Building service professionals can claim against domestic building owners

Did you know that architects and other professionals can pursue domestic building owners under the BCIPA?

The BCIPA does not apply to a construction contract for the carrying out of domestic building work if the owner is a party to the contract and resides in or intends to reside in the building; however the definition of domestic building work (in QBCC Act Schedule 1B) explicitly excludes design and documentation work and therefore no protection is provided to the owners for payment claims for such work.

If in doubt – seek expert assistance from Adjudicate Assist.

 

Adjudication in Queensland over Christmas

If you are a claimant and you are considering making a payment claim or an adjudication applications under the Building and Construction Industry Payments Act (“BCIPA”) during the holiday period, you need to be aware of and consider the close out period over Christmas and New Year.

In the counting of days under the BCIPA,’ business days’ are required to be understood precisely. The BCIPA defines a ‘business day’ as not including:

  • A Saturday or Sunday; or
  • A public holiday, special holiday or bank holiday in the place in which any relevant act is to be or may be done; or
  • Any day occurring within any of the following periods:
    • 22 to 24 December;
    • 27 to 31 December;
    • 2 to 10 January.

In short, the days between Wednesday 21 December 2016 and Wednesday 11 January 2017 (19 calendar days) are not ‘business days’ and therefore will not be counted in any time period under the BCIPA. BCIPA has the longest shut down period of any security of payment legislation.

Understanding the holiday ‘shut down’ period may be vital in your adjudication or payment claim being successful.

Remember, if in doubt, contact Adjudicate Assist

QBCC application form forms part of the Adjudication Application

The Queensland Building and Construction Commission (“QBCC”) requires claimants to complete the QBCC Adjudication Application form (Form 6, Version 2) before an application will be accepted. The form can be filled in on line or downloaded and filled in and submitted with the application documents.

Prior to the December 2014 Amendments to the BCIPA each individual ANA had its own adjudication application form for administrative purposes.

The difference between the pre and post December 2014 adjudication application form is hidden in the detail.

Form 6 and the current legislation

Under the current legislation the adjudication application form forms part of the adjudication application. Section 21(3)(a) of the Act requires the adjudication application to be in the approved form.

QBCC Form 6, Version 2 relevantly states: 

  • At page 1 – ‘(This is an approved form to be used for an application for adjudication of a payment claim made under the Building and Construction Industry Payments Act 2004 (Qld) hereinafter referred to as ‘the Act’)’
  • At page 1 – ‘The documents attached to or submitted with this application form part of this application.’
  • At page 1 – ‘You are to serve a full copy of this application for adjudication onto the respondent before the application can be decided by an adjudicator.’
  • At page 5 – ‘In applying for adjudication the claimant agrees that: The claimant is required to serve a complete copy of the adjudication application (including all submissions and attachments) to the respondent.’

Accordingly, Form 6, Version 2 is an essential requirement of a valid adjudication application.

As a consequence, when the claimant serves the respondent with a copy of the adjudication application it MUST include a copy of the adjudication application form and if it does not, the respondent will not have been served with a complete copy of the adjudication application, and the time within which the respondent can make its adjudication response will not have started.

This is yet another change in the legislation which has gone relatively unnoticed, yet it can have serious consequences to the parties and the adjudicator.

Post Script:

QBCC has now revised its Adjudication Application form (Form 6), from Version 2 to 3). This change was unannounced and the format of the revised form 6 is very different to its predecessor.

Importantly on page 2 under ‘COMPLETING THIS FORM’ it states

‘You are to serve a full copy of this application and submissions on the respondent after it is lodged with the registry. ‘

Notwithstanding the change in wording, it is clear that the application form must be provided to the respondent with a copy of the claimant’s submissions for the respondent to have been properly served.

If in doubt – seek expert assistance from Adjudicate Assist.

Getting the ‘Notice of Intent’ right.
Overwhelmingly the most misunderstood section of the BCIPA is the requirement to send a ‘notice’ to the respondent when no payment schedule has been issued to the claimant within the 10 business days from the service of the payment claim.
 
This notice, referred to as a section 20A(2) notice, is required before the claimant can proceed to either court or adjudication.
 
Prior to the December 2014 BCIPA amendments, this notice provision only applied if the claimant elected to pursue adjudication rather than the starting proceedings in the court to recover the debt and was referred to as a ‘notice of intent to apply for adjudication’.  
 
Otherwise the purpose remains the same; that is, once served it gives the respondent a further 5 business days in which to provide the claimant with a payment schedule.
 
One key difference though is that this section 20A(2) notice, unlike the previous section 21(2) notice, must state it is made under the BCIPA.
 
Furthermore, a consistent problem among claimants is the timing of the section 20A(2) notice.
 
The notice can only be issued after the due date for payment of the payment claim. It is not uncommon for claimants to wrongfully issue the notice before or on the due date for payment which, if not corrected, unfortunately renders any subsequent adjudication application invalid.
If in doubt – seek expert assistance from Adjudicate Assist.
 
 
 

Is using adjudication for dispute payment claims worth it?

When you are owed money for the work you have done it’s not about going to adjudication, it’s about getting paid.

Adjudication is only one of several options usually available to claimants who are chasing unpaid money.

The other options might include pursuing entitlement under the contract through the dispute resolution provisions, making a claim to QCAT, and of course having recourse to the courts.

Of the available options pursuing adjudication through the BCIPA is quicker and generally less costly than the alternatives; however remembering that an adjudicator’s decision is an interim award only and not finally binding on the parties under the contract.

The objective of the BCIPA is to keep money flowing through the contractual chain by legislating for the adjudication of payment disputes.

Notwithstanding the decrease in claimants success rate since the amendments to the BCIPA were introduced in December 2014, claimants on average overall get approximately 28% of the claimed amount (compared to approximately 42% pre the December 2014 BCIPA amendments), with all but the higher value claims (+ $500K) receiving between 50-67% of the claimed amount (compared with 57-99% pre the December 2014 BCIPA amendments).

Overall, the adjudication process is relatively quick for ‘standard’ payment claims ($750K or less), and if prepared properly and substantiated there is a good chance of success.

If in doubt – seek expert assistance from Adjudicate Assist.

Five things to consider before applying for adjudication

Adjudication can be a tough game particularly if you’re not aware about all its intracacies. To help focus your preparing, the Adjudcate Assist team have put together a quick-fire top five points to consider before you even think about serving your payment claim.

Here they are:

1. Is it addressed to the party who may be liable to make payment – who is the respondent?

You must correctly identify the person or entity who you are contracted with and who is liable to make payment, otherwise you run the risk of having your adjudication application deemed invalid.

Read the following Adjudicate Assist tip for further information:

Knowing your contracts: Vital to success in adjudication

Is it made from a valid reference date – when can you make a progress claim under the contract or the BCIPA?

A reference date is the key date from which you, as a claimant, can make a claim for payment. Typically these are clearly shown in your construction contract, but in some cases (such as verbal or oral contracts) they can be difficult to identify. If you call Adjudicate Assist, we can help you find out what your likely reference dates are.

Does it identify the construction work or related goods and services to which it relates – can the respondent clearly understand what you are claiming for?

The Building and Construction Industry Payments Act makes it a requirement for the claimant to identify the work they’re claiming for explicitly on the payment claim itself. You’re putting your best foot forward if you make the construction work which you’re claiming for as clear as possible on the claim itself.

Does it state the amount claimed – how much are you claiming?

Like the previous tip, claimants should make it 100% clear the total amount subject of the claim. You are required to do this under the legislation and leaving this part out may mean your payment claim cannot proceed to adjudication.

Does it state that it is made under the BCIPA – ‘This is a payment claim made under the Building and Construction Industry Payments Act 2004’?

The final tip is that you must endorsed your payment claim with the words “This is a payment claim made under the Building and Construction Industry Payments Act 2004”. This is a device to signal to the respondent that you’re making a claim under the act rather than submitting any old tax invoice. Claims without these words run the risk of failing at adjudication on jurisdictional grounds.

As always, Adjudicate Assist are willing, ready and able to help you with your payment claim and adjudication application.

If in doubt – seek expert assistance from Adjudicate Assist.

Adjudication application disappointment can be avoided by getting your documentation in order.

If you’re preparing to bring your payment claim to adjudication, getting your adjudication application documents in order should be your number one priority

Monthly Adjudication Statistics published by QBCC for January 2016 indicate that 31.5% of all applications made to QBCC are withdrawn before being referred to an adjudicator because of application validation issues.

Additionally, 18% of all adjudication decisions released the adjudicator found that there was no jurisdiction.

Put another way, this means that approximately 40% of all adjudication applications made to QBCC in this time period do not result in a decision because of validation issues. This inevitably means claimants are not getting the best bang-for-buck when pursuing adjudication.

Claimants need to ensure that their applications tick all the boxes before being submitted, to avoid unnecessary disappointment and wasting the application fee.

If in doubt – seek expert assistance from Adjudicate Assist.

Knowing your contracts: Vital to success in adjudication

As crazy as it sounds, it is not uncommon for claimants to be unsure who they are contracted with. This is particularly the case with oral contracts but not exclusively so.

Furthermore, knowing exactly who you are working for takes on greater importance if your claim goes to adjudication, as you must have a clear idea of who to serve documents on and who is liable to make payment. Incorrectly identifying your contractual partner may have jurisdictional ramifications.

In a recent adjudication we found that the principal named in the contract did not actually exist. The contract contained a myriad of references to non-existing entities, incorrect ABN & ACN numbers and an incorrect QBCC license number. Additionally, a legal practice purported to represent the non-existent legal entity which raised potentially significant problems for that legal practice.

Fortunately we were able to convince the adjudicator as to who the respondent was and the adjudication decision was made wholly in the claimant’s favour.

Before signing a contract or undertaking any work it is advisable to clarify who exactly you are contracting with. This should be a relatively simple exercise and will avoid potential problems down the track.

If in doubt – seek expert assistance from Adjudicate Assist.

Service of documents under BCIPA

Adjudicate Assist understand that the service of documents under the Building and Construction Industry Payments Act (“BCIPA”) – such as  payment claims, payment schedules, adjudication applications and responses  – can often be a confusing process.

The objective of this post is to clear up some of this confusion and help you understand the importance of proper service of documents as well as how to serve documents properly.

To clear up what we mean by service, we’re talking about the delivery of documents on an intended recipient. A good example is the simply act of sending a payment claim to a respondent – the act of doing this is what constitutes serving the payment claim.

Why is service important?

The reason why you should care about proper service of documents is that should your payment claim go to adjudication; a good adjudicator will often request proof of service of important documents (such as the payment claim or a notice of intent to apply for adjudication) in order to establish their own jurisdiction.

If you have not done it correctly, you run the risk of having your adjudication fail on jurisdictional grounds.

What the BCIP Act says and methods of service.

The BCIPA provides for service in the way, if any, provided under the construction contract or under section 39 of the Acts Interpretation Act 1954 or any other relevant law about service.

Popular methods of service include email, post and facsimile, but each have their drawbacks. A good rule of thumb when it comes to service is to refer back to your construction contract, or alternatively, serve as many ways as possible under the circumstances.

Email service can be problematic if not provided for in the construction contract and should not be relied upon on its own as the only method of service.

Posting to a PO Box is also problematic if not provided for in the construction contract and should not be relied upon on its own as the only method of service. A recent Queensland Supreme Court judgement determined that service on a PO Box was not valid service for the purpose of the BCIPA.

Sending by facsimile can be problematic if for example the recipient’s facsimile machine is switched off or not connected. On the other hand as long as you have a confirmation of transmission report, service will be valid even if the recipient does not print out or is unable to print the transmission.

Serve the correct person or entity.

It is vitally important to serve to correct person of entity.

Service of payment claims and adjudication applications must be to the person liable to make payment (the respondent) as specified by the construction contract.

Likewise, service of payment schedules and adjudication responses must be to the person who is entitle to make the payment claim (the claimant). If you are serving anyone else but the claimant or respondent, be sure this is provided for in the construction contract or by delegated authority. If you serve a notice on the wrong person, you risk invalidating the adjudication process.

Service of documents, other than the adjudication application on Queensland Building and Construction Commission (“QBCC”), can take place up until midnight on the last day for service irrespective of any provision in the construction contract to the contrary.

Making an adjudication application to QBCC must be within the prescribed times of 8:00 AM to 5:00 PM on a business day.

If in doubt – seek expert assistance from Adjudicate Assist.

Interest rates and payment claims under BCIPA

Were you aware that overdue claims made under the Building and Construction Industry Payments Act (“BCIPA”) attract interest?

Furthermore, if your payment claim goes to adjudication, and you’re successfully, the adjudicator will usually make a ruling on the interest rate your overdue claim will attract.

This blog pot gives you further information on the claimant’s entitlement to interest as well as an explanation of the interest penalty rate in the Queensland Building and Construction Commission (“QBCC”) Act means in terms of adjudication in Queensland.

Entitlement to interest

A claimant’s right to interest on overdue payments is provided in Section 15(2) and(3) of BCIPA

Interest is not only applicable to the adjudicated amount in adjudication decisions but can also be claimed in progress claims in certain circumstances.

Where a payment claim is made under the BCIPA and the respondent fails to provide a payment schedule within the required timeframe under the BCIPA, the claimed amount is due and payable on or before the due date for payment (s19(2) of the BCIPA).

If the claimant does not proceed to adjudication in respect of this payment claim, the claimant is entitled to claim interest for each day of delay immediately following the due date for payment in subsequent payment claims.

The magic of s67P interest

In an age where the banks are offering annual deposit interest rates in the low single digits, the QBCC Act Section 67P penalty rates are generous at around 12.3% p.a. compounded daily.

Where applicable QBCC Act Section 67P provides a significant deterrent to respondents which wish to delay payment of progress payments.

Many claimants ignore their entitlement to interest in progress claims even where this can be a significant sum of money.

If you’re not claiming the appropriate interest rate on overdue payment claims, you’re doing yourself a financial disservice.

Get in touch for more information.

Adjudicate Assist is a specialist company dealing with all aspects of security of payment legislation throughout Australia and providing expert help to those wishing to utilise the Building and Construction Industry Payments Act. Get in touch today.

If in doubt – seek expert assistance from Adjudicate Assist.