Making a payment withholding request – frequently asked questions (FAQs)
What is a payment withholding request?
A payment withholding request is served pursuant to Division 2A of the Building and Construction Industry Security of Payment Act 1999.
A payment withholding request directs a principal contractor to retain sufficient money to cover a claim out of money that is or becomes payable by the principal contractor to the respondent (the person on whom a payment claim is served).
Who can serve a payment withholding request?
Only a claimant (the person serving the payment claim) who has made an adjudication application can serve a payment withholding request.
How do I know if I am a ‘Principal Contractor’?
A principal contractor for a claim is defined in the Act as 'a person by whom money is or becomes payable to the respondent for work carried out or materials supplied by the respondent to the person as part of or incidental to the work or materials that the respondent engaged the claimant to carry out or supply'.
What if I am a principal contractor and I am served with a payment withholding request?
You will need to make sure you act on any payment withholding requests that are received. This means that you must retain unpaid money to the value of the amount claimed in the adjudication application until one of the following occurs:
- The adjudication application is withdrawn;
- The respondent makes payment to the claimant under the payment claim;
- The claimant serves a notice of claim on the principal contractor under the Contractors Debts Act 1997;
- A period of 20 business days elapses after a copy of the adjudication determination is served on the principal contractor by the claimant.
If you do not owe any money to the respondent, you are not required to retain the amount claimed in the payment withholding request. However you must notify the claimant of that fact within 10 business days of receiving the request.
There are penalties for principal contractors if they do not comply with these requirements.
What if I am a respondent?
If you are a respondent you may be required to provide information about the principal contractor to the adjudicator, to assist the claimant in identifying who and where the payment withholding request should be served upon.
There are penalties for respondents if they fail to provide this information when requested by an adjudicator.
How do I go about issuing a payment withholding request?
If you wish to serve a payment withholding request on a principal contractor, you must have made an application for adjudication under the Building and Construction Industry Security of Payment Act 1999. See applying for adjudication.
You are then responsible for sending these forms and a copy of the adjudication application to the principal contractor.
Once the adjudication determination has been made you are also responsible for providing a copy of the determination to the principal contractor within 5 business days.
If you withdraw your adjudication application you must advise the principal contractor within 5 business days.
There are penalties for claimants if they make a false statutory declaration, or fail to notify the principal contractor of the adjudication determination or withdrawal of an adjudication application.