The Queensland Government has announced proposed changes to the Building and Construction Industry Payments Act 2004 (BCIPA).
The proposed changes follow a review that was commenced in late 2012 by a discussion paper seeking feedback on the operation of BCIPA that was released by the Hon. Mr Tim Mander, the Minister for Public Works and Housing.
In this Alert, Special Counsel Charles Sullivan and Senior Associate Michelle Hall discuss the changes and what they could mean for new and existing contracts, as well as for claimants and respondents going forward.
Key changes
The proposed changes that have now been announced include the following:
- The Queensland Building and Construction Commission will take on the role of registering adjudicators and will appoint them to cases based on their skills, knowledge and experience. This replaces the current system whereby a claimant selects an authorised nominating authority (ANA) and the ANA refers the matter to an adjudicator.
- The time for when payment claims can be made is to be reduced from 12 months to six months after the construction work was last carried out or the related goods and services supplied (unless the contract provides a longer period). Specific timeframes are to be introduced in relation to a payment claim for a final progress payment, including the recovery of retention and/or the return of security.
- There is no longer a 'one size fits all' approach towards claims, and a dual model regime is to be introduced to allow respondents to large or complex claims where the sum involved is more than $750,000 to be given extra time to respond. For example:
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- For large or complex claims, the time for a respondent to provide a payment schedule will increase from 10 business days to 15 business days (all other claims will remain at 10 business days). Timeframes will be further extended to 30 business days if the claim for a progress payment is served more than 91 days after the reference date in the contract.
- The time for a respondent to provide an adjudication response will increase from five business days to 10 business days, and up to 15 business days for large or complex claims. The adjudicator can grant up to an additional 15 days for large or complex claims. Under BCIPA as it presently exists, there is no mechanism for an extension of time to be given.
- The Christmas shut down period is extended by a change to the definition of business days to exclude the three business days before Christmas and up to 10 business days after New Year's Day.
- Respondents can include in their adjudication response all relevant reasons for withholding payment, regardless of whether these issues were raised in the payment schedule. Claimants will be given a right of reply.
These amendments have been approved by Cabinet and will be debated in Parliament in mid-2014, with the changes anticipated to come into effect on 1 September 2014. There will be some transitional arrangements regarding contracts entered into before and after 1 September 2014.
How will contracts be affected?
Contracts entered into before 1 September 2014 will remain under the current BCIPA system. Contracts enter into after midnight on this date will fall under the amended system. However, any adjudication applications made on or after 1 September 2014 must be made to the Adjudication Registry within the Queensland Building and Construction Commission, rather than to an Authorised Nominating Authority.
Who benefits?
The proposed changes are significant and attempt to create a fairer and more transparent system, in the process creating a system that has been perceived by some as favouring claimants. From a claimant's perspective, the changes may not be desirable as they give respondents more time to respond to claims, reduce the timeframe when a claim can be made and remove the ability of a claimant to select the authorised nominating authority which in turn selects an adjudicator.
For respondents who have felt that BCIPA unfairly advantaged claimants, the changes will no doubt be well received.
A downside to the proposed changes will be a further divergence between the various Australian states and territories regarding the process for security for payment at a time when Governments are supposedly cutting red tape.
To view the Government media release, please click here.
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