Suspension of work is often a very effective means of enforcing compliance with an adjudicator’s determination if the works are ongoing and time for completion is critical.
For construction contracts entered into before 1 December 2015
Section 72 of the Act permits a party to a commercial construction contract to suspend work if an adjudicator’s determination has not been complied with, but care must be taken to ensure that proper notice has been issued and that all the relevant information required by section 59(2)(b) and (3) has been included.
The Act does not provide a right to suspend work under a residential construction contract and, accordingly, the right to suspend work will only exist in relation to a residential construction contract when that right is specifically conferred by the express terms of the construction contract.
For construction contracts entered into from 1 December 2015
Section 24A of the Act permits any party who carries out construction work under a construction contract to suspend work if an adjudicator’s determination has not been complied with, but care must be taken to ensure that proper notice has been issued and that all the relevant information required by section 59(2)(b) and (3) has been included.
If a party properly exercises the right to suspend work under the Act, that party:
- is not in breach of the construction contract; and,
- is not liable for any loss or damage suffered by any party; and,
- is entitled to an extension of time to complete the works; and
- keeps its rights under the contract including any right to terminate the contract; and,
- may lift the suspension at any time even if the amount has not been paid in full.
The right to suspend work ceases when the determination is complied with and payment is made in full. If a party failed to return to site after the determination was complied with, it would not be able to rely on the protections of the Act and may be held to be in breach of contract and liable for damages for loss.
To download a sample notice of suspension, click here