Adjudication is a quick way to resolve payment disputes. The Building Industry Fairness (Security of Payment) Act 2017 (BIF Act) sets out the adjudication process, and how to secure payment following the process.
In the BIF Act, a contractor who claims to be entitled to a progress payment is called a claimant. The person or company under the contract who is or may be liable to make the payment is called a respondent.
See the Queensland Building and Construction Commission (QBCC) website for information about the adjudication process, how to make an adjudication application and ways to secure payment.
Payment of adjudicated amounts
The BIF Act presently requires a respondent to pay an adjudicated amount within 5 business days after the adjudication decision is given, or another time decided by the adjudicator. A maximum of 200 penalty units applies for failing to pay.
From 1 October 2020, the respondent must also notify the registrar within 5 business days after making the payment, and provide the registrar with evidence that the payment was made. A maximum of 20 penalty units may apply for failing to notify the registrar.
The QBCC can take disciplinary action against a respondent that is a licensee if they do not comply.
Non-payment of adjudicated amounts
If a respondent does not pay an adjudicated amount, they may get fined, face prosecution or be subject to other disciplinary action.
From 1 October 2020, the BIF Act also gives a claimant other ways to secure payment if the respondent has not paid the adjudicated amount.
Payment withholding request
A claimant can make a payment withholding request to a higher party in the contractual chain. The higher party is the party in the contractual chain directly above the respondent. For example:
- a subcontractor may give a request to the principal contractor
- a head contractor may give a request to the financier of the principal.
Once the higher party is given a payment withholding request, they must retain an amount up to the amount stated in the request. However, there is no obligation to retain more than what the higher party owes the respondent. A higher party that fails to retain the amount becomes jointly and severally liable with the respondent for paying the adjudicated amount.
The payment withholding request will no longer apply once the respondent pays the adjudicated amount. Once the respondent has paid the claimant, the higher party can release the withheld amount to the respondent.
Learn more about how to make a payment withholding request on the QBCC website.
Charge over property
If the respondent, or a related entity of the respondent, owns the property where the work or services occurred, and the claimant is a head contractor, the claimant can request a charge over the property be registered.
The charge lets the claimant apply to court for an order to sell the property to satisfy the debt owing to them following adjudication.
Learn more about how to lodge a request for a charge on the QBCC website.
- Last updated:
- 11 September 2020