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Frequently asked questions – subcontractor's payment disputes
This information applies to construction contracts entered into before 1 August 2022. For contracts entered into on or after 1 August 2022 see the Building and Construction Industry (Security of Payment) Act 2021 webpages.
Am I a subcontractor or an employee?
An employee is paid according to a relevant award or contract and is supplied with the material and equipment required to do the work. A subcontractor is paid through invoices based on results achieved and will supply their own material and equipment to undertake the work.
I have heard that adjudication is too costly?
While there are costs involved with using adjudication, typically these costs are far less than those involved in commencing court action or arbitration.
What happens if I miss the 90 business day timeframe?
If you miss the 90 business day timeframe for applying for adjudication you will need to use other methods to resolve your payment dispute.
Can Building and Energy resolve my contractual dispute?
No. Building and Energy cannot resolve payment disputes. However, Building and Energy can provide advice on options to resolve the dispute.
Does the CCA apply to wages or superannuation?
No. The CCA does not apply to construction work being done by an employee.
Do I have to use the CCA to get paid?
No. Other options available to you may include negotiating directly, using a mediation service, using the dispute resolution clause in your contract or taking court action.
Can I apply for adjudication for a dispute over payment for a variation?
Yes.
Can I apply for adjudication for a dispute over liquidated damages owed?
Yes.
Is there a minimum or maximum amount I can seek adjudication on?
No. However, it is important to be aware that the costs associated with adjudication may reduce the amount of money you recoup. This should be considered when weighing up using the adjudication process.
Does the CCA apply to homeowners?
Yes. If you are a homeowner who has engaged a builder or tradesperson to carry out building work, including renovations, painting, plumbing or electrical work the CCA will apply to your contract.
If a dispute over payments owed under the contract occurs, the builder or tradesperson may use the rapid adjudication process to resolve the dispute. If you are served with an application for adjudication, you will have 10 business days to prepare and serve a response on the applicant and the adjudicator.
If you are unsure of what to do, you may wish to consider obtaining expert advice from a professional advisor, such as a lawyer or construction contracts specialist.
I spent money preparing my application can I get those costs back?
Parties are required to cover their own legal costs or any other fees incurred in preparing an application or response.
However, where an adjudicator is satisfied that costs incurred were the result of frivolous or vexatious conduct or unfounded submissions were made by the other party, the adjudicator may decide that party must pay some or all of the adjudicator’s fees.
Can I lodge my application for adjudication online?
Some appointors allow you to submit your application to them online, however, service of the application on the head contractor or principal needs to occur by registered post or by courier to their business address. If they are an individual then you should use a process server.
Can I only seek adjudication for disputes over progress payments?
No. The CCA allows for adjudication of any dispute over a payment claim made under a contract. This could include disputes over claims for the balance of the contract, interim payment on account, payment for additional work or variations, payment relating to extensions of time or delay, and claims upon termination.
The head contractor (or principal) has told me I need to sign a statutory declaration saying I have been paid. Should I sign it?
You should only sign the statutory declaration if you have been paid up to that time.
What services are available to carry out ‘due diligence’ on a head contractor before entering into a contract?
Carrying out due diligence on a head contractor before entering into a contract for works is a good business practice. There are a number of financial reporting services available to assist with this including payment reports, credit checks and solvency information. The Australian Securities and Investment Commission provides access to a range of reporting services through the ASIC Connect Portal, alternatively a number of reputable firms offering these services can be found through a simple web search.
What happens if my contract says I will be paid within a period greater than 42 days?
No matter what the payment terms in your contract are, the CCA implies a term into the contract that payment must be made within 42 days after it is claimed. If payment has not been made within 42 days after it is claimed, then for the purpose of the CCA a payment dispute arises, and you may make an application for adjudication.
Can I still negotiate payment with the other party?
Yes. Once the adjudication process is commenced you may still negotiate with the other party to reach a resolution of the payment dispute. If a resolution is reached, the parties may request the adjudicator to make a determination that gives effect to the settlement of the parties.
If an adjudicator makes a determination in my favour, then how do I get paid?
The determination of the adjudicator is required to be in writing and state the amount to be paid and the date on or before which it is to be paid. Or it will state the security to be returned and the date on or before which it is to be returned. The adjudicator’s determination is binding therefore the party against whom a decision has been made must make payment or return a security in accordance with the due date set in the determination.
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