We have previously updated you on the amendments to the Building and Construction Industry Payments Act 2004 in our June and September updates.

The Act as amended (New Act) is yet to commence, and the date for its commencement is yet to be announced (Commencement Date). However, the Queensland Building and Construction Commission (QBCC) has issued a statement that the Commencement Date is anticipated to occur before Christmas 2014.

Further changes made in Parliament last week have changed the transitional provisions yet again, to introduce a third regime (Transitional Act) which is a hybrid of the New Act and the pre-amendment Act (Old Act).

These further changes bear close examination, as key deadlines for claimants have now become even more complex under the Transitional Act.

IMPACT OF TRANSITIONAL ACT ON EXISTING PAYMENT CLAIMS

The Transitional Act applies to all payment claims which have already been served before the Commencement Date, but where there is an ‘outstanding matter’ occurring after the Commencement Date, such as the service of a payment schedule, an application for adjudication or judgment, any step in the adjudication process, or a suspension of works.

Effectively, the Old Act ceases to apply after the Commencement Date, other than in relation to Supreme Court challenges to pre-Commencement Date adjudications.

In brief, the Transitional Act operates as follows:

  • service of payment schedules, adjudication procedures, and applications for judgment under the Transitional Act operate substantially the same as the Old Act, save for the following key changes;
  • all adjudication applications under the Transitional Act, as well as the New Act, are to be made to the adjudication registry at the QBCC, not the ANAs;
  • the New Act section 35B, regarding withdrawal of adjudication applications, applies under the Transitional Act;
  • the New Act section 100, as amended, applies under the Transitional Act, empowering the Supreme Court to ‘sever’ parts of adjudication decisions affected by jurisdictional error;
  • the extended Christmas ‘blackout’ period of 22 December to 10 January applies under the Transitional Act as well as the New Act.

IMPACT ON NEW PAYMENT CLAIMS UNDER EXISTING CONTRACTS

Under the Old Act, payment claims could be served up to 12 months after the completion of work (or longer if permitted by the contract). Under the New Act, this period is reduced to 6 months after completion, or 28 days after the end of the last defects liability period (DLP) (or any later date specified in the contract).

Similarly, under the new section 117, where a contract was entered into before the Commencement Date, but a payment claim is served after the Commencement Date, the 12 month limitation period still applies, as well as the ability to make a final claim 28 days after the end of the DLP.

However, section 117 ‘expires’ 6 months after the Commencement Date, at which time the New Act deadline for payment claims then applies to all contracts, whether entered into before or after the Commencement Date.

To take a hypothetical example, the practical effect of these provisions could operate as follows:

  • works were completed at a particular site on, eg, 30 September 2014;
  • the Amendment Act is proclaimed, with a Commencement Date of 19 December 2014 (note that this is a hypothetical date only);
  • under the Old Act, the deadline for a payment claim to be served for the works was 12 months after completion, namely until 30 September 2015;
  • under the New Act, 30 September 2015 remains the deadline;
  • however, on 19 June 2015 (6 months after the Commencement Date), the deadline stops being 30 September 2015, and reverts to 30 March 2014 (6 months after completion of the works);
  • the claimant’s accrued right to make a claim on or before 30 September 2015 may therefore be lost after 19 June 2015.

One final additional change is noteworthy—the ability to serve a final claim within 28 days of the end of the last DLP will not be available under the Transitional Act, where the 12 months for a final claim under the Old Act had already expired before the Commencement Date.

WHAT DOES THIS MEAN FOR CLAIMANTS?

We have previously observed that the safest course for claimants may be to lodge all outstanding payment claims as quickly as possible, to take fullest advantage of the Old Act.

However, any payment claims that have not already been served should now be held back until the new year. Under the Transitional Act (assuming that it is proclaimed before Christmas), any claim served on 6 December 2014 or later doesn’t need to be responded to until 2015.

This is because the entire period Saturday 20 December 2014 to Sunday 11 January 2015 is excluded from the counting of ‘business days’ under the Transitional Act and the New Act. Effectively, the clock stops running on Friday, 19 December 2014, and doesn’t start again until Monday, 12 January 2015.

Of course, if the relevant works were completed in late December 2013 or early January 2014, claimants should consider serving their payment claims anyway, before the 12 month deadline expires, even though the respondent will have extra time. The alternative may be losing the right to claim.

Finally, when the Commencement Date is proclaimed, the date falling six months after the Commencement Date should be diarised in relation to all project completed since June 2014, with a bring-up date to enable any final payment claims to be lodged before this date.

Otherwise, claimants risk losing the right to claim.