Tasmanian Government Logo

Department of Justice

Security of payment

If you work in the building industry and have a client who is not paying the debt that they owe you, the following steps can be taken:

  1. Serve a Claim for Payment upon the person or business
  2. The person must respond within 10 days for commercial building work, or 20 days for residential building work with a payment schedule
  3. If a Payment Schedule is not received the Builder can get an adjudicator for a ruling
  4. If the adjudicator decides the amount needs to be paid then the debtor must pay it within 5 days unless another date is set by the adjudicator
  5. If the amount is not paid by the due date then the builder can ask the named authority for an adjudication certificate
  6. The builder takes the adjudication certificate to a court registry to be enforced as a judgement debt
  7. The builder can also serve notice on the debtor to say they are stopping work on the building work.

Payments

The Act entitles a person to recover progress payments for building or construction work done and goods and services supplied for building or construction work. The person claiming is called the claimant.

Progress payments

Progress payments can be claimed under the Act even if the contract

  • was not written
  • did not provide for progress payments
  • provided for a single payment at the completion of the work
  • contains a "paid when paid" clause.

A progress payment becomes due and payable

  • on the date nominated in the construction contract, or
  • the last day of the month in which construction work was carried out (or the related goods and services were first supplied).

Payment claim

A person who does building or construction work, or supplies goods or services for building and construction work under a construction contract can ask for a progress payment by making a payment claim.

The payment claim must

  • identity the works or services to which the progress payment relates
  • indicate the amount of the progress payment
  • state that the payment claim is made under the Act. For example by using words like, "this is a claim made under the Building and Construction Industry Security of Payment Act 2009".

More information about making a claim.

Payment schedule

A person on whom a payment claim is served may reply to the claim by providing a payment schedule to the claimant. This person is called the respondent.

A payment schedule

  • must identify the payment claim to which it relates
  • must include the amount of the payment, if any, that the respondent proposed to make (the scheduled amount)
  • if the scheduled amount is less than the amount claimed in the payment claim, all reasons for this difference must be given

If the respondent does not respond with a payment schedule within the required time, the whole amount claimed becomes payable and an application may be made to have the claimed amount become a judgement debt.

After the claimant receives the payment schedule they must decide whether to

  • accept what the Respondent has offered to pay and their reasons for this offer within the prescribed time, or
  • to have their claim adjudicated.

If the adjudicator has determined that an amount needs to be paid by the Respondent to the Claimant, that amount must be paid within 5 business days of the date of the determination, unless the adjudicator has specified another date.

Non-payment

If the Respondent fails to pay the whole or part of the adjudicated amount, the Claimant may then ask the NA to provide an adjudication certificate. This can be taken to a court registry to be enforced by the court staff as a judgement debt.

The Claimant also has the right to serve a notice on the Respondent stating that they will suspend carrying out of construction work (or supplying goods or services) under the construction contract.

Making a Payment Claim

Who can make a claim under the Act?

People who can make a claim under the Building and Construction Industry Security of Payment Act 2009 in relation to a building and construction work contract include:

  • contractors including builders and plumbers
  • sub-contractors
  • suppliers of construction materials
  • suppliers of plant and equipment for use in connection with construction work (supply can be by sale, hire, or otherwise)
  • service providers in relation to the construction work, including:
    • labour
    • design, including architectural, hydraulic and engineering design
    • engineering
    • building surveying
    • land surveying
    • interior or exterior decoration
    • landscaping
    • contract or project management
    • consultancy

Progress payments can be claimed under the Act even if the contract:

  • was not written
  • did not provide for progress payments
  • provided for a single payment at the completion of the work
  • contains a "paid when paid" clause.

What can I claim for?

  • construction work you have done
  • construction materials or plant you have provided
  • services such as project or contract management, consultancy
  • interest on overdue progress payments
  • cash security and retention monies
  • a claim for final payment at the end of the contract.

Who can I make a claim against?

Contractual arrangements included within the scope of the Act include:

  • contractors against principals or developers
  • subcontractors against contractors
  • builders and other contractors against residential owners
  • subcontractors against owner builders
  • suppliers against subcontractors or contractors
  • equipment hirers against subcontractors or contractors
  • consultants against clients.

How do I make a claim under the Act?

Your claim must:

  • be made at the time stated in the contract, or if no time is stated, on the last day of the month
  • in writing
  • addressed to the Respondent
  • describe the building or construction work, or the related goods and services for which you are claiming
  • state the amount of the progress payment that is due
  • include the words: "this is a payment claim made under the Building and Construction Industry Security of Payment Act 2009" or a similar statement that conveys the meaning that it is a claim under that Act
  • refer to work done under a building or construction contract within the past 12 months or such longer period as specified by the contract.

The claim may also include attachments such as:

  • statements detailing the extent of the work completed
  • completion certificates
  • delivery dockets
  • photographs
  • other applicable contract documents.

To make a claim you must:

  • establish the reference date for your claim. The date for making claims is either stated in the contract, or if there is no date, the end of the month
  • decide how much you are entitled to be paid calculated to the reference date
  • on or after each reference date make a written payment claim and serve it on the party liable to make payment (the Respondent). The claim will usually be a Tax Invoice
  • serve the claim by sending it to the Respondent. Service can be by post, hand delivery, fax, or any other methods provided in the contract
  • record the date of service on which the Respondent receives the claim.

Can a payment claim made under the Act be re-submitted if not paid?

No. Only one claim for each reference period can be made under the Building and Construction Industry Security of Payment Act 2009. Monies not paid in respect of a previous claim can be included in the next payment claim.

When can a claimant expect to be paid?

  • You are entitled to be paid by any date or period of payment provided for in the contract
  • If there is no date provided in the contract, then you are entitled to be paid 10 business days after you serve a Payment Claim on the Respondent.  This extends to 20 business days if the Respondent is a residential home owner. A 'businesss day' means any day other than Saturday, Sunday or a Statutory Public Holiday
  • If you are not paid by the due date, you have a right to interest and an adjudicator will determine the rate payable on the unpaid amount.

How long do I have to wait for a response?

If the Respondent is not willing to pay the full amount claimed, they have 10 business days to respond with their Payment Schedule. A residential home owner has 20 days to respond with their Payment Schedule. This is a written statement of what they are willing to pay, and reasons for not paying any part of the claim. If the Respondent does not serve the Claimant with a Payment Schedule by the required time, the Respondent is then liable to pay the whole amount of the Payment Claim.

What can I do if there is no response to my payment claim?

If the time for providing a Payment Schedule expires and there has been no response, the Claimant enforce their rights by:

  1. using the adjudication process in the Building and Construction Industry Security of Payment Act 2009 ; or
  2. taking the matter to court.

Using the adjudication process

  • You must notify the Respondent of your intention to proceed to adjudication, within 20 business days of the Payment Schedule being due. This means 30 days of you issuing a claim, or 40 days if the Respondent is a residential home owner. The Respondent then has 5 business days to provide a Payment Schedule after receiving your notice.
  • If no response has been received after business 5 days you may make an adjudication application to a Nominating Authority.
  • You can also suspend work or the supply of goods or services to the Respondent within 2 days of sending a notice to suspend.

What can I do about a Payment Schedule that I disagree with?

If you disagree with the Payment Schedule you may apply for adjudication within 10 business days of receiving the schedule.

Responding to a Payment Claim

Who is a Respondent to a payment claim made under the Security of Payment Act?

You are a Respondent if you:

  • are a party to a contract in which building or construction work or related goods or services are provided to you in Tasmania; and
  • are served with a Payment Claim under the Building and Construction Industry Security of Payment Act 2009.  A Payment Claim made under the Act must have written on it: "This is a Payment Claim made under the Building and Construction Industry Security of Payment Act 2009" or a similar statement.

What is a Payment Schedule?

A Payment Schedule is a notice in writing, which the Respondent must serve on the Claimant, if they do not intend to pay the full amount of the Payment Claim.

A Payment Schedule must:

  • be in writing and be addressed to the Claimant
  • identify the Payment Claim to which it relates
  • state the scheduled amount that the Respondent is willing to pay (it may be nil)
  • if the amount offered is less than the amount claimed, give all the reasons why that amount is being offered. For example, if payment is to be withheld, the Schedule must give the Respondent's reasons for withholding it
  • be posted, delivered by hand or faxed to the Claimant (service is as allowed under the Act or specified in the contract) so that it reaches them no later than 10 business days (or 20 business days if the Respondent is a resdidential home owner) after the Respondent received the Payment Claim. (A Payment Schedule can also be sent by email by prior agreement of both parties).

A Payment Schedule may also include attachments containing detailed explanations of the reasons why the Respondent intends -

  • not to pay all the amount claimed; and
  • withholding any part, or all of the claimed amount, including how the withheld amount was calculated.

Implications of receiving a Payment Claim

Respondents need to have contract administration skills to ensure that they can meet critical timelines imposed by the Act.  Employees handling invoices and mail must be aware of the importance of a Payment Claim so that the Respondent has time to give consideration of amounts claimed.

If there is a disagreement over items claimed, it is important that a Payment Schedule is served within time, in the correct form and manner and giving all the reasons why a claim is disputed.

Does a Respondent have to provide a Payment Schedule?

If a Respondent fails to serve a Payment Schedule within time, they are liable for the full amount of the Payment Claim. If the Claimant then sues for recovery in a court, or seeks an adjudication of that amount, the Respondent cannot raise any defence based on the building or construction contract or raise any cross claim.

What happens if the Respondent does not submit a Payment Schedule in time and will not pay the claim?

A Claimant may then:

  1. Take the matter to a court and obtain an immediate judgment as a debt due to the Claimant; or
  2. Give notice that they intend to take their claim to an adjudication application and suspend work under the contract; and
  3. Excercise a lien over any plant of materials they supplied to the Respondent.

What if the Claimant disputes the Respondent's Payment Schedule?

If the Claimant disputes the Respondent's Payment Schedule, the Claimant may then apply for adjudication of that claim.  The Respondent will be notified of an adjudication application, and then has 5 business days to deliver their submission to the appointed adjudicator.

If a Respondent's Payment Schedule fails to raise a defence, set-off (counter claim or cross claim) or other reasons for not paying, then they cannot raise that defence during adjudication proceedings.

See also Applying for Adjudication and Nominating Authorities.

Residential home owners

Does the Security of Payment Act apply?

Yes. The Building and Construction Industry Security of Payment Act 2009 applies to residential home owners who live in, or intend to live in, the dwelling where building or construction work (or the supply of related services) is being carried out.

For example, a residential home owner includes a person who owns a house or land, who has contracted with a builder or other contractor to be responsible for performing building work on that house or land.  If they receive a claim for payment under this Act, they must either pay or lodge a a payment schedule giving reasons for not paying the full amount.

Doing nothing is not an option, otherwise the claimant can take the matter to adjudication and obtain a judgment against the home owner for the full amount claimed.

Is there a difference between a residential home owner contracting for work, and an owner builder?

Yes;

  • An owner builder has 10 business days to respond to a payment schedule, the same as an accredited builder.
  • A residential home owner has 20 business days to respond to a payment schedule.

This is because an owner builder has taken on the role of being the responsible  builder for a project. For example, they include someone who has been registered as an owner builder by the Director of Building Control to carry out or manage building work.  Under the Act they are treated the same as an accredited builder who is in the business of building.

A home owner has 20 business days in which to respond as they are not in the business of building and may have little experience of contract administration.

Adjudication

Under the Building and Construction Industry Security of Payment Act 2009 (the Act), 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.

OR

  • within 10 business days of receiving a Payment Schedule that the Claimant disagrees with.

OR

  • 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.

Adjudication process

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.

Adjudication costs

There are two parts to the cost of an adjudication application:

  1. the NA's fees; and
  2. 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.

Response

After receiving a copy of the adjudication application, the Respondent has the right to expand upon the reasons given in the Payment Schedule.

Decision

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.

Determination

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:

  1. Lodge a payment claim with the respondent (the person who owes the money)
  2. The respondent is to provide a payment schedule to the claimant
  3. 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.
  4. The adjudicator will make a decision as to the amount owed to the claimant by the respondent.

Nominating authorities and adjudicators

What are nominating authorities?

Nominating authorities (NA) are important to the administration of adjudication services to Claimants under the Building and Construction Industry Security of Payment Act 2009 .  They have been authorised by the Tasmanian government to perform the following functions:

  • receive adjudication applications from claimants
  • provide assistance to parties regarding the adjudication process
  • recruit adjudicators with appropriate skills and qualifications
  • nominate an adjudicator to decide an adjudication application
  • serve copies of the adjudication decision
  • issues adjudication certificates to Claimants (if requested).

Fees

NA charge fees for their services. Prior to selecting a NA, the Claimant should enquire about likely fees and expenses from adjudication.

What are adjudicators?

After an application for adjudication is lodged with a NA, it will appoint an adjudicator to review all relevant documents that were lodged and to make a determination.  Adjudicators are private individuals engaged by the NA on the basis of their skills and knowledge of construction industry payment disputes. Once appointed to hear an application, the adjudicator will notify both parties to the payment dispute.

NA are required to ensure that adjudicators they nominate meet minimum competencies and comply with professional standards of conduct.

These services are authorised to operate in Tasmania.

Nominating authority Registration number Contact details

Australian Solutions Centre Pty Ltd

TNA01061002

Regus Miranda
Level 1, 29 Kiora Road
MIRANDA NSW 2228

Phone: 1300 722 624
Fax: 1300 722 924

Email: info@solutionscentre.com.au

Web: www.solutionscentre.com.au

RICS Dispute Resolution Service

TNA01061003

Street address:
RICSDRS C/- Hobart Corporate Centre
Level 3/85 Macquarie Street
HOBART TAS 7000

Head office:
Suite 720, Level 7, 127 Creek Street
BRISBANE QLD 4000

Phone: 1300 953 459
Fax: 1300 953 529

Email: drsaus@rics.org or amahoney@rics.org

Web: www.rics.org

Adjudicate Today Pty Limited

TNA01061001

Reserve Bank Building
Level 6, 111 Macquarie Street
HOBART TAS 7000

Phone: 1300 760 297
Fax: 1300 760 220

Email: tas@adjudicate.com.au

Web: www.adjudicate.com.au

Resolution Institute

 TNA01061004

Level 2, 13-15 Bridge Street
SYDNEY NSW 2000

Phone: 02 9251 3366
Fax: 02 9251 3373

Email: nominations@resolution.institute

Web: www.resolution.institute

ABC Dispute Resolution Service

TNA01061005

Postal address:
PO Box 7815, Waterfront Place
BRISBANE QLD 4001

Street address:
Level 3, 85 Macquarie Street
HOBART TAS 7000

Phone: 1300 857 383
Fax: 1300 857 384

Email: contactus@abcdrs.com.au

Web: www.abcdrs.com.au