Helping Contract Administrators decide which security of payment regime applies as Queensland moves from BCIPA to BIFA
The widespread changes brought about by the introduction of the Building Industry Fairness (Security of Payment) Act 2017 (BIFA) have been much publicised within the building and construction industry. You will have already heard that the headline updates include the establishment of Project Bank Accounts together with the repeal and amalgamation of the Subcontractors Charges Act 1974 (SCA) into the BIFA. These changes together with those proposed to progress payments and the adjudication process in Chapter 3 (to be rolled out on 17 December 2018), mean that the time has come for contract administrators to familiarise themselves with the BIFA.
With the Chapter 3 amendments here, we attempt to unravel the transitional provisions of BIFA in this article, and explain which legislation is likely to apply during the move away from the Building and Construction Industry Payments Act 2004 (BCIPA) and into the BIFA.
BIFA Chapter 3 Amendments
Chapter 3 of BIFA amongst other things:
- removes the requirement for a payment claim to be endorsed under the Act;
- removes the requirement for a Claimant to provide a Respondent with a ‘second chance notice’ before taking certain steps to recover a claimed amount; and
- prevents the respondent’s from raising new reasons in its adjudication response.
Furthermore, there are extended timeframes prescribed for a respondent to submit its payment schedule, and for a claimant to file its adjudication application.
Given the details have only just emerged, contract administrators can be forgiven for being confused as to which legislation applies to what contracts. In particular, where the contract commences under the BCIPA regime and continues into the new world of the BIFA.
Unfinished Matters of Existing Payment Claims
Put simply, BIFA will apply to all payment claims made after its commencement date regardless of whether your contract was entered into before the commencement date of 17 December 2018.
But what about existing payment claims that are issued in accordance with BCIPA prior to the commencement of BIFA, but are not yet due for a payment schedule in response until after the commencement of BIFA? Is the respondent now able to rely on the extended timeframes of BIFA and issue its payment schedule at a time later than that provided by BCIPA? Or, if a payment schedule made under the BCIPA is disputed, can the claimant rely on the additional time that is allowed under the BIFA to file an adjudication application?
The answer to the above appears to be – no. In short, the transitional provisions of the BIFA provide that if a payment claim is validly made under the BCIPA and given to the Respondent prior to the commencement of the BIFA, then that payment claim is to be dealt with in accordance with BCIPA throughout the entire adjudication process.
Accordingly, the time for filing an adjudication application in respect of a payment claim made under the BCIPA will not be extended as prescribed by BIFA (potentially 30 business days). As such, contract administrators ought to be aware that even after the commencement of BIFA, that the shorter timeframes by which documents are to be submitted under the BCIPA, will apply to all existing payment claims validly made under the old act.
This is because the transitional provisions of BIFA provide that despite the repeal of the BCIPA, any ‘unfinished matters’ for existing payment claims are to be dealt with under the repealed act. The term ‘unfinished matters’ includes all steps that are undertaken throughout the life of the adjudication process if it is yet to be started or completed. This includes replying to a payment claim with a payment schedule all the way through the process to the filing of an adjudication certificate as a judgment debt.
Furthermore, contract administrators should be aware, that as a result of ‘business days’ under both the BCIPA and BIFA not including those days between 22 December 2018 and 10 January 2018, that an unfinished matter for an existing BCIPA payment claim could continue beyond February 2019.
During these upcoming initial months of BIFA, contract administrators need to be mindful that there are circumstances where the BCIPA may still apply even once it has been repealed and replaced with BIFA.
If you would like more clarity about how the changes to the security of payment regime in Queensland will affect your contract administration and your options for recovering payment under the BCIPA and/or BIFA, feel free to get in touch.Not intended as legal advice. Read full disclaimer.