Your contractor endorses his payment claims as payment
claims under BCIPA.1 He says he will not pursue any
disputed amount under BCIPA. What should you do and what are the
Recent amendments to the NSW Security of Payment
legislation2 means that in NSW, contractors will no
longer be required to endorse a payment claim as being made under
the NSW Act. Every payment claim received (and response issued) by
a principal will be subject to the strict mechanisms and time
periods of the NSW Act.
While there is no such amendment in the proposed reforms to the
equivalent Queensland legislation, similar issues can still arise
if (as some contractors do) a contractor endorses all of his
payment claims as claims under BCIPA a matter of course.
For a summary of the proposed BCIPA reforms3
(including the different treatment of standard payment claims and
complex payment claims), please see BCIP Act reform - Key changes.
PAYMENT CLAIMS IN QUEENSLAND
If a payment claim is endorsed as being made under BCIPA, a
principal must respond to the claim (by issuing a payment schedule)
within 10 business days for standard payment claims or 15 business
days for complex payment claims, including reasons for certifying
an amount less than the amount claimed by the Contractor.
Currently, if a disputed claim is referred to adjudication, a
principal may only rely on arguments raised in its payment
WHAT IF A CONTRACTOR STATES IT WILL NOT PURSUE A PAYMENT CLAIM
Often, a contractor will endorse every payment claim as one made
under BCIPA as a matter of course, regardless of whether or not it
intends to pursue a disputed claim under the BCIPA process.
An interesting question arises where a contractor states it will
not pursue a payment claim under BCIPA where the claim is endorsed
as one under that Act.
What happens if the principal, relying on that statement, does
not provide a payment schedule (or only provides a very limited
payment schedule) within the statutory time period and the
contractor subsequently elects to refer the disputed payment claim
to adjudication under BCIPA?
CAN A PRINCIPAL PREVENT A CONTRACTOR FROM PURSUING A BCIPA
CLAIM IN THESE CIRCUMSTANCES?
We suggest that the answer is "no".
BCIPA contains a very clear "no contracting out"
provision.4 Any express agreement that attempts to limit
BCIPA's operation is not enforceable.
It seems unlikely therefore that a court will intervene based on
a contractor's statement (even if relied upon) to deprive the
contractor of its right to pursue a claim under BCIPA, when it
cannot give up that right freely under contract for valuable
WHAT OPTIONS DOES A PRINCIPAL HAVE?
A principal is afforded a "second chance" to provide a
payment schedule, but the principal has a shorter timeframe to
prepare its payment schedule.5
However, providing a comprehensive payment schedule within
BCIPA's strict timeframes is an expensive and
RESPONDING TO COMPLEX PAYMENT CLAIMS
Under the proposed amendments to BCIPA, submissions in a
subsequent adjudication for a complex payment claim6
will no longer be restricted to arguments raised by the principal
in its payment schedule.
RESPONDING TO STANDARD PAYMENT CLAIMS - RISKS REMAIN
Importantly, however, respondents to 'standard' payment
claims still cannot include arguments in adjudication submissions
if those reasons were not included in the payment schedule. When
responding to standard payment claims, it will therefore still be
necessary to provide a comprehensive payment schedule.
1Building and Construction Industry
Payments Act 2004 (Qld).
2Building and Construction Industry
Security of Payment Act 1999 (NSW).
3Expected to commence in early September
5Currently, within 5 business days of
receiving the adjudication notice.
6A payment claim valued at more than $750,000
or made in respect of a latent condition or time related
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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