BCIPA The new rules of engagement Matt Bradbury, Partner IPWEAQ SW - PowerPoint PPT Presentation

BCIPA “The new rules of engagement” Matt Bradbury, Partner IPWEAQ SW Branch Conference 16 May 2014

Hierarchical nature of contracts Principal Principal’s Representative/ Superintendent Contractor

The magic words ‘This is a payment claim pursuant to the Building and Construction Industry Payments Act 2004’.

Rationale for the introduction of BCIPA State government view • Hierarchical chain of contracts • Cash flow • Adjudicator ’ s determination is • enforceable as a judgment debt

BCIPA: One way traffic Principal Head Contractor Subcontractor Subcontractor Subcontractor Subcontractor

Current procedure for recovery of the claimed amount Thecontractor makes a paymentclaim Theprincipalsubmits a paymentschedule Adjudication application Adjudication response Adjudication determination

Key changes proposed QBCC not Authorised Nominating Authorities will: • administer the Act – monitor performance – appoint adjudicators – Timeframes • payment claim can only be served within 6 months after the construction work was last – carried out or related goods and services provided (not 12 months as is current) unless contract provides otherwise (i.e. to reflect DLP) – Introduction of complex claims model • claims greater than $750,000 – claims for latent conditions – claims for time related costs – additional timeframes provided –

Key changes proposed cont… Ability to include additional information in adjudication response • Change in the definition of business day • – Increased blackout period – 3 business days before Christmas and up to 10 business days after New Year’s day

Service of the payment claim (by Claimant) Standard claims Large or complex claims Current legislation (estimated 85% of ($750K or latent condition claims) or time related cost) Later of period under the Later of period under Later of period under contract or within 12 the contract or within 6 the contract or within 6 months after work last months after work last months of work last carried out carried out carried out Service of the payment schedule (by Respondent) Earlier of period under the contract or within 15 Business Days after Earlier of period under Earlier of period under payment claim served, if the the contract or within 10 the contract or within 10 payment claim was served >90 days Business Days after Business Days after after entitlement to do so (reference payment claim served payment claim served date). If the payment claim was served >91 days after the reference date, 30 Business Days after this service

Current legislation Proposed legislation Adjudication application lodged (by Adjudication application lodged (by Claimant with Authorised Claimant with QBCC who appoints Nominating Authority who appoints adjudicateor) adjudicator) Adjudication response served (by respondent to adjudicator and claimant) Later of 5 Business Days Later of 10 Business Days Later of 15 Business Days after adjudication application after adjudication application after adjudication application received or 2 Business Days received or 7 Business Days received or 13 Business after Adjudicator’s Acceptance after Adjudicator’s Acceptance Days after Adjudicator’s received received Acceptance received Adjudication Decision 15 Business Days after the adjudicator receives response or longer if 10 Business Days after the adjudicator 10 Business Days after the adjudicator agreed by both parties or receives response or longer if receives response or longer if adjudicator extends by a further agreed by both parties agreed by both parties 10 Business Days if only one party agrees

Queensland Statistics Year Decisions QueenslandStatistics Released GFC Decisions Released FY 04/05 32 1000 500 FY 05/06 289 0 FY 06/07 467 Decisions FY 07/08 529 Released FY 08/09 999 FY 09/10 887 FY 10/11 674 Year FY 11/12 731 FY 12/13 721

Queensland Statistics – year to date 1 July 2013 to date – 555 adjudication applications were lodged, with 383 • decisions being released 1 July 2013 to date – average adjudication fee charged is $5,649 • Minimum adjudication (decision) - $460 • Maximum claim – circa $700,000,000 • – WICET

Applications by region Region MTD YTD YTD Previous Year Brisbane 32 285 333 Cairns 3 30 35 Gold Coast 4 49 53 Mackay 2 40 55 Maryborough 1 11 6 Rockhampton 6 42 43 Sunshine Coast 2 28 20 Toowoomba 8 35 29 Townsville 0 35 43

Claimant statistics Claimant statistics MTD YTD YTD Prev Year Consultant 3 29 20 Head Contractor 2 5 39 Contractor 12 119 119 Subcontractor 38 365 383 Supplier 3 36 56

Common traps Superintendent’s response – contract v BCIPA • – clause 42 AS2124 – payment certificate – section 18 – payment schedule – no payment schedule = DCM

Tips when dealing with BCIPA Administrative procedures • – ensure that staff handling invoices are aware of the Act (accounts, receptionists, project managers) – have invoices with the BCIPA endorsement referred to a nominated individual for consideration Registered office • – payment claims can be served on a registered office – could be at company’s accountant

Tips when dealing with BCIPA Principal’s representative/superintendent • – ensure that superintendent is aware of the Act and implications – remember though that payment claims, payment schedules, adjudication applications and adjudication responses are not validly served if served on superintendent

Tips when dealing with BCIPA Act immediately • – tight time frames – may need to engage experts to assess the payment claim – preparation of a well drafted payment schedule can resolve the dispute – review the payment claim to ensure it has been validly made – cannot include new matters in the adjudication response that were not included in the payment schedule – assess whether there are contractual options available that can run concurrently with the statutory process

Contact Matt Bradbury Partner T +61 7 3233 8972 E mbradbury@mccullough.com.au Disclaimer: This presentation covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. This presentation is intended for information purposes only and should not be regarded as legal advice. Further advice should be obtained before taking action on any issue dealt with in this presentation.