In April 2014, Queensland’s Department for Housing and Public Works released details of fundamental amendments to the Building and Construction Industry Payments Act 2004 (Qld) (BCIPA).
The Building and Construction Industry Payments Amendment Act 2014 (Qld) (Amending Act) was passed by parliament on 11 September 2014, and the amendments came into force on 15 December 2014.
Key amendments to BCIPA
There are four key areas impacted by the Amending Act:
- Division between complex claims and standard claims
- Change to timeframes
- New notice requirements before commencing court proceedings
- Respondents are not limited to payment schedule responses for Complex Claims at adjudication
- Claimants may withdraw adjudication proceedings
- Appointment of adjudicators is now regulated by the Queensland Building and Construction Commission (QBCC)
1. Standard Claims & Complex Claim
The Amending Act differentiates between standard claims and complex claims, depending on whether the claimed amount is more than $750,000 (excluding GST). Where a claim is a complex claim, the Amending Act now provides longer time frames and further opportunities for a respondent to respond to the claims.
The key amendments to timeframes relate to complex claims, which aim to achieve a fairer and more balanced approach to these types of claims. Depending on how complex the claim is, the amendments to timeframes include increasing the time in which respondents may serve payment schedules and adjudication responses.
For complex claims:
- the time for a respondent to provide a payment schedule will increase from 10 to 15 business days (all other claims will remain at 10 business days), if the payment claim is served within 90 days after the reference date
- if the payment claim is served on the respondent 90 days after the reference date, then the respondent must serve a payment schedule within 30 days after the payment claim is served
- the time for a respondent to provide an adjudication response will increase from 5 business days to 15 business days
- the adjudicator can grant up to an additional 15 days to provide an adjudication response for complex claims
For all claims:
- the time for a respondent to provide an adjudication response will increase from 5 business days to 10 business days
- unless a longer period is provided for in the contract, the time in which a payment claim can be made will be reduced to 6 months (from 12 months) after the work was carried out or the goods or services were supplied, or 28 days after the end of the last defects liability period under the contract
- the definition of business days will exclude the 3 business days before Christmas until 10 business days after New Year’s Day to reflect industry shutdown
3. Notice requirements
There are new notice requirements which relate to notification to respondents when a claimant intends to initiate court proceedings or apply for adjudication.
Under the new provisions, if a respondent fails to respond to a valid payment claim, before the claimant can commence proceedings or apply for adjudication in respect of the payment claim, it must first notify the respondent of this intent. The respondent may then serve a payment schedule on the claimant within 5 business days after receiving the notice.
Prior to this amendment, claimants could take these steps without any notice to a respondent. Respondents now have a further opportunity to submit a payment schedule prior to the claimant initiating proceedings or applying for adjudication.
4. Responses for Complex Claims
Under BCIPA, respondents are required to compile and serve a payment schedule within a relatively short period of time – this is in circumstances where it is open to the claimant to prepare its claim over a much longer period of time. Further, prior to the Amending Act, only reasons given in a payment schedule could be relied upon to defend claims submitted for adjudication.
The Amending Act now provides that where a claim is a complex claim, a respondent will be able to include all relevant reasons for withholding payment in its adjudication response, whether or not these issues were raised in the payment schedule.
A number of significant changes have occurred in relation to adjudication under BCIPA, including an increase in the benchmark for the skills and qualifications of adjudicators.
The Amending Act establishes a single Adjudication Registry within the QBCC and Construction Commission to administer BCIPA, maintain a current list of adjudicators and monitor performance and appoint adjudicators. Previously, adjudicators were appointed by nominating authorities and a contractor could choose which authority to serve (in the absence of a contractual agreement to the contrary).
Previously, adjudicators were not entitled to payment for concluding that they do not have jurisdiction to hear a dispute. Now, adjudicators are entitled to be paid for their time to reach that conclusion. This regime dissuades adjudicators from determining they have jurisdiction when they do not.
Claimants may now withdraw adjudication applications – previously there was no right to withdraw an adjudication application, which meant that claimants wishing to withdraw proceedings did so on the basis that an agreement was struck between the parties.
The Amending Act also states that adjudication applications are made in an ‘approved form’ – accordingly we expect that QBCC will make available a standard adjudication application form for all claims.
Effect on pre 15 December 2014 Contracts
The Amending Act will not apply to contracts entered into before 15 December 2014, with the exception of the incorporation of the QBCC registrar, which will conduct appointments of adjudicators.
Importantly, changes to the definition of ‘business day’ do not apply to the pre 15 December 2014 contracts.
What the changes to BCIPA mean
Some of the inherent deficiencies of BCIPA which have been identified and experienced by industry stakeholders since its commencement in 2004, are addressed by the Amending Act. However, there are some obvious matters which remain unremedied – one of the most glaring being the Wallace Report’s recommendations regarding the regulation of adjudications.
Standard form contracts should be reviewed by principals and contractors, particularly with reference to the change to time periods and also the introduction of the complex claims threshold.