Adjudication under the Construction Contracts Act
The Construction Contracts Act 2004 (Act)came into operation on 1 January 2005. The primary aim of the Act is to keep the money flowing in the contracting chain by enforcing timely payment and sidelining protracted or complex disputes.
Under the Act if a payment dispute arises under a construction contract in Western Australia, any party to the construction contract may apply to have the dispute adjudicated. The object of an adjudication of a payment dispute is to "...determine the dispute fairly and as quickly, informally and inexpensively as possible".
Applying for adjudication
To have a payment dispute adjudicated, a party to the contract must within 28 days after the dispute arises:
- prepare a written application for adjudication (the Act provides what information must be included),
- serve it on each other party to the contract;
- and serve it on any agreed prescribed appointer or the body responsible for appointment of the adjudicator.
When does a payment dispute arise?
The Act provides, a payment dispute arises if by the time when the amount claimed in a payment claim is due to be paid under the contract:
- the amount claimed in a payment claim is due to be paid under the contract, the amount has not been paid in full; or
- the claim has been rejected wholly or partially disputed.
Responding to an application for adjudication
After being served with an application for adjudication the other party to the contract has 14 days to respond in writing to the adjudicator and the applicant. Again, the Act provides what information must be included in a written response to an application for adjudication.
The adjudicator's role and determination
The adjudicator must, within 14 days of being served with a response to an application for adjudication, or if no response has been served, within 14 days of the last date a response could have been served:
- dismiss the application; or
- determine, on the balance of probabilities, how much, if any, money should be paid in respect of the payment dispute and the date when the money must be paid.
When making a determination the adjudicator is required to act informally. The adjudicator is not bound by the rules of evidence and can inform themself in any way they think fit, including requesting more information, inviting the parties to meet in a conference or inspecting the work the subject of the payment dispute.
Effect of determination
An adjudicator's determination is final and binding. There are very limited rights of appeal.
In the event a party is not satisfied with the determination of the adjudicator, it retains its full rights to go to court or use another dispute resolution mechanism available under the contract.
