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INSIGHT

Important changes to BCIPA in Queensland

By Dan Young 11 April 2014
Construction & major projects Government Infrastructure & Transport Property & Development

In brief

Queensland's Department for Housing and Public Works has released details of fundamental amendments to the Building and Construction Industry Payments Act, proposed to come into effect this year. Partner Dan Young and Overseas Practitioner Andrew Middleton report on the key reforms proposed and their implications should they be enacted in their current form.

Jump To

  1. Background to the reforms
  2. Proposed regime
  3. Commentary

How does it affect you?

  • The changes will mean:
    • both potential claimants and potential respondents need to be aware that different timeframes will apply to payment claims made under the Building and Construction Industry Payments Act 2004 (Qld) (the BCIPA), depending on the value and the nature of the claim;
    • it will be even more important than at present to seek proper legal advice in relation to any claim, to ensure the applicable timescales are identified and met;
    • when drafting and negotiating construction and related goods or services contracts, regard should be had to the possible effect of the new timescales on the times for things to occur under the contract (including payment certification); and
    • industry participants should familiarise themselves with the new process for the appointment of adjudicators, to be administered centrally through the Queensland Building and Construction Commission (the QBCC).
  • Participants should note that the new regime is proposed to come into force on 1 September 2014, and should begin to turn their minds to updating their forms of contract and their contract administration and other procedures, as may be required in readiness for the changes.

Background to the reforms

In December 2012, the Minister for Housing and Public Works released a discussion paper seeking consultation from industry stakeholders regarding the operational effectiveness of the BCIPA. Following consultation, in May 2013, the final report was published. The key amendments announced by the Queensland Government are the product of the further review of the numerous recommendations contained in the final report.

Proposed regime

The key changes announced include the following:

  • a separate set of timescales to apply to any claim that exceeds $750,000, or which is made in respect of a latent condition or a time-related cost. The respondent will have:
    • 15 business days to provide a payment schedule (or 30 business days if the claim is served more than 91 days after the reference date in the contract); and
    • 15 business days to provide an adjudication response (which can be increased by the adjudicator by up to a further 15 days);
  • in respect of all other claims, the respondent will still have only 10 business days in which to provide a payment schedule but will now also have 10 business days to provide an adjudication response (an increase from the current five business days);
  • the time for serving a payment claim following the date upon which the construction work was last carried out or the related goods or services were provided, will be reduced from 12 to six months (or such longer period as is provided for in the contract);
  • in respect of claims for final progress payments (which now includes the recovery of security or retentions), the claim will have to be served within 28 days after the expiry of the defects liability period (or later if provided for in the contract) or, if neither is applicable, within six months of the date work was last carried out;
  • respondents will be entitled to raise new reasons for non-payment in their adjudication responses, despite those issues not having been raised in the respondent's original payment schedule;
  • the QBCC will establish an Adjudication Registry, which will maintain a list of 'active adjudicators' and which will have reserved to it the power to appoint adjudicators to adjudicate claims. There will also be more stringent skills and qualifications requirements for adjudicators, including CPD; and
  • to correspond with the shutdown of businesses in the industry during the festive period, the period from three business days before Christmas up to 10 business days after New Year's Day will not be counted as business days for the purpose of the BCIPA.

The reforms will generally only apply to contracts entered into after the date the changes take effect (currently proposed as 1 September 2014). However, the reforms relating to the appointment of adjudicators will also apply to contracts entered into before that date.

Commentary

The proposed new regime purports to achieve a more even balance between the interests of claimants and respondents, particularly in relation to larger claims and delay in the making of claims.

Undoubtedly, a layer of complexity would be added to the regime in Queensland, and it is especially important for industry participants to be aware of the new timeframes that may apply in the circumstances.

The reforms also have ramifications at a contractual level, and participants should, in conjunction with the appropriate legal advice, consider what changes will be required to their forms of contract.

Finally, it is worth noting that the proposed changes are still to be debated in the Queensland Parliament, and participants should remain alert both to the possibility of changes to the reforms as proposed and to the effective date any reforms will take effect.