THINGS YOU NEED TO KNOW
- It is common for payment claims to be served under BCIPA during the holiday period. Reforms to BCIPA have been implemented lessening the dangers that confront unwitting recipients of Christmas payment claims but these risks have not been eliminated completely and you must be vigilant to any claims.
WHAT YOU NEED TO DO NEXT
- You should start to identify any potential issues that may result in a payment claim being served, remain vigilant to the risk of payment claims and confirm the location of your registered office. Staff working during the Christmas period should be trained to know what to look out for and what to do if a payment claim is served.
The Building and Construction Industry Payments Act 2004 (Qld) (BCIPA) has existed in its current form for over a decade. It can be a useful tool for resolving claims that have been the subject of protracted disputes or commercial negotiations. However, and particularly at this time of the year, industry participants should ensure that they are not caught out by unexpected Christmas payment claims.
The long-awaited reforms to BCIPA commence today (Monday, 15 December 2014), and with them, a welcomed extension to the Christmas ‘black-out’ period to better reflect the shutdown within the industry.
The reforms have been the source of much debate, and were the subject of a series of industry workshops that we hosted in Brisbane and in a number of regional centres earlier this year with Michael Chesterman, the Adjudication Registrar of the Queensland Building and Construction Commission (QBCC). The reforms, and some practical examples to illustrate how they will operate, are set out in the attached table.
This focus alert addresses the effects that the BCIPA reforms may have on your business this holiday season.
The payment claim that stole Christmas
In the lead up to Christmas, it is common for payment claims to be served under BCIPA which are aimed at taking advantage of reduced staff levels and office closures. The reforms will lessen (but not eliminate) the dangers that confront unwitting recipients of Christmas payment claims.
The timeframes under BCIPA are expressed in terms of business days. In the amended BCIPA, the term ‘business day’ will not include the period between 22 December 2014 and 10 January 2015, meaning that the timeframes for any step to be taken will be suspended during this period. This is a significant extension of the current ‘black-out’ period, which excluded 27 to 31 December (plus public holidays). Time frame examples are set out in the attached.
The transitional BCIPA regime
The reforms will apply to all payment claims that are served after their commencement. However, if a claim has been served prior to the commencement of the reforms, but further steps remain to be taken under BCIPA (such as the service of a payment schedule, adjudication application or adjudication response), a transitional version of the amendments will apply. It differs from the current BCIPA process in some important ways, including the following:
- the QBCC will assume the functions of authorised nominating authorities, including the appointment of adjudicators
- a new provision will apply which allows applicants to withdraw from an adjudication and
- the new definition of ‘business day’ will apply.
Practical tips for Christmas
Despite the extended Christmas moratorium, it is important to remain vigilant to the risk of payment claims being served close to Christmas and going undetected. If a payment claim is served before the reforms commence and is not responded to within ten business days, a statutory debt for the full amount claimed will arise and be enforceable in Court.
- We recommend that the following protocols be put in place to minimise these risks:
- Review the status of your projects to identify any potential problems which may result in a payment claim being served. Communicate any foreseeable risks to staff who will be working during the Christmas moratorium.
- Train any staff working during the Christmas moratorium to look for any documents bearing the words ‘This is a payment claim made under the Building and Construction Industry Payments Act 2004 (Qld)’ (or words to this effect), and to elevate them immediately to a nominated person.
- Confirm the location of your registered office (it may, for instance, be your company’s accountant’s office) and identify who will be present over the Christmas shutdown to identify payment claims and forward them to a nominated person.
- Ensure that all personnel on leave divert their emails to a nominated person who is responsible for checking them regularly, and that fax machines are stocked with paper (as a payment claim stored in the memory of the machine may be sufficient for valid service) and cleared regularly.