This guest post is brought to you by Fionna at Aitchison Reid Building & Construction Lawyers. It relates to businesses undertaking construction work or the supply of related goods or services in Queensland.
Do you issue payment claims?
You probably don’t even think about BCIPA or your payment claims, unless someone stops paying. And like most of us, you probably wait a couple of months before thinking about enforcing your payment claim. The problem is that under the new amendments to BCIPA you would have just missed your chance to enforce your payment claim all together.
You will recall that you have three ways you can enforce a payment claim, if someone doesn’t send a payment schedule or doesn’t pay the claimed amount by the due date, which are:
- Suspension of works;
- Adjudication; and
- Court proceedings.
Suspension of work is only effective if you still have work to complete under the contract. Adjudication has strict time frames and requires that you send a notice within 20 business days after the due date to the payer.
Until the recent amendments, court proceedings was the only way that you could enforce a payment claim after the work was finished and without any strict time limits. So long as your payment claim was valid, you could start to enforce its non-payment some 6 months, or even 12 months after the due date.
However, now if you do not take action within 20 business days immediately after the due date, you will miss out enforcing your payment claim under BCIPA completely.
How has this happened?
On 15 December 2014 the most recent changes to BCIPA came into force. The changes included section 20A “Notice required before starting particular proceedings”.
The section requires that before a claimant can issue court proceedings, the claimant must send a notice to the payer stating that:
- The payer may serve a payment schedule within 5 business days; and
- The notice is made under the Building and Construction Industry Payments Act 2004.
The problem with the notice is that the claimant must give the notice to the payer “within 20 business days immediately following the due date”. If the claimant does not, the claimant cannot issue Court proceedings under BCIPA.
This means that when most contractors consider enforcing their payment claims, some 2-3 months after the due date – they can no longer use this protection of the Act. Their delayed payment claim is redundant.
As invoices, the claimants still have a right to be paid BUT this puts the claimants in the situation that BCIPA and all the other security for payment legislation was intended to avoid. As a normal court proceedings, the payer can raise counter-claims and defences that prolong proceedings and can avoid payment. Under BCIPA the claimed amount is treated as a debt due and the payer cannot raise defences or counterclaims.
What can you do?
Be vigilant. To effectively use payment claims and the protections under BCIPA you will need to be on top of who has not paid you and know when the due date for payment is for each contract. If you are unorganised on the book keeping front, it’s time to consider hiring a book-keeper. If you don’t know when your due date is, it is time to read your contracts.
You will need to be ready to take action within the 20 business days of the due date (when you should have been paid) and so you will need to have a section 20A notice template on hand to use.
If you would like help with your processes, understanding your contract, section 20A notices or understanding these amendments to BCIPA please call us on 07 3102 3117.
Our personalised Section 20A eNotices are just $70 (excluding GST).