June 1, 2014

Construction alert: Changes to the QLD Security of Payment Legislation

Building and Construction Industry Payments Act – Amendment


In May 2013, Mr. Andrew Wallace (a barrister with Construction Industry experience and an Adjudicator) submitted a report (Final Report of the Review of the Discussion Paper – Payment dispute resolution in the Queensland building and construction industry – the Wallace Report) to the Minister for Housing and Public works following his review of the Building and Construction Industry Payment Act (‘BCIPA’).

Mr. Wallace was appointed to undertake a review of BCIPA and undertook extensive stakeholder consultation in the preparation of his final report, which included 49 recommendations for the Government’s consideration.

Key Areas of Reform

The Government worked in collaboration with other stakeholder agencies to determine 3 key areas of reform to address issues raised in respect to the adjudicator appointment process and the skills of adjudicators, and the imbalance in timeframes between claimants and respondents.

1. Appointment of Adjudicators and Adjudication Process

A single Adjudication Registry within the Queensland Building and Construction Commission, which administers the Act, will be established to monitor performance and appoint adjudicators. Adjudicators will be appointed based on their skills, knowledge and experience.

The QBCC will raise the benchmark for the skills and qualifications of adjudicators, amend the requirements necessary to become a qualified adjudicator and introduce a continual professional development regime.
Adjudicators must determine if they have jurisdiction under the Act to make a decision based on the information provided, and will be entitled to be paid for their time should they conclude that there is no jurisdiction to decide the matter.

Claimants will be able to withdraw adjudication applications if they wish.

2. Timeframes for Claimants and Respondents

The amendments include:

  • A Payment Claim must be made within the later period of time required under the contract, or within 6 months of the work being performed (instead of 12 months).
  • Service of a final claim must be made within the later of the period stated in the contract, or 28 days after the expiry of the defects liability period.
  • In recognition that the ‘one size fits all’ concept may not be appropriate for large or complex matters, to ensure a fairer system a dual scheme will be implemented where the claim is for more than $750,000, or is for a latent condition, or a time related cost.
  • For large or complex claims, the time for a respondent to provide a Payment Schedule will be extended from 10 to 15 business days. Timeframes will be further extended by 30 business days where the Payment Claim is served more than 91 days after the reference date in the contract.
  • For large or complex claims, the time for a respondent to provide an adjudication response will increase from 5 to 10 business days, and the adjudicator can grant up to an additional 15 business days.
  • The definition of business days will exclude the 3 business days before Christmas and up to 10 business days after New Year’s Day to reflect industry shutdown.

3. Provision of Additional Information

Along the lines of the Victorian legislation, respondents will be able to include in the Adjudication Response all relevant reasons for withholding payment, even if they were raised or not in the Payment Schedule.

Adjudicators will be more properly appraised of the facts and circumstances surrounding the payment dispute.

Timing of the Amendments

The amendments are expected to take place effective 1 September 2014.

Contracts entered into before this date will remain under the current BCIPA system. Contracts entered into after midnight 1st September 2014 will fall under the amended system. Any adjudication applications made on or after 1st September 2014 must be made to the Adjudication Registry within the Queensland Building and Construction Commission rather than to an Authorised Nominating Authority.

SV Partners Turnaround Management team possess specialist construction expertise enabling them to tailor individual solutions to resolve a crisis. We are concerned with the long-term health of the business and consequently the flow-on effect to those associated with it. If you would like further information about the proposed changes to the QLD Security of Payment Legislation, please call SV Partners on 1800 246 801.

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