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14 Nov 12
Beware of unwanted Christmas claims

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As the construction industry winds down for the Christmas and New Year period, industry participants must remain mindful of the ever present threat of payment claims and other documents being served on them pursuant to the Building and Construction Industry Payments Act 2004 (Qld) (BCIPA). This article will outline some of the traps that are inherent in BCIPA before providing some tips for surviving the Christmas and New Year period.

The traps

BCIPA imposes extremely tight timeframes for responding to payment claims, payment schedules and adjudication applications and does not permit any relief for those who fail to adhere to them. 

In particular, the failure by a respondent to serve a payment schedule in response to a payment claim within ten business days may result in the respondent being liable to pay the full claimed amount, even if the respondent has valid reasons for non-payment or counterclaims that exceed the claimed amount. This is so even if the respondent’s non-compliance with the legislation is inadvertent or accidental. 

A late response under BCIPA is as good as failing to respond entirely and may still result in a respondent being liable to pay the claimed amount in full. 

BCIPA’s timeframes start counting down from the moment that service has been validly effected on a party. Case law has confirmed that a document served pursuant to BCIPA need not come to the attention of the person to whom it is addressed in order to have been validly served on that person. As such, a notice under BCIPA may validly be served by being delivered to or left at the registered office or principal place of business of a company even if no one at those offices has actually seen or noticed it. You should also confirm the address for service of notices stated in any contracts.

BCIPA does, however, provide a minor reprieve over the coming weeks. The definition of ‘business day’ under BCIPA specifically excludes the Christmas period between 25 December 2012 and 2 January 2013, which means that the legislation’s rigorous time frames are frozen during this time. However, the Christmas shutdown period remains a high risk time for payment claims to be served undetected.

The tips

It is imperative to be vigilant in checking your company’s registered office, principal place of business, site offices, PO boxes, other postal addresses, fax machines and email accounts to avoid being taken by surprise by an unexpected payment claim. Some of the key tips for surviving the Christmas and New Year period are as follows:

  • develop and implement procedures to detect the service of BCIPA notices (for example, if your company’s registered office is not your principal place of business, ensure that its staff understand the urgency with which to treat BCIPA notices)
  • ascertain where your principal place of business and registered offices actually are (for instance, many companies list their accountant’s office as their registered office, meaning that BCIPA notices can be validly served there)
  • develop a system to ensure that any BCIPA documents are elevated to the appropriate person within your organisation, and
  • be aware of the reference date stipulated by your construction contract so that you can predict when a payment claim may be served.

Our experienced construction lawyers are available to provide specialist advice during the Christmas period if you need assistance in respect of any issues that may arise.

 

Focus covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. Focus is intended for information purposes only and should not be regarded as legal advice. Further advice should be obtained before taking action on any issue dealt with in this publication.

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