The amended Building and Construction Industry Payments Act 2004 (Qld) (amended Act) will commence on 15 December 2014.
This alert sets out how the changes will impact the construction industry.
The amended Act will apply to all payment claims served on or after 15 December 2014, with one exception (see, 'What has changed for claimants?' below). For payment claims served before 15 December 2014 a transitional version of the amended Act will apply (transitional Act). The transitional Act is essentially the unamended Act, with the new definition of 'business day' and new provisions about the transfer of the functions of authorised nominating authorities (ANA) to the Adjudication Registrar (registrar) included.
Extending the Christmas break
The definition of 'business day' has changed. The traditional industry shutdown between Christmas and New Year has been recognised and time will not run between 22 December and 10 January. This change will apply to all payment claims, whether served before or after the commencement of the amended Act, but not necessarily to the timing of service of all payment schedules.
For a more detailed outline of how the change to the definition of 'business day' will affect you this Christmas period, see our note, 'Changes to the Building and Construction Industry Payments Act 2004 (Qld) – A merrier Christmas for some!'
What has changed for claimants?
The window for making progress payment claims has been halved from 12 months to 6 months after the completion of all construction work, unless a later period is allowed under the contract. For 6 months after commencement, this change only applies to contracts which are entered into on or after 15 December 2014, regardless of when the payment claim was made. After 6 months, existing contracts will also transition to a 6 month window for making progress payment claims.
Payment claims made after 15 December 2014 which relate to final payment, must be made by the later of:
- the period worked out under the contract;
- 28 days after the end of the last defects liability period; or
- 6 months after the completion of all construction work.
If the claimant's right to make a payment claim had expired under the unamended Act, then this right is not revived by the new provision allowing payment claims for final payment to be made 28 days after the end of the last defects liability period.
What has changed when giving a payment schedule?
For payment claims made on or after 15 December 2014, unless the claim is for more than $750,000 (excluding GST), there is no change. A payment schedule for a complex claim must be served within the earlier of:
- the time required by the relevant construction contract;
- 15 business days after the claim is served, if the claim was served 90 days or less after the reference date; or
- 30 business days after the claim is served, if the claim was served more than 90 days after the reference date.
A respondent gets a second chance to introduce reasons for withholding payment in its adjudication response.
What has changed if a respondent does not serve a payment schedule?
From 15 December 2014, a claimant no longer has an immediate right to apply for judgment. It must give the respondent a second chance to serve a payment schedule by giving the respondent notice prior to commencing proceedings. The respondent is given a second chance to serve a payment schedule within 5 business days of the notice.
A claimant can no longer 'bank' payment claims that lack a response. Its right to apply for judgment is lost if the notice is not given within 20 business days after the due date for payment.
What has changed for applicants making an adjudication application?
From 15 December 2014, instead of applying to an ANA for appointment of an adjudicator, the application is made to the registrar. The registrar must then refer the application to an adjudicator. The Queensland Building and Construction Board will make policies governing the administration of the Act, which will come into force by regulation. Regulations which are of a 'savings or transitional nature' can be retrospective.
The registrar will perform the functions previously performed by the ANAs. This includes providing an adjudication certificate to the successful claimant following an adjudication decision.
What has changed for respondents to an adjudication application?
For an adjudication in relation to a payment claim made on or after 15 December 2014 the time for serving an adjudication response has been extended
If the payment claim is for less than $750,000 (excluding GST), the respondent must give its adjudication response to the adjudicator within the later of:
- 10 business days after receiving a copy of the adjudication application; or
- 7 business days after receiving notice of the adjudicator's acceptance of the adjudication application.
If the payment claim is for more than $750,000 (excluding GST), the respondent must give its adjudication response to the adjudicator within the later of:
- 15 business days after receiving a copy of the adjudication application; or
- 12 business days after receiving notice of the adjudicator's acceptance of the adjudication application.
The respondent may apply to the adjudicator for an extension of up to 15 business days if the payment claim is for more than $750,000 (excluding GST).
The claimant's right of reply to new reasons for withholding payment given in an adjudication response
In an adjudication relating to a payment claim served on or after 15 December 2014, the claimant is entitled to reply to any new reasons for withholding payment given in an adjudication response.
The claimant must give the adjudicator 5 business days' notice of its intention to reply. The reply must be made within 15 business days after receiving the adjudication response, but the claimant can apply for an extension of a further 15 business days.
What has changed for adjudicators?
From 15 December 2014, the adjudicator will be appointed by the registrar, rather than by an ANA.
The adjudicator must determine whether they have jurisdiction to adjudicate the application prior to making a decision. If they decide they don’t have jurisdiction they are entitled to be paid a fee for making the jurisdictional decision.
The adjudicator must not make a decision before the end of the 'minimum consideration period'. This is the period within which the respondent may give an adjudication response, and additionally (if applicable), the period within which the claimant may give a reply to any new reasons for withholding payment raised in the payment schedule.
For payment claims over $750,000 (excluding GST) the deadline for an adjudication decision is 15 business days after either:
- receipt of the adjudication response; or
- if the claimant has a right of reply, receipt of that reply.
If the respondent does not give an adjudication response, or if the claimant does not give a reply, the deadline is 15 business days from the last day the adjudication response, or reply, could have been given to the adjudicator.
The parties may agree to give the adjudicator more time to decide the adjudication application, or if the parties do not agree, an adjudicator may give themselves an extension of 5 business days.
There are a number of considerations specified for the adjudicator to take into account when deciding the proportion of the adjudicator's fees and expenses to be paid by each party.