Security of payment adjudication is a process carried out by an independent expert (the Adjudicator) to decide the amount (if any) of a progress payment that is due to a Claimant.
Only the Claimant who has served a claim for unpaid payments can start the adjudication process. They may apply for adjudication in the following circumstances:
- the time for receiving a payment schedule has expired (10 business days, or 20 business days for a residential home owner); and
- within 20 business days of the payment schedule being due, have notified the Respondent that they intend to apply for adjudication and also given the Respondent an additional 5 business days to provide a payment schedule.
- within 10 business days of receiving a payment schedule that the Claimant disagrees with.
- if the Respondent does not pay the full amount of the payment schedule.
Applying for Adjudication
A Claimant may choose to contact any one of the five Nominating Authorities (NA) appointed to provide services in Tasmania. The NA will provide the Claimant with an application form, requesting that an Adjudicator be nominated (appointed) by the NA. The application form must also:
- be lodged with the NA within the time allowed
- be served on the Respondent at the same time of lodgement with the NA
- attach a copy of the Claimant's payment claim
- attach a copy of the payment schedule (if one was provided)
- attach a copy of the written contract (if any)
- include payment of the NA's fee
- include all information in support of the claim that the Claimant would like the Adjudicator to take into account. This can include expert reports, photographs, and reasons to rebut the Respondent's defences as to why they should not pay.
If the claimant decides to take their payment claim to adjudication, their application must:
- be in writing
- be made to one of the Nominating Authorities (NA) authorised in Tasmania
- lodged within the time limits required by the Act
- identify the payment claim, and the payment schedule (if any) to which the application relates
- pay the application fee of the NA
- include any submissions that the claimant wishes to include.
Once the Claimant has submitted an adjudication application, the NA will then contact an Adjudicator that they consider has the best skills and experience to determine the claim. Once the Adjudicator accepts that appointment the Claimant and the Respondent will be notified.
If the Claimant does not receive a notice of acceptance within 4 business days, the Claimant may withdraw their application, and has 5 business days to lodge an application with another NA.
There are two parts to the cost of an adjudication application:
- the NA's fees; and
- the Adjudicator's fees and expenses
To keep costs low the adjudication is expected to be informal, fast and inexpensive. Costs of adjudication are usually based on the value of the payments claimed. If issues are kept simple and the parties' submissions are clear and concise, then adjudication fees can be kept to a minimum. Adjudicators and NAs operate on a user pays system and are entitled to be paid for their services. The Claimant and the Respondent must both contribute to the fees in equal shares, unless the Adjudicator decides that one party pay a greater proportion.
The Adjudicator can withhold releasing their adjudication decision until their fees and expenses are paid. A Claimant may pay the Respondent's portion of the fees to have a decision released. That portion can then be added to the total amount that the Respondent has to pay.
Respondent right to respond
After receiving a copy of the adjudication application, the Respondent has the right to expand upon the reasons given in the payment schedule.
After the NA has appointed an independent adjudicator and all documents relevant to the application have been received, the adjudicator will assess all the information. The adjudicator may choose to hold a conference between the parties, to carry out an inspection of work or to request further documentation.
The Adjudicator will:
- make a determination as quickly as possible; and
- make their decision within 10 business days after the date on which the application for adjudication was lodged, unless the Claimant and Respondent have agreed on a longer time.
Contractors or suppliers
The Act creates a statutory right for a claimant to receive progress payments. If not paid on time, the claimant may recover the money owed in 4 steps:
- Lodge a payment claim with the respondent (the person who owes the money)
- The respondent is to provide a payment schedule to the claimant
- If there is a dispute over the claim, or it is not paid in full, the claim may be referred to a nominating authority to appoint an adjudicator to make a decision about the claim.
- The adjudicator will make a decision as to the amount owed to the claimant by the respondent.