The Building and Construction Industry Payments Act 2004 (“BCIPA”) regime is intended to be an efficient and reasonably low cost method for contractors and subcontractors to ensure payments are made to them. This flow of funds down the construction chain will only occur where the person claiming moneys owing can properly establish an entitlement to that payment under BCIPA. Where that entitlement is disputed by the other party, recourse to the adjudication process will be necessary if the claimant wants to rely on the BCIPA regime.
Allana Agnew, Senior Associate in our Litigation & Insolvency team, provides a brief summary of some tips and traps to be weary of when engaging in the adjudication process.
TIPS FOR THE CLAIMANT
- DON’T ADD NEW GROUNDS: Claimants cannot add new grounds to recover a payment claim in an adjudication and must therefore only rely on the grounds raised in the payment claim as the basis for entitlement to payment.
- RESPOND TO ALL GROUNDS: Any reason given in a payment schedule for withholding payment must be addressed in the adjudication application submissions to maximise prospects of succeeding in an adjudication application.
TIPS FOR THE RESPONDENT
- NEW GROUNDS: The adjudication response (for construction contracts entered into before the BCIPA amendments commence) cannot seek to raise a new ground for withholding payment of any amount which is not addressed in the payment schedule. An adjudication decision made in reliance of any new ground can be invalidated by the Court, increasing the costs of adjudication to both parties.
- JURISDICTION ISSUES: Adjudicators will usually consider objections to jurisdiction, even where you have not served a payment schedule within the required timeframes. Where there is a basis for doing so, respondents should always make these submissions on lack of jurisdiction (eg, there was no contract or arrangement).
TRAPS FOR ALL PARTIES
- SERVICE OF DOCUMENTS: Understand how to serve documents under BCIPA, including adjudication applications, as correct service determines whether or not the adjudicator can decide the matter. If your contract provides for the way in which you serve a document, then serve it in that manner. If it does not, make sure you serve the respondent according to legislation.
- COURT PROCEEDINGS: BCIPA is not the only process to recover payment and often not the most cost efficient. It is designed to ensure those carrying out construction work receive progress payments as quickly as possible for goods and services they provide, by using an adjudication process. However, BCIPA does not extinguish a party’s other legal rights, including the right to recover or “claw back” part or all of a progress claim. You should therefore not assume it is the best process for you to follow in every situation.