Australia: Unlocking the benefits of the BCIPA 2014 amendments for a Christmas respite

The amendments to the Building and Construction Industry Payments Act 2004 (which took effect on 15 December 2014) were intended to provide contractors with an extended Christmas "cease fire" period to address subcontractor ambush claims, and extra time to respond to subcontractor claims over $750,000.

On first reading, contractors may have thought that these amendments automatically afford them some respite from BCIPA claims during the industry's annual Christmas shutdown. However, a closer look at the amendments shows that the respite is only available to contractors who have made the requisite changes to their subcontracts.

In particular, contractors should keep in mind the following:

Avoiding end of year ambush claims

Firstly, if your subcontract does not expressly adopt the definition of "business day" from BCIPA, it will not have the benefit of the Christmas "cease fire period" which now extends from 22 December to 10 January, each year.

Get more time to respond to large claims

Secondly, where a subcontractor lodges a complex payment claim (ie one over $750,000), the time for a contractor to lodge a payment schedule can be as long as either:

• 15 business days, if the claim was served 90 days or less after the reference date, or
• 30 business days, if the claim was served more than 90 days after the reference date.

However, if your subcontract provides that you must lodge a payment schedule within 10 business days (and the odds are that it does), then you will be obliged to act within that limited period.

Key message

The BCIPA amendments can make a contractor's life easier by relaxing the timeframes for response to certain subcontractor claims. However, those relaxations are only likely to be available if your subcontract contains the necessary amendments.

During the course of the year, you will be letting subcontracts under which the work will extend over the next Christmas period. The necessary amendments will need to be made at the time you enter into the subcontract. With the appropriate subcontract wording, you will be able to enjoy the Christmas break without having to worry about subcontractor ambush claims.

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.