Indicate the amount of the payment (if any) that you propose to make (the ‘scheduled amount‘).
3. If the scheduled amount is less than the claimed amount, reasons for withholding payment.

If you do not provide a Payment Schedule within the earlier of-

1. the time required under the contract; or
2. 10 business days after the Payment Claim is served,

you will be liable to pay the claimed amount to the Claimant.

The Payment Claim for the ACT Act must:

1. identify the construction work (or related goods and servicesinclude all property (except for real property) and all types of services including building and construction services, and infrastructure.) to which the progress payment relates; and
2. indicate the amount of the progress payment that you claim to be due (claimed amount); and
3. state that it is made under the ACT Act if the contract is for residential building work.

Claimants must ensure the payment claim is given on or after:

1. the last day of the calendar month;
2. an earlier day in the calendar month as provided in the contract; or
3. if the contract is terminated, the day of termination.

Claimants must serve your Payment Claim on the respondent within the later of:

1. the end of the period determined under the contract; or
2. the end of the period of 12 months after the construction work (or the related goods and servicesinclude all property (except for real property) and all types of services including building and construction services, and infrastructure.) to which the claim relates was last carried out.

Claimants cannot serve more than one Payment Claim in respect of each Reference Date under the contract. However, you may include an amount that has been the subject of a previous claim.

In response to a Payment Claim, you may provide a Payment Schedule. For your Payment Schedule to be valid under the ACT Act, it must identify the Payment Claim to which it relates and must state the amount of payment (if any) that the Respondent proposes to make.

You must provide a Payment Schedule to you within the time required by the contract or within 10 business days after the Payment Claim is served (whichever is earlier) otherwise you will be held liable to pay the claimed amount.

A Claimant is entitled to make a Payment Claim for payment on or from each Reference Date.

If the work was carried out in Tasmania, the Payment Claim must:

1. “be in writing;
2. be addressed to the person on whom it is served;
3. state the name of the claimant;
4. identify the work carried out in sufficient detail to enable the respondent to assess the claim;
5. specify the amount of the progress payment that you claim is due; and
6. state that it is a claim made under the Building and Construction Industry Security of Payment Act 2009 (Tas); and
7. include the prescribed details, if any.”

Only one Payment Claim can be served per Reference Date under the building or construction contract. However, the Claimant may include an amount in their claim that has been included in a previous claim which has not been paid.

A Payment Claim must be served within the later of the following:

1. 1. the period stated under the contract; or
   2. the period of 12 months after the work or related goods and servicesinclude all property (except for real property) and all types of services including building and construction services, and infrastructure. to which the claim relates was last carried out.

When serving a Payment Schedule on a Claimant, the Payment Schedule-

1. 1. “Must identify the payment claim to which the schedule relates; and
   2. must indicate the amount of the payment you propose to make” (the ‘scheduled amount‘).

A Payment Schedule must be served before:

i. the end of the period required under the contract; or

ii. before the expiry of the following applicable circumstance:

1. 1. 1. 20 business days after the Payment Claim is served – if the claim relates to a residential structure and the Respondent is the owner and not a building practitioner; or
      2. 10 business days after the Payment Claim is served for other cases.

If you fail to serve a Payment Schedule within the above timeframes, you become liable to pay the claimed amount.

The South Australian Security of Payment Act requires that for a Payment Claim to be valid it must:

1. 1. Identify the construction work or related goods and servicesinclude all property (except for real property) and all types of services including building and construction services, and infrastructure. to which the progress payment relates; and
   2. state the amount of the progress payment to be payable (‘claimed amount’); and
   3. state that it is made under the Building and Construction Industry Security of Payment Act 2009.

A Payment Claim must be served within the later of:

1. 1. the time under the contract; or
   2. the period of 6 months after the work the subject of the Payment Claim was carried out.

A Claimant can only serve 1 Payment Claim in respect of each Reference Date. However, a Claimant may include in their claim, an amount that has been included in a previous claim which has not been paid.

When providing a Payment Schedule to the Claimant, you must-

1. 1. identify the Payment Claim to which it relates; and
   2. indicate the amount of the Payment you propose to make (the ‘scheduled amount‘).

You must serve a Payment Schedule within the earlier of:

1. 1. the time required under the contract; or
   2. within 15 business days after the Payment Claim is served,

otherwise, you will be liable to pay the claimed amount.

If you are undertaking construction work in Western Australia and the contract contains a provision as to how to make a claim the claimant must comply with those requirements. Where a construction contract does not have a written provision about how to make a claim for payment, the provisions in the Contracts Act 2004 are implied.

If the Act is to be implied into the contract, payment will be valid if it meets the following requirements:

1. 1. it must be in writing; and
   2. “be addressed to the party to which the claim is made; and
   3. state the name of the claimant; and
   4. state the date of the claim; and
   5. state the amount claimed; and
   6. in the case of a claim 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; and
   7. in the case of a claim by the principal – describe the basis for the claim in sufficient detail for the contractor to assess the claim; and
   8. be signed by the claimant; and
   9. be given to the party to which the claim is made.”

The amount you pay must be calculated in accordance with the contract. If the contract does not provide a way of calculating the amount, the amount claimed must be calculated as follows:

1. if the contract is a lump sum contract – the proportion of the contract sum that is equal to the proportion of the work performed; or
2. if the contract is a schedule of rates contract – the value of the work performed and detailed in the claim calculated by reference to the rates; or
3. otherwise – a reasonable amount for the work performed and detailed in the claim.

A payment claim must –

1. 1. be made in writing and be in the approved form (if any); and
   2. indicate the amount of the progress payment that the claimant claims is payable by the respondent (the claimed amount); and
   3. describe the items and quantities of construction work, or related goods and servicesinclude all property (except for real property) and all types of services including building and construction services, and infrastructure., to which the progress payment relates; and
   4. state that it is made under this Act; and
   5. include any other information required by regulations.

A payment claim must be served within the later of:

1. 1. the period worked out under the contract;
   2. 6 months after the construction work (or related goods and servicesinclude all property (except for real property) and all types of services including building and construction services, and infrastructure.) were last carried out; or
   3. for a final payment claim only, the later of:
      1. the period under the construction contract;
      2. 6 months after the completion of all construction work or supply of related goods and servicesinclude all property (except for real property) and all types of services including building and construction services, and infrastructure.; or
      3. 28 days after the end of the defects liability period.

Unlike the process in BIFA, in WA you would not respond to a Payment Claim with a Payment Schedule.

As the respondent in WA, you must respond to the Payment Claim in accordance with the terms of the contract. However, where the contract is silent on this matter, the Act implies the “responding to claim for payment” provision (‘Provision’).

Under the Western Australian Act, a principal may issue a Payment Claim for payment of an amount in relation to the performance or non-performance by you of your obligations under the contract.

If you receive a Payment Claim and believe that the claim should be rejected because the claim has not been made in accordance with the contract; or if you want to dispute the whole or part of the claim, you must, within 14 days after receiving the claim, give the claimant a notice of dispute.

The notice of dispute must:

a. “be in writing

b. be addressed to the claimant;

c. state the name of the party giving the notice;

d. state the date of the notice;

e. identify the claim to which the notice relates;

f. if the claim is being rejected because it is not made in accordance with the contract, state the reasons for the belief;

g. if the claim is being disputed otherwise, identify each item of the claim that is disputed and state the reasons for disputing it; and

h. be signed.”

If the claim received is not disputed/rejected wholly, the claim must be paid in part (if partly rejected/disputed) or in whole within 28 days after the claim is received.

A payment schedule must –

1. 1. be given in writing and be in the approved form (if any); and
   2. identify the payment claim to which it relates; and
   3. indicate the amount of the payment (if any) that the respondent proposes to make (the scheduled amount; and
   4. if the respondent does not propose to make any payment – indicate that the respondent does not propose to make payment.

The respondent may respond to a payment claim by giving a schedule (a payment schedule) to the claimant before the earlier of the following

1. 1. the time required by the contract; or
   2. 15 business days after the payment claim is made.

The Construction Contracts (Security of Payments) Act in the Northern Territory implies provisions into a contract where the contract does not provide for a particular provision. For example, if the contract is silent as to making a payment claim and its requirements, the NT Act implies the “making Payment Claims” provision, which is located in the Schedule of the NT Act.

Accordingly, if the contract does provide the requirements for making a Payment Claim, then the Claimant must comply with those requirements.

If the contract does not provide a provision for making a Payment Claim it must:

a. “be in writing; and

b. be addressed to the party to which the claim is made; and

c. state the name of the claimant; and

d. state the date of the claim; and

e. state the amount claimed; and

f. for a claim made by the contractor – itemise and describe the obligations you have performed and to which the claim relates in sufficient detail for the principal to assess the claim; and

g. for a claim by the principal – describe the basis for the claim in sufficient detail for the contractor to assess the claim; and

h. be signed by the claimant; and

i. be given to the party to which the claim is made.”

Note there is no requirement that the Payment Claim be endorsed under the Act.

The amount claimed must be calculated in accordance with the contract. If the contract does not provide a way of calculating the amount, the amount claimed must be calculated as follows:

1. if the contract is a lump sum contract – the proportion of the contract sum that is equal to the proportion of the work performed; or
2. if the contract is a schedule of rates contract – the value of the work performed and detailed in the claim calculated by reference to the rates; or
3. otherwise – a reasonable amount for the work performed and detailed in the claim.

Similar to the security of payment legislation requirements in WA, in NT you must respond to your Payment Claim in accordance with the terms of the contract. Where the contract is silent on this matter, the Act implies the “responding to claim for payment” provision (‘Provision’).

If you receive a Payment Claim and believe that the claim should be rejected because it was not made in accordance with the contract; or if you want to dispute the whole or part of the claim, you must, within 10 days after receiving the claim, give the claimant a notice of dispute.

The notice of dispute must:

a. “be in writing

b. be addressed to the claimant;

c. state the name of the party giving the notice;

d. state the date of the notice;

e. identify the claim to which the notice relates;

f. if the claim is being rejected because it is not made in accordance with the contract, state the reasons for the belief;

g. if the claim is being disputed otherwise, identify each item of the claim that is disputed and state the reasons for disputing it; and

h. be signed.”

If the claim received is not disputed/rejected wholly, the claim must be paid in part (if partly rejected/disputed) or in whole within 20 days after the claim is received.