Building and construction reform – important changes to Queensland security of payment legislation

The Queensland Government has recently introduced key changes to the Building and Construction Industry Payments Act 2004 (Qld) (BCIPA) that will have a big impact on all players within the construction industry.

These changes were presented to Parliament on 21 May 2014 by way of the Building and Construction Industry Payments Amendment Bill 2014 (Qld). The Bill seeks to respond to concerns raised by industry stakeholders and to address the perceived ‘claimant friendly’ operation of BCIPA.

The proposed reforms focus on three key areas and seek to:

• extend the timeframes for responding to some payment claims and adjudication applications;
• allow for the provision of additional information in adjudication responses; and
• establish the Queensland Building and Construction Commission (QBCC) as a single adjudication registry.

Timeframes

BCIPA has been widely criticised for its tight timeframes, which create difficulties for parties (particularly respondents) involved in factually complex or high-value claims.

The Bill seeks to address such criticisms by setting up a dual regime where payment claims are categorised as ‘standard’ or ‘complex’. ‘Complex’ claims are those where the payment claim is for a latent condition, time related cost or an amount exceeding $750,000.

For complex claims, the proposed amendments extend the timeframe in which a payment schedule must be provided from 10 to 15 business days. They also allow a respondent 15 days (rather than 10 days) to submit their adjudication response (with the ability to apply to the adjudicator for a further extension of three weeks).

Other key amendments to timeframes include:

• a reduction of the timeframe in which a payment claim can be made after ‘construction work’ was last carried out from 12 to six months; and

• a relaxation of the definition of ‘business day’ to address industry shutdown by excluding  the three business days leading up to Christmas and up to 10 business days following New Year’s Day.

Reliance on further information

Under BCIPA, respondents cannot rely on matters not raised in their payment schedule in any adjudication. The proposed amendments will remove that prohibition if the claim is categorised as a ‘complex’ claim. For such claims, the respondent will be allowed to raise additional information and reasons for withholding payment in their adjudication response that were not previously raised in the payment schedule. The amendments also give the claimant three weeks to reply to any new matters raised by the respondent (with the ability to apply to the adjudicator for an extension of up to three weeks).

The adjudication registry

Currently, claimants can lodge their adjudication application with any one of a number of registered Authorised Nominating Authorities.

The Bill seeks to establish the QBCC as a single adjudication registry, which will be responsible for:

• maintaining a list of active adjudicators and appointing adjudicators based on their skills, knowledge and experience; and
• monitoring the adjudicators’ performance and ensuring that they are appropriately qualified.

Summary

The proposed reforms to BCIPA will be debated in Parliament mid-year and are expected to come into effect from 1 September 2014.

While the Government has shown its intent to address the industry stakeholder concerns, it remains to be seen whether the changes to the timeframes will reduce the perceived imbalance between parties making and receiving payment claims and adjudication applications.

Regardless of whether the changes achieve their desired effect, it will be important for all participants in the industry to be aware of the reforms so they can make sure they comply with the new timeframes and requirements in any adjudication or payment dispute.