The Queensland Government is set to introduce key changes next month to its security of payment legislation – the Building and Construction Industry Payments Act 2004 (BCIPA).
The main reforms relate to the appointment of adjudicators, reduced times for making a payment claim, extended times for responding to a payment claim, provision of additional information, and acknowledging the industry shutdown over the Christmas period.
Adjudication Registry of Queensland Building and Construction Commission
The Queensland Building and Construction Commission (QBCC) will establish an Adjudication Registry to appoint adjudicators to cases. The registry will keep a list of active adjudicators, with details of their skills, experience and qualifications. Performance will also be monitored. This replaces the current system which uses 7 commercially operated Authorised Nominating Authorities, and gave rise to criticism of a perceived bias towards claimants.
The QBCC will also amend the requirements for becoming a qualified adjudicator, and implement continuing professional development.
Time for making a payment claim
Claimants will be required to make a payment claim within 6 months of completing the construction work, unless the contract provides otherwise. This replaces the current timeframe allowed under the BCIPA of 12 months.
A final payment claim must also be served within the period provided for under the contract. If the contract is silent, the default timeframe is within 28 days after expiry of the defects liability period.
Time for responding to a payment claim
A dual regime will be established where a payment claim will be regarded as either ‘standard’ or ‘complex’. The type of claim will affect the timeframe for responding to a claim. The claim will need to state whether it is a standard or complex claim.
‘Complex’ claims are those claiming over $750,000, latent conditions, or time related costs. A respondent will now have 15 business days to provide a payment schedule, and 15 business days to provide an adjudication response. An adjudicator can also extend the time for an adjudication response for a further 15 business days.
For ‘standard’ claims, a respondent will need to provide a payment schedule within 10 business days, and an adjudication response within 10 business days.
This replaces the current timeframe applicable to all claims, being 10 business days for providing a payment schedule, and 5 business days for providing an adjudication response. This has historically limited a respondent’s ability to prepare a thorough and detailed response, particularly in response to a large claim.
Respondents to a ‘complex’ claim will be able to include additional information and the reasons for withholding payment in an adjudication response, where the information was not provided in the payment schedule.
This aims to address industry concerns regarding the limited time to prepare a payment schedule, where a payment claim may have been prepared over an extended period of time.
Change to definition of ‘business days’
The definition of ‘business day’ will be changed to reflect the usual industry shutdown over the Christmas period. The three business days leading up to Christmas Day will be excluded, as well as up to 10 business days following New Year’s Day.
This aims to avoid the opportunistic making of payment claims at a time of year when key personnel and their advisers are likely to be unavailable.
The amendments have been approved by Cabinet, and are expected to be legislated by 1 September 2014. The changes will only affect construction contracts entered into after commencement. However, all adjudication applications made on or after the effective date must be made to the QBCC’s new Adjudication Registry.
The reforms come after a lengthy period of consultation with industry stakeholders, and the report of Mr Andrew Wallace, a barrister and adjudicator, to the Minister for Housing and Public Works following his review of the legislation (Final Report of the Review of the Discussion Paper – Payment dispute resolution in the Queensland building and construction industry – the Wallace Report). The Wallace Report included 49 recommendations for consideration by the Queensland Government.