In brief - Contracts must incorporate some of the BCIPA amendments in order to benefit from them

Significant changes to the Building and Construction Industry Payments Act 2004 (BCIPA) came into effect on 15 December 2014. However, some of the more significant changes will not have any effect unless they are expressly incorporated into the relevant construction contract.

Extended time limits for responding to complex payment claims

One of the amendments to BCIPA was to extend the time limit for serving payment schedules in response to payment claims where the amount claimed is more than $750,000 excluding GST (now known as "complex payment claims").

The amended BCIPA provides that payment schedules in response to complex payment claims must be served within the earlier of the time required under the contract (if any) or:

  • 15 business days after the payment claim is served if the payment claim is served within 90 days after the reference date to which the payment claim relates
  • 30 business days after the payment claim is served if the payment claim is served more than 90 days after the reference date to which the payment claim relates.

Previously, respondents had 10 business days to serve a payment schedule in response to a payment claim, regardless of how much was claimed.

Extended time limits will only apply if allowed for under the contract

However, these extended time limits will not apply unless the relevant construction contract either expressly allows for them, or does not specify a time by which payment claims must be responded to.

This is because BCIPA says payment schedules must be served within the earlier of the time specified in the contract, or the extended time limits set out above.

Most contracts still require payment schedules or progress certificates to be served within 10 business days of a payment claim, in which case that shorter time limit will apply.

Extended Christmas shutdown period

The definition of "business day" in BCIPA now does not include the period from 22 December to 10 January of any year. Previously the definition of "business day" only excluded the period from 25 December to 1 January.

The purpose of this amended definition is to reflect the recognised industry Christmas shutdown period, and presumably, to prevent respondents from having to respond to payment claims and adjudication applications during that period.

However, as with the extended time limits for responding to complex payment claims, the extended industry shutdown period will usually only apply for the purposes of calculating time limits for responding to payment claims if the contract expressly adopts the new definition of "business day".

This is because payment schedules must be served within the earlier of the time allowed for in the contract, or the time limits set out in BCIPA.

If a contract requires a payment schedule or progress certificate to be served within 10 business days, but does not incorporate the amended definition of "business day", then only the contractual definition of "business day" will apply and respondents will not receive the benefit of the extended Christmas shut down period.

Contractors and principals must amend their contracts to benefit from BCIPA amendments

Contractors and principals who wish to get the benefit of the extended time limits for responding to complex payment claims and the extended Christmas shutdown period provided by the recent amendments to BCIPA, must amend their contracts to expressly incorporate them.