The BCIPA Reform

After much debate, the Building and Construction Industry Payments Amendment Act 2014 (Qld) (the Amending Act) was passed in Queensland Parliament on 11 September 2014.

The Act introduces amendments to the Building and Construction Industry Payments Act 2004 (QLD) (“BCIPA“) which seek to create a better balance between claimants and respondents in the building and construction industry in Queensland.

The main focus of the reform revolves around the adjudication process, types of claims and new timeframes for payment.

The Key Areas of Reform

The Adjudication Process – The Queensland Building and Construction Commission (QBCC) now acts as a single adjudication registry in charge of, inertia alia, registering and appointing adjudicators. The registry is also responsible for adjudicators in so far as monitoring them, providing a list of ‘active adjudicators’ to the public, providing professional development to them and assisting them to administer the Act.

Timeframe to Make a Claim – A claim for payment must be made within 6 months (rather than 12 months) from the time the last work was carried out or the goods/services were supplied. The only exception to this rule is where the contract provides for a longer period.

Special Provision for Large or Complex Claims – If the claim is over $750,000 it will fit under the banner of ‘large’ or ‘complex’ claim. If the Payment Claim is large or complex, the Respondent will have 15 business days to pay (rather than 10 like all other Claims). Furthermore, if the Payment Claim is served after 91 days (starting from the reference date on the contract) the Respondent in a large or complex Claim will be allowed 30 business days to make payment.

Time for Adjudication Response – All Respondents have 10 business days to respond (rather than 5) after receiving an Adjudication Application. Again, if it is a large or complex Claim the Respondent will have 15 business days and the Adjudicator may allow a further extension of an additional 15 business days.

Information on Adjudication Response – Respondents can now set out their reasons for lack of payment in their adjudication response, even if the issues were not raised by the Claimant in the payment claim. Claimants can then reply within 15 business days. The Claimant may also apply to the adjudicator for an additional 15 business days if the reasons given by the Respondent are complex or high in volume. This change has occurred because, previously, Claimants could spend large periods of time preparing payment claims and the Respondent only had 10 business days to respond.

Fees of Adjudicator – The new BCIPA provides a list of considerations that an Adjudicator may take into account when deciding what fees to charge to the parties. Included in the list is whether one of the parties participated for an improper purpose or whether one of the parties acted unreasonably.

Second Chance for Respondents – If a Claimant serves a Payment Claim on a Respondent and the Respondent fails to serve a Payments Schedule and pay all or part of the Claim by the due date, the Claimant must give the Respondent notice of their intention to either start proceedings or apply for adjudication. This step must be taken before such action can proceed. The notice must allow 20 business days starting on the day after the payment fell due and state that the Respondent can serve a Payment Schedule within 5 business days after receiving the notice. 

Tip for Respondents

It is important for Respondents to provide a Payment Schedule within the correct timeframe whenever they receive a Payment Claim. This is the case even if the contractor has previously stated that they will not pursue a payment claim under BCIPA because express agreements are not allowed to limit the operation of BCIPA. However, should such an event occur, the Respondent still has a second chance to lodge a Payment Schedule once served with a notice of proceedings.

In these circumstances, the Respondent will only have 5 days to create the Payment Schedule which, depending on the complexity and scale of the claim, could be time consuming and costly. It is therefore recommended that all Respondents seek legal advice and begin preparation on a Payment Schedule as soon as they are served with a Payment Claim, even if they decide to wait until after they are served with the notice of proceedings to lodge it.

Transitional provisions

The transitional provisions are relatively simple. Any construction contract that is entered into before 11 September 2014 will still be subject to the old BCIPA in regards to the recovery of payments. Even if an Adjudication application has been made before the amendments and the decision has still not been made after the amendments, the old BCIPA will still apply to the decision.

The only part of the new BCIPA that will apply to contracts before its commencement are the changes relating to the functions of the ANA’s (Authorised Nominating Authority’s). Simply put, the functions of the ANA’s have been transferred to the registrar.

An element of training and education has been implemented into the transitional provisions by giving the Registrar the power to impose a condition on the registration of Adjudicators. The only condition that the Registrar can impose is the condition that the Adjudicator completes “transition training”. This condition can only be imposed within the first 6 months after the commencement of the Act in order to facilitate a smooth transition to the new provisions.

Moving Forward

In general, the reforms create a more equitable system and should reduce Adjudication costs for parties. They take account of complex claims and look to boost the interests of Respondent’s, which were previously stifled in comparison to Claimants.

The amendments add a layer of complexity to the industry so it is important that both Claimants and Respondents obtain legal advice to ensure compliance. The legal industry can assist compliance by shifting focus to concentrate on timeframe identification and creating new construction contracts that are drafted with the BCIPA amendments in mind.

Should you require assistance with your building or construction dispute, contact Cronin Litigation Lawyers on (07) 5592 6633

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Cronin Miller Litigation is a Gold Coast based law firm specialising in resolving commercial disputes, and providing effective results for persons who have a claim of a commercial nature.