In April this year, HopgoodGanim reported in an alert that the Queensland Government had announced proposed changes to the Building and Construction Industry Payments Act 2004 (BCIPA).
The Building and Construction Industry Payments Bill 2014 (Bill) was introduced to Parliament in May 2014. The changes were originally expected to commence on 1 September 2014, although that did not occur.
In this Alert, Senior Associate Michelle Hall discusses the significant changes to BCIPA.
On 11 September 2014 the Queensland State Parliament passed the Bill with amendments (the Amended Bill). This follows the delivery of a Parliamentary Committee Report (Report) on 1 September 2014.
The Report made 18 recommendations in relation to the Bill, some of which were accepted and incorporated into the Amended Bill. However, not all of the recommendations were accepted. In some cases where the recommendations were accepted in principle, it was considered that rather than amending the Bill the objectives of the recommendations could be achieved in other ways (eg through an amendment to the regulations). For example, the Government proposed in Parliament that the requirements for training and accreditation of adjudicators will be set out in the regulations.
The significant changes as passed by the Amended Bill include the following (please note that not all of the changes are listed here as this is a summary only):
- The Queensland Building and Construction Commission (QBCC) will take on the role of registering and appointing adjudicators. This replaces the current system whereby a claimant selects an authorised nominating authority (ANA) and the ANA refers the matter to an adjudicator. The Amended Bill does not set out high-level guiding principles regarding the appointment process of adjudicators (this was recommended in the Report) and whilst the Government agrees in principle with this recommendation in the Report, the Government has proposed instead that this is accomplished by a policy that is approved by the QBCC Board and published on the QBCC’s website. The Amended Bill allows the QBCC Board to make a policy governing the administration of BCIPA.
- The time for when payment claims can be made is to be reduced from 12 months to six months after the construction work was last carried out or the related goods and services supplied (unless the contract provides a longer period).
- There is no longer a ‘one size fits all’ approach towards claims, and a dual model regime will commence to allow for extended timeframes for complex payment claims. In the Bill the definition of a ‘complex payment claim’ included claims for an amount more than $750,000.00 (or a greater amount prescribed by regulation), a latent condition or a time-related cost. The Amended Bill removes the reference to latent condition and time-related cost. The result is that a ‘complex payment claim’ pursuant to the Amended Bill is a claim that is assessed solely on monetary value ($750,000 excluding GST or a greater amount prescribed by regulation).
- The Christmas shut down period is extended by a change to the definition of business days to exclude the period between 22 December and 10 January over the industry shut down period.
- Respondents can include in their adjudication response new reasons for withholding payment that were not included in the payment schedule. Claimants are given a right of reply to the new reasons of up to 15 business days and the claimant can apply to the adjudicator for an extension of time of up to 15 additional business days because of the complexity or volume of the new reasons.
- The Amended Bill contains some transitional arrangements with respect to construction contracts entered into before commencement. These arrangements are a mixture of the unamended BCIPA and the changes that have been passed by the Amended Bill. For a construction contract entered into before commencement, the existing recovery of progress payment provisions under BCIPA (which are defined as being the sections in the unamended BCIPA dealing with the process for payment claims, payment schedules and adjudications of disputes) continue to apply for the recovery of progress payments as if the provisions had not been amended. However, the changes under the Amended Bill and relating to the functions of the ANA’s (for example, the appointment of adjudicators) being transferred to the registrar will apply to the construction contract.
- Further, transitional arrangements provide that where an adjudication application has be made, but not yet decided before commencement of the Amended Bill the adjudication application must be dealt with and decided under the unamended BCIPA.
The Amended Bill is currently awaiting Royal Assent for commencement.
Once the Amended Bill receives Royal Assent and becomes an Act, the changes will be significant for the development and construction industry. Both claimants and respondents should familiarise themselves with the new procedures in anticipation of the amendments commencing in the near future and consider what the changes mean for them in the context of their existing and future contractual frameworks. Consideration should also be given to the drafting of future construction contracts in light of the changes to BCIPA.