For those involved in the Construction industry, receiving payment on time can be described as difficult at best. Often, invoices are issued and the creditor does not get paid by the due date. You do not want to upset your clients with constant emails/phone calls as this may lead to strained relationships and potential jobs lost down the line. The Queensland Building and Construction Commission (QBCC) has taken note of this type of situation and they have many procedures in place that makes this a much smoother operation than your standard Debt Collection Claim. We have spoken previously about why you should engage a Debt Collection Company, and how this can be useful to take the personal aspect of getting an invoice paid out of the equation.
Below, we discuss another method that our clients in the construction industry can utilise to receive payment of their overdue invoices.
It is something that surprisingly a lot of businesses within the construction industry are unaware of or simply do not take advantage of. This is the Building and Construction Industry Payments Act (BCIPA). Those in other states will recognise this as the Security of Payments Act. In this article, we will be focusing on the jurisdiction of Queensland.
The BCIPA Act is in place to help businesses within the construction industry get paid and find a quicker resolution to disputed matters. It doesn’t matter whether the contract was for construction work or the supplying of goods or services to the construction industry. If the contract was written or oral and the work was carried out in Queensland after the 1st October 2004, you can follow this claim process.
The most important part of this whole process is including the correct phrase on your invoices otherwise, you cannot submit a claim under this Act. On your Invoice, you must include the following, “This is a payment claim made under the Building and Construction Industry Payments Act 2004 (Qld)”. Yes, it is that simple.
“The object of the Security of Payments Act is to ensure that any person who undertakes to carry out construction work (or who undertakes to supply related goods and services) under a construction contract is entitled to receive, and is able to recover, progress payments in relation to the carrying out of that work and the supplying of those goods and services”.
Each state has their own variation of the Act. Each state however, has the same goal, to ensure that any persons carrying out construction work are entitled to receive payment in relation to the carrying out of such work or the supplying of those goods and services. An important feature of Queensland’s Act is that it is the only type of legislation in Australia that has case law where the authority is that if a construction contract is terminated, a claimant is precluded from serving a payment claim under the BCIPA legislation after the termination date.
The Process:
As mentioned previously, a contract (oral or written) must be in place to apply for payment under this Act. Once that has been established, it can be made by serving a valid payment claim. The claim under this Act is an alternative to going to court. This can all be completed online. This will lead to:
a) Adjudication;
b) Payment; or
c) A potential Judgment.
I have attached a Flowchart taken from the Security of Payments detailing the possible scenarios from filing the claim. This will give you a complete rundown of each possible scenario. Included are the timeframes for each step.
It is very important to note the Reference Date. This is the date both parties agree a Payment Claim can be lodged for the preceding months’ work. If your contract does not contain any terms about when you can send your payment claims, BCIPA provides a default provision that states the reference date will be:
a) The last day of the month in which work was first carried out; and
b) The last day of each later month that work is undertaken.
Also, it is very important to include the following:
- Correct Entity Details,
- Project Details,
- Identifying the construction work,
- Calculating the Amount,
- Due Date for Payment; and
- Serving the Claim.
Applying for Adjudication:
Once served, the respondent must provide a payment schedule within 10 business days of receiving a Payment Claim. If you have not received payment and there is a broken Payment Agreement, or a Payment Schedule you do not agree with, you can apply for adjudication.
A payment schedule:
- Must identify the payment claim to which it relates, and
- Must specify the amount of those payments
If the Respondent provides a payment schedule within the allocated time which you accept, full payment must be made by the due dates. If it is not, the claimant can proceed with the Adjudication process
Please note you must issue a 2nd Notice for payment if no payment schedule is received with this second Notice to be served 20 days from the Due Date for Payment as per the initial notice. The other party has 5 business days to respond. This must be done before an application for adjudication can be lodged. This 2nd notice must clearly outline the previous unpaid payment Claim and notify the Respondent of the claimant’s intention to apply for adjudication.
The adjudicator will state the amount you are to receive, the due date and the interest payable. They will be given 5 business days to pay. If payment is still not received, you will be given an Adjudicators Certificate, which you can register as a Judgment and begin Enforcement.
It is also very important to note; a claimant is entitled to serve a Notice to Suspend Works if the Respondent does not pay by the due date. This will protect the Claimant against claims and back charges from the Respondent.
In relation to preparing, lodging, and serving the application for adjudication it is very important not to make mistakes when proceeding down this route as it can disrupt the whole claim.
Please consult with the security of Payments Act for changes and updates relating to the Act.
If you need advice regarding the Building and Construction Industry Payments Act or have a customer who is delaying with their payments, please don’t hesitate to contact our office on 1300 794 290 for a no obligation discussion.
Contractors Debt Recovery. (n.d.), from Security of Payments Act
Written by:
Garth Post
Head of Recoveries
Email: garth@slaterbyrne.com.au
Liam White
02 9191 4518
liam@slaterbyrne.com.au
Liam White joined the Slater Byrne Recoveries team in early 2013. He has worked across the credit & dispute resolution industry for a number of years. He is currently working in a Marketing/Head of Sales capacity at Slater Byrne Recoveries.