The Building and Construction Industry Payments Act 2004 has been around since 1 October 2004 in Queensland, but its use and effectiveness may not be well known inside or outside the construction industry. The Act is designed to streamline the enforcement of payments within the construction industry and to provide a faster and less expensive way to resolve disputes. Most other states have very similar Acts.
The Act has a wider application than the other subcontractors charges Acts which you may be familiar with. It covers construction work (very broadly defined), as well as the supply of material, equipment and services done under a construction contract that have never been covered by the subcontractors charges Acts. The Act does not apply to:
- domestic building work where the resident owner is a party to the contract;
- work done outside the state;
- contracts entered into before the introduction of the Act (1 October 2004).
The process is relatively simple. A payment claim is made by someone who is owed a progress payment. This claim must be made within 12 months of the work being done and must comply with the Act. The person liable to make the payment issues a payment schedule detailing the amount admitted as owed along with any deductions or disputes and the relevant reasons. Disputes are then generally referred to an adjudicator for resolution.
If the payment claim does not comply with the Act, it will not be enforceable. If a payment schedule is not delivered, does not comply with the Act, or does not detail the reasons for the dispute, the adjudicator will not be able to consider the reasons in his or her decision. It is important then that people liable for payments ensure that their payment schedules are correct and complete.
Strict time periods are imposed on the process. The payment schedule must be issued with 10 business days of the receipt of the payment claim, or any other period set by the contract. Anyone making an application for adjudication must comply with the deadlines under the Act, for example, if a payment schedule was never served the claimant must give notice of their intention to apply for adjudication and offer a second chance for a payment schedule to be served. The adjudicator must make their decision within a 10 business day period, and the payment decided by the adjudicator must be made within a further 5 business days.
The whole process from making a payment claim to receiving an adjudication decision can be completed in less than 2 months and is almost always completed in less than 3 months.
Anecdotal advice is that people within the industry are not as familiar with the provisions, particularly what is a complying payment claim, and are therefore not getting the most benefit from the Act. We have yet to use the Act by making a claim as a liquidator or trustee, but will keep readers informed on how this works from an insolvency perspective when we do.
We thank Rod O’Sullivan from Shand Taylor in Brisbane for this article.