Can the builder back-charge me? What an adjudicator makes them prove
Only the back-charges the builder identified in its payment schedule, with a contractual basis and enough substantiation to show the cost was real, caused by you, and incurred or genuinely due. A line that says 'back-charge pending' or 'set-off, reasonable belief' is a placeholder, not a reason, and adjudicators treat it that way. The adjudicator values your work first, then deducts only what the builder proves.
What a back-charge has to look like to survive
The adjudicator is looking for four things on each deduction: the clause the builder relies on, the notice it gave you under that clause, the evidence that the cost was caused by your work or your default, and the evidence of the amount. An invoice from the trade that did the rectification, a defect notice with a date, photographs, and a rectification direction you did not act on will do it. 'Estimated cost to rectify' with no invoice and no date will not.
Clauses that let the builder deduct on a 'reasonable belief', across any contract, are common in the subcontracts we analyse. They are not void, but at adjudication a belief has to be shown to be reasonable on the documents, which brings it back to the same four things.
A placeholder deduction, the kind that reads 'client negotiations ongoing, final figure to be confirmed', is a builder reserving a position, not proving one. Say so in the application and ask the adjudicator to value the claim without it.
The schedule is the whole battlefield
In the East Coast states the builder's adjudication response cannot include reasons for withholding that were not in its payment schedule. That makes the schedule the single most important document in the dispute. Read every deduction line on the day it arrives and reply in writing: identify the clause, the notice and the records. Half the deductions shrink before anyone lodges anything.
Where the subcontract says defects are to be made good from retention first, a deduction from a progress claim while retention is still held is outside the contract's own mechanism, and that is worth one paragraph in the application.
Know where your contract stands
Adjudicate Pro: what an adjudicator would likely award under your state's Act, and whether to apply.
Assess my payment dispute freeCommon questions
Can the builder set off money from a different job?
Many subcontracts say it can. At adjudication the builder still has to identify the other contract, the amount and the basis in its schedule, and prove the amount is actually due. Cross-contract set-off on an unproven figure gets the same treatment as any other unproven deduction.
What if the builder's schedule just says 'back-charges' with a number?
Reply in writing on the day: ask for the clause, the notice and the records for each item. In the application, point out that the schedule gives no reasons for the deduction and ask the adjudicator to disregard it. A number with no reason is the weakest position a respondent can hold.
Do I have to prove the back-charge is wrong?
No. You prove your claim. The builder proves its deduction. Put in your records anyway, because an adjudicator who can see both sides decides faster and with more confidence.
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General information for Australian subcontractors, not legal advice. Statutory deadlines and details vary by state and change over time; verify them before relying on them. Written by Mat Kennedy at The Construction Contracts Co.