BCIPA Bites the Dust

Michael Chesterman March 18, 2018
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With the recent confirmation that the Building and Construction Industry Payments Act 2004 (BCIPA) will be repealed effective from 1 July 2018 and replaced with provisions contained in the Building Industry Fairness (Security of Payment) Act 2017 (BIFA), I have reflected on my past involvement (17 years) in its development and evolution as a significant dispute resolution process.

During this period of time I made a number of critical decisions or argued strongly for the adoption of particular positions that I believe have shaped and defined BCIPA as respected, quick and effective dispute resolution process.

On reflection, the single most important thing I did in the development of BCIPA was undertake an extensive consulting process (2000–2004) with all industry stakeholders. I did this principally through authoring two discussion papers to build widespread consensus for the necessity to introduce such groundbreaking, transformational legislation. I was very conscious of the fact that while BCIPA was based on simple and easily understood objectives, it worked because BCIPA packed a powerful punch for nearly two decades.

BCIPA has always been divisive because it deliberately places claimants such as subcontractors in a very favourable position in their pursuit to get paid for work done, fact that I addressed in a previous article entitled ‘Why is the Building and Construction Industry Payments Act 2014 (BCIPA) so divisive?

Furthermore during the short consultation period (approx 3 months) from the time the relevant Bill was introduced into Parliament and BIFA was enacted, I identified a number of misconceptions about BCIPA that caused me to author another article entitled ‘Folk Stories and other Urban Myths‘.

With the end of BCIPA fast approaching here are my top 10:

Abandoned

  • Specifically and intentionally not having the words “Security of Payment” in the title of the legislation. I believed at the time and still do that such words imply a guarantee of payment to persons carrying out construction work or supplying goods or services (claimants) which to me is plainly an unrealistic impression that I did not want to see BCIPA evaluated against. The BIFA slogan of “get paid on time every time” will be very difficult for the legislation to live up to.
  • Requiring claimants to endorse payment claims made under BCIPA when they wished to avail themselves of the legislations powerful payment entitlements. I considered that an endorsed BCIPA payment claim by a claimant also put the respondent on notice that the claimant meant business, and in many situations I hoped, would result in a potential dispute been settled. Under BIFA all progress claims are payment claims and no endorsement is necessary and therefore the actual intent or commitment of the claimant is unknown.
  • Affording a respondent with the opportunity to provide a ‘second chance’ payment schedule before the claimant can proceed to adjudication. I am aware through hundreds of conversations with contractors and suppliers that many disputes have been settled during the short period respondents have been afforded this opportunity, negating the need for the parties to become embroiled in potentially expensive and time consuming dispute resolution action or litigation.

Retained

  • In 2004 creating an Adjudication Registry, at that time primarily for the purpose of registering Authorised Nominating Authorities (ANA’s) (bodies that appointed adjudicators) and adjudicators. The other Australian jurisdictions that had similar legislation in effect at the time I undertook industry consultation in this regard had no such statutory oversight in place. In these jurisdictions, the responsible Minister appointed ANA’s.
  • 10 years later, successfully implementing the 2014 BCIPA amendments, and in particular overseeing the transferring from ANA’s to the Adjudication Registry, the functions of receiving adjudication applications and appoint adjudicators. While this was a very controversial decision and has been the subject of much misinformation, it should be noted that on the commencement of the BCIPA reforms contained in BIFA, the Adjudication Registry will continue performing these vital functions. The Registry I was in charge of for 13 years will remain under BIFA, performing all the above key functions and i consider this such an important decision for integrity reasons.
  • Adjudicators will be required to comply with CPD requirements.
  • Adjudicators will be required to comply with a code of conduct.

Unknown

There are a number of actions I undertook for transparency, integrity and accountability reasons where it is currently unknown at this point of time as to what will be the final BIFA position. Michael Chesterman

  • Publishing all adjudication decisions in full, a decision a lot of adjudicators had concerns about.
  • Publishing comprehensive monthly statistics. While some of these statistics opened me and my former team up for criticism I did not resolve away from my strong belief the industry deserved comprehensive BCIPA statistics to evaluate. In this regard I have noticed that the most recent adjudication statistics published on the QBCC website are October 2017 and I find that disappointing.
  • Developing a Board approved policy governing the grading of adjudicators and the processes the Adjudication Registry has to employ in referring adjudication applications to adjudicators.

In conclusion when it comes to the above BCIPA positions I adopted or strongly supported, there is nothing I would do differently. I always put the best interests of the industry first and strongly advocated for what I believed was the appropriate decision or action. Many times this put me at odds with different stakeholders but I had a clear focus on making sure BCIPA remained a fair, respected and transparent dispute resolution process.

As I stated in my earlier article entitled ‘Why is the Building and Construction Industry Payments Act 2014 (BCIPA) so divisive?’, “During the time I was the Adjudication Registrar a total of 7367 adjudication decisions were quickly handed down and where claimants (approximately 65% subcontractors) were awarded approximately $1.3 Billion. Prior to the advent of BCIPA, parties pursuing payment for work done or services provided would have had to commence costly and lengthy legal proceedings or just not chase the money owed to them.”

I am happy to have others judge my overall performance over these 17 years and welcome any comments or feedback, supportive or otherwise, because this is your industry and all views should be listened and respected.

I will certainly be carefully reviewing and monitoring the payment claims and adjudication reforms that will come into effect on 1 July 2018.

Should you wish to obtain advice concerning the current operations of BCIPA or the proposed new payment and adjudication regime under the BIFA please feel free to contact Michael Chesterman at michael@helix.legal or Earl Tan at earl@helix.legal.

Helix Legal is also hosting “Bracing for High Tech Future” on 27 March 2018, come along and join the conversation about the future of the construction industry.

Not intended as legal advice. Read full disclaimer.
Michael Chesterman March 18, 2018

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