Rapid adjudication of payment disputes can literally save a
construction contractor's business. But before you can
adjudicate a pay dispute, one has to exist.
There are two common situations where despite appearances, no
pay dispute exists.
First, the work scope may change as a result of directions or
site instructions from the principal but the contract price will
not necessarily change as a result. If the contractor does not
claim a price variation within the time and in the way that the
contract prescribes, it may lose its right to be paid anything at
all for the extra work. In order to be adjudicated, a payment right
has to be disputed; in order to be disputed, a payment right has to
exist under the contract. If there is no payment right under the
contract because the contractor did not claim payment on time or
properly, there will be nothing to adjudicate.
The other common situation where contractors seek adjudication
of payment disputes that do not actually exist is where a
principal/head contractor's request for clarification of a
payment claim, or more information about that payment claim, is
treated as a refusal to pay. Unless payment has been withheld for
longer than 50 days (in Western Australia) or any shorter time
prescribed in the contract, there can be no payment dispute without
an expressed or implied refusal to pay. If you apply for
adjudication without an expressed or implied refusal to pay, your
application will be rejected because there will be no payment
dispute to adjudicate.
A principal/head contractor's response to a payment claim
can sometimes be read more than one way, so you should always take
legal advice the moment you think there may be a rejection of your
payment claim. The other thing a good lawyer will consider is
whether there are other present or future payment disputes that can
be bundled up in the same adjudication to avoid the cost and delay
of making multiple applications.
Often, there is a window of time when all or most of your
payment disputes can be taken to adjudication at the same time
– a "sweet spot" that represents the ideal time to
adjudicate. That "sweet spot" may literally just last a
day or two, and can often be manipulated by asking the
principal/head contractor the right questions at the right time.
But timing is everything so always take legal advice the moment you
are having trouble, or expect that you might have trouble, getting
paid for the work you do.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The High Court of Australia has granted special leave to appeal a decision of the NSWCA that upheld an adjudication determination under the NSW 1999.
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