The Building and Construction Industry Payments Amendment Bill 2014 has been passed, with BCIPA reforms to come into effect later this year.

On Thursday, 11 September 2014 the Building and Construction Industry Payments Amendment Bill 2014 was passed with amendments in the Queensland Parliament. The passed Bill retained the majority of amendments tabled earlier this year, in addition to adopting a number of key recommendations made by the Transport, Housing and Local Government Committee (“the Committee”) in its 1 September 2014 report (a summary of which can be read here...).

All industry stakeholders need to be aware of the following four key areas of reform, to take effect later this year.

Appointment of adjudicators

  • The amendments will establish a single Adjudication Registry responsible for appointing adjudicators based on their skills, experience, areas of expertise and availability. The Adjudication Registry, to be administered independently by the QBCC, is intended to eliminate the perception that certain ANAs are “claimant friendly” and remove the potential for what is commonly referred to as “adjudicator-shopping”.
  • Under the new regime, all claimants must submit their applications to the Adjudication Registry.

Timeframes - Standard and Complex Claims

  • In recognition that the “one size fits all” approach is not appropriate for large or complex claims, the existing statutory timeframes have been overhauled, and a “dual model regime” has been implemented. The amended BCIPA also introduces a distinction between “standard” payment claims, and “complex” payment claims.
  • There will be a separate set of statutory timeframes for “complex” payment claims, which are defined to mean claims over $750,000.00. The Parliament accepted, however, the Committee’s recommendation to remove latent conditions and time related costs from the definition of “complex” payment claims, making the classification of claims simpler for all contractors.
  • Practically, the amended statutory timeframes will no longer work in favour of claimants.
  • The table on page three provides a practical summary of amendments to the new statutory timeframes.

“Ambush” Claims

  • The third and final area of reform, which applies to adjudications arising from “complex” payment claims only, allows a respondent to include in its adjudication response all relevant reasons for withholding payment, whether the reasons were raised in the payment schedule or not. In turn, the claimant will be given a right of reply to the adjudication response, of between 15 and 30 business days. These amendments will not apply to adjudication responses made in respect of “standard” payment claims.
  • A respondent cannot currently include in its adjudication response any reasons for withholding payment which were not included in its payment schedule. In practice, this has allowed claimants to make so-called “ambush” claims – the claimant has months to prepare a payment claim and adjudication application, whilst the respondent has just 10 business days to examine the claim and prepare a response which exhaustively states the reasons for non-payment. As it applies to “complex” payment claims, this amendment places respondents on a more level playing field.

Summary Judgment

  • The amended BCIPA removes the immediate ability for a claimant to seek summary judgment of its payment claim, where a respondent fails to serve a valid payment schedule. In a further bid to make the amended BCIPA more fair and just for respondents, claimants must now give the respondent notice, within 20 business days after the due date for payment, of the claimants intention to start summary judgment proceedings, and provide the respondent a second chance to serve a payment schedule.

Security

  • While put forward by the Committee as a further required reform, the Government did not pass the recommendation that adjudicators be given power to release securities claimed in payment claims, such as bonds or bank guarantees. As a consequence, contractors must continue to draft their contracts carefully to protect their entitlements to recover, or use, security.

Christmas shut down period

An amendment to be welcomed by all industry stakeholders is the change in definition of “business days” over the Christmas period. The new BCIPA will extend the definition to exclude the three business days before Christmas until 10 business days after New Years Day, reflecting the industry shut down period, and largely removing the risk of “ambush” claims and snap summary judgments occurring over the shutdown period.

What does this mean for contractors and subcontractors?

It is important that you familiarise yourself with the amendments in the coming months to protect your rights to lodge or respond to an adjudication application under BCIPA, and strengthen your prospects of success at adjudication.

If you wish to discuss anything in this article, or seek assistance as to how best to accommodate for these amendments in your contracts or otherwise, please do not hesitate to contact us.

 

 

 Pre-Amendment

 Post-Amendment

 

 All Claims

 Claim < $750,000

 Claim > $750,000

A. Payment Claim

 

 Time for claimant to make payment claim after construction work last carried out / related goods and services last supplied

 12 months

 6 months

 6 months

 Time for claimant to make payment claim after construction work last carried out or related goods and services last supplied if payment claim is in relation to recovery of a final progress payment (including recovery of retention and/or return of security

 12 months

 The later of the period prescribed in the contract, or 28 days after expiry of defects liability period

If above alternatives are not applicable, within 6 months

 The later of the period prescribed in the contract, or 28 days after expiry of defects liability period

If above alternatives are not applicable, within 6 months

 B. Payment Schedule

 

 Time for respondent to provide a payment schedule if progress payment served less than 91 days after reference date

 10 business days

 10 business days

 15 business days

 Time for respondent to provide a payment schedule if progress payment served more than 91 days after reference date

 10 business days

 10 business days

 30 business days

 C. Adjudication Application

 

 Time for claimant to serve adjudication application

 10 business days

 10 business days

 10 business days

 D. Adjudication Response

 

 Time for respondent to provide an adjudication response

 5 business days

 10 business days

 15 business days

(+ adjudicator can grant up to an additional 15 days)

 E. Claimant reply to response         

 

 Time for claimant to provide reply to adjudication response

 n/a

 n/a

 15 business days

(+ adjudicator can grant up to an additional 15 days)

  

Contacts

Brisbane

Troy Lewis, Partner
T: +61 7 3135 0614
E: troy.lewis@holdingredlich.com

Stephen Burton, Partner
T: +61 7 3135 0604
E: stephen.burton@holdingredlich.com

Disclaimer
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this publication is accurate at the date it is received or that it will continue to be accurate in the future. We are not responsible for the information of any source to which a link is provided or reference is made and exclude all liability in connection with use of these sources.

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