HG Building and Construction Alert: Discussion paper on operation of BCIPA now open for comment - 15 Jan 2013

A discussion paper seeking feedback on the operation of the Building and Construction Industry Payments Act 2004 (BCIPA) has been released by the Minister for Public Works and Housing, the Hon Tim Mander.

Entitled Payment Dispute Resolution in the Queensland Building and Construction Industry, the discussion paper provides background on how BCIPA has functioned in the eight years it has been operating in Queensland.

Partner Adam Carlton-Smith and special counsel Charles Sullivan outline some of the issues posed by the paper, and the possible consequences that could result.

Key points

  • The discussion paper poses a total of 20 questions to which interested parties including industry stakeholders, head contractors, subcontractors and suppliers are invited to respond.
  • The deadline for providing submissions and comments is 22 February 2013. 
  • HopgoodGanim will be making a submission in response to the discussion paper, and welcomes feedback from any interested parties on both the discussion paper and BCIPA generally.

Questioning the operation of BCIPA

The questions posed by the discussion paper include the following:

  • Should the jurisdiction of BCIPA be reduced to specifically exclude payment claims for some types of work, or work over a stated value? If so, what should be excluded?
  • Should BCIPA allow other types of payment claims, including claims by purchasers, to be subject to adjudication?
  • Should the type of payment claims allowed under BCIPA be restricted? If so, should payment claims be restricted to:
    • contract price for the work;
    • any other rates or prices stated in the contract; 
    • any variation agreed to by the parties of the contract by which the contract price, or any other rate of price stated in the contract, is to be adjusted by a specific amount; or
    • the estimated cost of rectifying any defects in the work?
  • Do you believe BCIPA allows those who carry out construction work or supply related goods and services to serve large and complex payment claims in an untimely and unfair manner?
  • Should BCIPA allow claimants, at the lodgement of an adjudication application, to place a charge on monies owing to a respondent head contractor by a principal?
  • Do you believe that some respondents are misusing the legal process by commencing Supreme Court proceedings to delay the payment of an adjudicated amount?

The purpose of BCIPA: Cash flow vs dispute resolution

The questions posed, and the paper as a whole, certainly deserve consideration by all participants in Queensland’s construction industry. A critical issue to consider is whether the purpose of BCIPA is to provide a quick method to ensure payment to enable cash flow to continue, or whether its purpose is to provide an alternative form of dispute resolution. The title of the discussion paper perhaps gives a clue as to the where the current thinking of the Government lies on this issue.

At the time that BCIPA was passed by the Queensland Parliament (11 May 2004), the legislation was seen by the then-Minister as directly addressing issues of non-payment and was touted to “make a significant difference to the working and payment culture of the building and construction industry.

The Minister also promised to “progressively and incrementally continue to tighten the noose around the necks of the undesirables in the industry and continue to provide weapons of mass destruction to the subcontractors where possible.

It remains to be seen whether the current discussion paper will result in a further tightening of the noose. Alternatively, if the process under BCIPA is made more complex, will its effectiveness be reduced, resulting in a loosening of the noose?

For more information on the operation of BCIPA or to contribute to HopgoodGanim’s submission on Payment Dispute Resolution in the Queensland Building and Construction Industry, please contact HopgoodGanim’s Building and Construction team.

To facilitate discussion of the key issues necessary to be covered in a submission, HopgoodGanim will be running a breakfast briefing in mid-February. Invitations will be issued shortly.