Amendments to BCIPA: The first 10 months

1. Presented by
Mark Kenney, Carter Newell
Colin Harris, HWL Ebsworth
Amendments to BCIPA: the First 10
months

2. – 2 –
Overview
 Practical issues arising from amendments
 Effect on adjudication volumes
 Effect on the process and behaviours
 Challenges to decisions – have things changed?

3. – 3 –
Background
On 15 December 2014, amendments to the Building and Construction
Industry Payments Act 2004 (Qld) (BCIPA) came into effect. The
amendments have had significant impact at three levels:
 The parties (claimants and respondents)
 Adjudicators
 The Registry

4. – 4 –
Types of payment
claims
 The 2014 amendments to the Act introduced a dichotomy between
Complex Payment Claims (i.e. claims for more than $750,000
exclusive of GST) and Standard Payment Claims (i.e. other claims).
 Different timeframes and adjudication processes apply to those
different categories.
 Parties should be mindful that the $750,000 threshold relates to the
total amount claimed in the payment claim and not to the amount
which is actually in dispute between the parties. For example, a
payment claim seeking $1,000,000 will always be a complex claim
(and attract the longer time frames prescribed by the Act),
notwithstanding that the respondent may well admit $900,000 of the
amount which is claimed.

5. – 5 –
Service
Time for serving payment claims
 The 6 month deadline in sections 17A(2) and (3) was, prior to the
2014 amendments, 12 months.
 Claimants should be mindful of the new time bar, particularly since
the transitional provisions previously provided for by section 117 of
the Act expired on 15 June 2015.

6. – 6 –
Payment Schedules
 Consequences for non-delivery of a payment schedule have been
curtailed.
 Claimants must now issue a second chance notice (s20A) before
being able to recover a progress claim as a debt for non-delivery of
a payment schedule or proceed to adjudication.
 Claimants must carefully calculate the due date for payment in order
to comply with the 20 business day period in s20A(3)(a), which has
caused issues.

7. – 7 –
Reasons for
withholding payment
 For Standard Payment Claims a respondent is still precluded from
relying on a reason for withholding payment in its adjudication response
which was not included in its payment schedule.
 For Complex Payment Claims, a respondent is expressly entitled to
raise in an adjudication response any reasons for withholding payment
whatsoever, whether included in a payment schedule or not (s24(5)). A
respondent may now tactically elect whether to put “all its cards on the
table” early in the dispute process or not. However, potential
consequences of deciding not to do so include:
 the right of the claimant to provide a reply to any new reasons raised in
the adjudication response under section 24B; and
 the risk of being ordered to pay the adjudicator’s fees and expenses,
even if the respondent is ultimately successful (section 24(4)).

8. – 8 –
Adjudication
timeframes
Standard payment claims
 Timeframe for filing an adjudication application is unchanged.
 Time for delivery of the adjudication response is extended by a week - (10
business days instead of the previous 5 business days).
Complex payment claims
 Now 15 business days to deliver the adjudication response, with the adjudicator
able to extend that period by up to a further 15 business days if a request is
made within later of:
 5 business days of receiving the adjudication application; or
 2 business days of the appointment of the adjudicator.
 Prior to the 2014 amendments, many complained that the Act operated unfairly
in relation to large and complex disputes.
 All up, a dispute can now take more than 5 months to resolve.
Extended Christmas Shutdown: the 3 week Christmas blackout further extends the
timeframes

9. – 9 –
Step Old Scheme
(business days)
Standard Payment
Claim (business
days)
Complex Payment Claim (business days)
Payment Schedule (from receiving the Payment
Claim)
10 10 15 –<90 days of reference date
30 – if >90 days of reference date
Adjudication Application (from receiving the
Payment Schedule)
10 10 10
Adjudication Response (from receiving the
Adjudication Application)
5 10 15
(the Adjudicator can extend time by up to a
further 15 business days)
Reply No reply No reply 15 business days
Claimant must advise the adjudicator within 5
business days of receiving the Adjudication
Response
(the Adjudicator can extend time by up to a
further 15 business days)
Adjudication Decision (from receiving the
Adjudication Response)
10
(Can be extended by
agreement of both
parties)
10
(Can be extended by
agreement of both
parties)
15
(Can be extended by agreement. If the
Adjudicator requests an extension and it is
refused, the Adjudicator can extend time by 5
business days)
Total time 35 40 55 – 120 business days, longer with
consent of both parties

10. – 10 –
Overview
 In summary, the Act remains an essential tool for claimants to obtain
payment under construction contracts, particularly for amounts
under $750,000.
 For larger claims however, the extended time frames, potentially
greater expense and the ultimately provisional nature of an award
under the Act must now all be considered by a claimant before
embarking on the adjudication process.
 In some cases, a dispute may well be better suited to resolution by
arbitration or other dispute resolution mechanisms provided for by
the contract, or by litigation in the courts where a successful
claimant would be expected to also recover its costs of the process.

11. – 11 –
Adjudicators
 Referral of applications to be conducted by the Adjudication Registry
instead of by Authorised Nominating Authorities
 Adjudicator Grading and Referral Policy 2015
 The Registry has graded adjudicators registered under BCIPA.
There are three grade categories:
 Adjudicator (grade 1),
 Advanced Adjudicator (grade 2)
 Senior Adjudicator (grade 3).
 The grade of adjudicators is determined by three criteria:
experience, qualifications and skill.

12. – 12 –
Adjudicator
Appointment
 Suitable adjudicators to are shortlisted. If there is more than one
suitable adjudicator shortlisted, the Registrar has the discretion to
consider the last occasion that the adjudicators were referred an
application in order to fairly distribute the referral of applications.
 The adjudicator is required to complete forms relating to conflict of
interest, rate agreement, delivery of application, and if applicable,
agent nomination in order to accept the referral.

13. – 13 –
Adjudicator
functions
 Essentially unchanged (sections 25 and 26 BCIPA)
 Note the key issue remains - the adjudicator must identify a
contractual basis of entitlement to payment that arose before the
relevant reference date:
 BM Alliance Coal Operations Pty Ltd v BGC Contracting Pty Ltd and
Ors [2012] QSC 346
 BM Alliance Coal Operations Pty Ltd v BGC Contracting Pty Ltd [2013]
QCA 394

14. – 14 –
Some new issues
for Adjudicators
Fees
 s 35(5) now provides that if an adjudicator determines that they do
not have jurisdiction to hear the dispute, the adjudicator is still
entitled to be paid for their time to conclude that they have no
jurisdiction to adjudicate the application.
 Previously adjudicators were not entitled to payment for concluding
that they did not have jurisdiction.
 An adjudicator is also entitled to be paid fees and expenses where
the adjudication application is withdrawn.

15. – 15 –
Some new issues
for Adjudicators
Fees continued
 An anomaly exists with respect to lodgement fees.
 While the Adjudicator can determine which party pays their fees
BCIPA does not provide a power for the adjudicator to determine
who pays application fees.
 This could be up to $5,000 on complex disputes.

16. – 16 –
Some new issues
for Adjudicators
 In complex claim the respondent may include any (new) reasons for
withholding payment whether or not those reasons were included in
the payment schedule when served on the claimant (s24(5)).
 Claimant may reply to new reasons for withholding payment: s24B.
However, the reply should be confined to addressing the new
reasons for withholding payment and should not be a reply at large.
 Adjudicators will need to decide what in truth are new reasons for
withholding payment and what are the limits of a reply to those new
reasons.

17. – 17 –
Registry
 QBCC has a dedicated Deputy Registrar and Adjudication Registry.
 Responsible for training.
 Appoints adjudicators. No further involvement until the decision is
made.
 Decisions must be notified to the Registry and a copy of the decision
is published on the QBCC Website.

18. – 18 –
Lodgement
 Applications can be lodged at the Registry over the counter at any
QBCC office, by mail, by fax and online.
 To date approximately 55% online, 33% in person and the balance
by mail and fax.
 For s111(2)(c)(i), an adjudication application must be lodged
between 8:00am and 5:00 pm on a business day. An application
lodged after 5:00 pm is taken to have been lodged on the following
business day.

19. – 19 –
Lodgement
 The new process represents a substantial change to the earlier
practice where a number of ANAs would accept lodgement after
business hours by prior arrangement.
 The practicalities associated with lodging a voluminous application
other than personally must be born in mind.
 “in the door by 5.00pm” in practice.
 Note the prescribed adjudication application coversheet and
payment of the Application Fee at lodgment.

20. – 20 –
Appointment and
Notification
 QBCC appears to be mandating the use of Adjudicator Agents.
 In practice, appointment of the adjudicator is notified by the
Adjudicator Agent. Initially this caused some confusion as some
ANAs rebranded themselves Adjudicator Agents.
 Query whether this is consistent with the intention of projecting an
independent registry is now managing appointments.

21. – 21 –
Fees
 Adjudicators are entitled to be paid an amount that is reasonable
having regard to the work done and expenses incurred by the
adjudicator.
 The Registry developed a schedule of recommended fees, which
vary depending on the claim amount and how the adjudicator is
graded. The fees represent the upper scale of what may be
considered reasonable for an adjudicator to charge. The fees were
determined based on industry consultation and an analysis of fees
historically charged for adjudications.

22. – 22 –
Fees
 For Payment Claims up to $25,000 there is a sliding scale of fixed
fees and thereafter a three tiered scale of hourly rates based on
grade.
 The difficulty may be that a small claim can still be very complex but
the adjudicator is still limited to what represents only a few hours
work at hourly rates for a professional.

23. – 23 –
Effect on
adjudications
 Of the first 422 applications made under the new scheme, 402 have
been standard claims and the remaining 20 have been complex
claims.
 One factor may be the resurgence of arbitration for large claims.

24. – 24 –
Statistics To Date
QBCC Report – June 2015

25. – 25 –
Statistics to date
$0
$50,000,000
$100,000,000
$150,000,000
$200,000,000
$250,000,000
Adjudication Amounts Claimed vs Awarded
Claimed - Adj
Awarded - Adj
QBCC Reports 2012-June 2015

26. – 26 –
Statistics to date
0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.00
90.00
100.00
Percentage of Claim Awarded
% of Claim Awarded
QBCC Reports 2012-June 2015

27. – 27 –
Challenges to
decisions
Of the 151 decisions made and released to July 2015 the QBCC had
received notification that four decisions are being challenged in the
Supreme Court.

28. – 28 –
Amendments and
dispute resolution
strategy
 Longer
 More expensive?
 Management of concurrent complex claims
 Attractiveness of other dispute resolution options
 Strategic decision to deliver a payment schedule? What reasons to
include?

29. – 29 –
Predictions
 Delivery of payment schedules
 Management of complex claims
 Adoption by other jurisdictions?

30. – 30 –
Questions