This page explains how to respond to an adjudication application under the Building and Construction Industry Security of Payment Act 2002 (Vic).
If you aren’t sure how to respond to an adjudication application under the Victorian security of payment legislation, we suggest the following approach:
1. Find out when (and how) your adjudication response needs to be lodged.
2. If you think you might need it, get help straightaway.
3. Consider whether there are any jurisdictional issues.
4. Determine whether the claim includes any items that are not claimable under the Act, such as excluded amounts.
5. Check the Act to see what may/may not be included in your adjudication response.
6. Prepare submissions and gather evidence dealing with the substance of the claim.
7. Serve your adjudication response by the deadline.
Each of these steps is explained in more detail below.
If you’re not familiar with how the Victorian Security of Payment legislation works generally, you can read more detail about it here.
Two things will determine this:
You may only have 5 business days after receiving the application.
The time for serving your adjudication response is strict and cannot be extended, regardless of the value of the claim or the volume of material prepared by the claimant.
Once you have determined when your response is due, you should think about how you plan to serve it.
If the construction contract lists three or more nominating authorities, the application must be made to one of those three authorities.
Most nominating authorities will accept service electronically (ie by email or document upload), and you can contact them to find out. Sometimes (but not always) the nominating authority will send you a note explaining how you can respond.
If you will be serving a large volume of material, you should ensure that you allow plenty of time to make sure it can be safely delivered before the deadline.
If you think you might need assistance preparing your adjudication response, it’s critical that you seek that help as early as you can. Some parts of the Act are highly technical, and an experienced construction lawyer will be able to help you work through the issues. (You can contact us here.)
No matter how good they are, a lawyer will not be able to achieve much if they only receive instructions a short time before your response is due.
Just because you have received a document that purports to be an adjudication application, this does not necessarily mean that it is a valid application under the Act.
This is an area where a specialist construction lawyer can help.
For an adjudication application to be valid, there must be (among other things):
In relation to the third point, a ‘reference date’ is a date on (or from) which the contractor is entitled to make a claim for payment. (See section 9, here.) If the contract does not prescribe reference dates, the default position under the Act will apply (and you can find the details here). Importantly, only one payment claim can be made in respect of each reference date. (See section 14(8), here.)
Unless all of the relevant conditions are satisfied, an adjudication application will not be valid. If the application is invalid because of a jurisdictional reason, the adjudicator will not be authorised to issue a determination, regardless of the merits of the underlying claim.
The Act gives a statutory right to eligible persons to recover progress payments for construction work and/or related goods and services.
Section 10 (here) explains how these progress payments are to be calculated. Relevantly, the value of the payment will be:
Regardless of what the construction contract or section 10(1) says, a ‘claimable variation’ may be taken into account in calculating the amount of a progress payment. You can read more about ‘claimable variations’ here. Importantly, an ‘excluded amount’ must not be taken into account in calculating the amount of a progress payment. You can read more about ‘excluded amounts’ here.
Anything that falls outside of this cannot be claimed.
For example, claims for general damages will not normally be allowed under the Act. This is because most construction contracts do not contemplate general damages being taken into account in assessing the value of a progress payment, and general damages are unrelated to the value of construction work and related goods and services.
If there are amounts included in the claim that cannot be claimed under the Act, these should be identified in your adjudication response and brought to the adjudicator’s attention.
Section 21 (here) sets out the requirements for adjudication responses.
Relevantly, an adjudication response:
You may address jurisdictional issues in your response.
However, if you introduce any new, non-jurisdictional reasons for withholding payment that were not included in your payment schedule, the adjudicator must give the claimant an opportunity to respond to those new reasons (see section 21(2B)).
Once you understand what can be included in your adjudication response, it is time to start putting the response together, including the supporting documentation.
Adjudication responses can sometimes be lengthy documents. Usually an adjudication response would include:
Once your response is finalised, make sure you serve it on the adjudicator before the deadline. Late responses cannot be considered.
Also note that, pursuant to section 21(3) of the Act (here), a copy of the response must be served on the claimant.