The Building and Construction Industry Payments Amendment Act (2014) (Amending Act) commences today (15 December 2014).

In our previous alert we reported on some of the key amendments. After the Amending Act was passed in September 2014, industry stakeholders raised a number of concerns with its transitional provisions.

As a result, on 26 November 2014, the Queensland Parliament made further changes to the transitional provisions of the Amending Act. A summary of the changes to the transitional provisions, and the changes to the Amending Act, is set out below.

Both claimants and respondents will need to understand the changes included in the Amending Act. While the reforms are an attempt to provide a more level playing field within the construction industry, the amendments add a further layer of complexity.

Standard form construction contracts may also need to be amended in order to facilitate the new dual model for payment claims.

Definition of ‘business day’

The Amending Act includes a new definition of ‘business day’ which creates a Christmas shut down period between 22 December and 10 January each year.

Concerns were raised that it was not clear as to whether this new definition will apply to the calculation of time for contracts entered into before the commencement of the Amending Act. This had the potential to become a significant issue for the construction industry, impacting principals and contractors alike over the Christmas and New Year period.

To clarify this issue, the new definition of ‘business day’ will apply to all payment claims (and subsequent adjudications) made after 15 December 2014, regardless of when a contract was entered into.

Transitional process

Where a payment claim is served on a respondent prior to 15 December 2014, the unamended Building and Construction Industry Payments Act (2004) (BCIPA) will apply to any matter that remains outstanding in the recovery process, but for the following differences, which will apply to all new adjudication applications:

  • All functions of authorised nominating authorities (ANAs) will be assumed by the Queensland Building and Construction Commission (QBCC) Adjudication Registrar. This means that all new adjudication applications made after 15 December 2014 must be lodged with the QBCC.
  • Any adjudication application already lodged with an ANA but not referred to an adjudicator will be referred to a qualified adjudicator by the ANA.
  • Under the new section 35B, a claimant will be permitted to withdraw an adjudication application by serving a notice of discontinuance.
  • The new section 100(4), which deals with treatment by the Court of a decision affected by jurisdictional error, will apply. This means that the part of a decision that is affected by jurisdictional error may be severed from the remaining unaffected part and the remainder of the adjudicator’s decision will stand.
  • As discussed above, the new definition of ‘business day’ will apply.

Lodging a payment claim

Two additional transitional provisions will apply to the time in which claimants under contracts entered into prior to 15 December 2014 can lodge a payment claim:

  • Under section 17A(2)(b) or (3)(c) of the Amending Act, the maximum period for serving a payment claim has been reduced form 12 months to six months. However, for six months following commencement of the Amending Act, the maximum period will be extended to 12 months.
  • If a contractor’s right to a payment claim has expired at the commencement of the Amending Act, it will not be revived by the application of the new provision in section 17A(3)(b).

In addition to the changes made to the transitional provisions discussed above, the Amending Act will include the following changes:

Dual model for payment claims

  • The Amending Act introduces separate processes for ‘standard payment claims’ and ‘complex payment claims’.
  • The Amending Act defines a ‘complex payment claim’ as a payment claim for an amount more than $750,000, and a payment claim which is not a ‘complex payment claim’ is a ‘standard payment claim’.
  • Claimants are now required to identify in the payment claim whether it is a standard or a complex payment claim.

Payment schedules

  • For standard payment claims, the existing timeframes for providing payment schedules will continue (i.e. 10 business days from receipt of the payment claim).
  • For a complex payment claim, respondents are now required to serve a payment schedule within either 15 business days from the receipt of the payment claim (an increase of 10 business days from the old regime); or 30 business days if the payment claim is served more than 90 days from the reference date.

Adjudication response

  • For standard payment claims the time to provide an adjudication response to an adjudication application will increase from five business days to 10 business days.
  • For complex payment claims, the time to provide an adjudication response is 15 business days. However, a respondent will be able to apply to the Adjudicator for an additional 15 business days.
  • An application for additional time must be made within five business days after receiving the adjudication response.
  • Respondents to complex payment claims can now also include new reasons for lack of payment in their adjudication response, even if the reasons were not raised by the claimant in the payment claim. If new reasons are raised by the respondent, the claimant will have 15 business days after receiving the adjudication response to respond to those reasons.

Second chance notice

  • For a standard payment claim, a respondent now no longer bears the threat of having a judgment entered against them for not serving a payments schedule by the due date.
  • In what is considered one of the most significant amendments, a claimant must now wait until after the due date for payment to then serve the respondent with a second chance notice of the claimant’s intention to either start proceedings or apply for adjudication. The respondent then has five business days to provide a payment schedule.

Appointment of adjudicators         

  • As previously reported, ANAs will no longer be able to accept adjudication applications. The QBCC now acts as the single adjudication registry and has assumed the role of ANAs in referring adjudication applications to adjudicators for determination.
  • The QBCC is also now responsible for appointing, monitoring and training adjudicators.

The changes to the BCIPA will impact claimants and respondents. Gadens can assist with advice on the changes to the BCIPA as well as with staff training.