In our second instalment exploring the potential impact of the Qld Building Industry Fairness (Security of Payment )Bill, we look at reforms to BCIPA and the Qld Subcontractors Charge Act.
Whilst the security for payment reforms may not be as headline grabbing as PBA’s they are not subject to threshold tests, are intended to take affect sooner and therefore should be front of mind for all industry participants.
Key changes include:
1. Claimants are no longer required to state on a payment claim that the claim is made under the legislation. The claimant must simply identify the work, state the amount of the progress claim and request payment in writing. (During the consultation it was suggested that certain subcontractors would not state their progress claim was a payment claim under the Act for fear of negative consequences from the head contractor).
2. Creation of a new (additional) reference date on termination of the contract if the contract does not provide for one.
3. Failing to submit a payment schedule will expose respondents to:
- $12,615 penalty + disciplinary action under QBCC (if without reasonable excuse).
- Liability for the full claim amount and preclusion from providing an adjudication response.
- Claimants may be entitled to suspend work and apply for summary judgement.
4. Removal of requirement for claimants to issue Section 20A notices within 20 business days of due date in order to preserve BCIPA rights. Whilst this was a burden on claimants, it provided respondents’ with a 2nd chance to serve a payment schedule (no longer available). Under the Bill, respondents will be unable to include new reasons in an adjudication response which were not raised in a payment schedule.
5. Extending the timeframe for applications for adjudication from 10 business days to 30 business days from receipt of a payment schedule. 10 days was considered a short time frame for SME businesses to compile information to support their claim where the issues raised in the payment schedule are extensive and complicated.
Payment schedule timeframes remain within 10 business days (standard claims) and 15 business days (complex claims).
Should the changes become law, claimants will need to be particularly careful of how they manage communications with customers to ensure reference dates are not wasted. Similarly, respondents will need to be increasingly vigilant to ensure that any communications from subcontractors interpreted as payment claims are properly responded to with a payment schedule, as they will no longer receive a 2nd chance.
Insofar as the Bill deals with what is currently the Subcontractors Charges Act one significant change is that a Contractor served with a notice of claim of charge must respond within the reduced time period of 5 business days advising whether the Contractor accepts liability (or part thereof) for the amount claimed. Failure to do so constitutes an offense.
Read our first instalment here.
