Everything’s a Payment Claim Now – Are you Ready?

Security of Payment

One of the principal features of a payment claim under the Building and Construction Industry Payments Act (BCIPA) has always been that it’s conspicuously endorsed as being a payment claim.

Until now.

From 17 December 2018, payment claims in Queensland no longer need that endorsement.

At first glance, this might seem like a minor change. But as we’re about to explain, it means some contractors are going to need to totally overhaul their contract administration processes to avoid getting caught out.

What’s the Change?

As you might already know, the Building Industry Fairness Act 2018 (BIF) came into force on 17 December 2018.

One of its many alterations to construction law as we know it is to remove the requirement that payment claims be expressly endorsed.

Previously, if you got a payment claim that required the delivery of a payment schedule, it was pretty obvious. Normally it would have something like “This is a Payment Claim under the Building and Construction Industry Payments Act” written on the document.

But now, a “payment claim” might look like a/an:

  • tax invoice
  • table of claims
  • piece of correspondence
  • demand
  • email

And the question is… are you ready to deal with that?

So Where Does your Mail Go?

As forms of communication grow increasingly more complicated, what systems do you have in place to deal with deliveries that don’t arrive in the normal mailbox?

While a payment claim might ordinarily be served to the address for service in a contract, it doesn’t have to be. There are a broad range of legitimate ways to serve a payment claim.

However, in reality, once a claimant demonstrates that a payment claim has come to your attention (whether through legitimate means or otherwise), the issue of service becomes another issue to be argued.

So while you might be able to argue that a particularly subtle form of “service” didn’t effectively serve the payment claim, we wouldn’t recommend relying solely on that argument if you can avoid it.

The big question is whether you’re prepared, throughout your entire workforce, to receive, process, and respond to payment claims received in non-standard ways.

This includes ensuring that a response is made to claims which come to your company’s attention through means which are not authorised by the contract or otherwise. For example:

  • •in correspondence to your registered office (which is probably your accountant);
  • by email to your commercial manager;
  • via an attachment delivered to your site foreman over Facebook Messenger;
  • by delivery to your site office;
  • by MMS to your director’s mobile phone.

While some of these methods of service are likely to be up for argument, if problematic claims are left unanswered, by the time you’re talking about whether something was served “properly” you’re already on the back foot – probably because you ignored a claim and a judgment has been entered against you down the track.

What to Do?

At a basic level, the best advice we can give you is to treat everything that sounds like it’s asking for money as a payment claim.

That way, nothing gets ignored and everything gets responded to in a timely fashion.

If you want a system to help manage a decent volume, then here’s one way of doing it.

First – have a central place (probably an email address) to which all documents seeking money are sent. So if you get a Facebook Message with a potential payment claim in it, you forward that on to this email address. Letters get scanned and sent through, and so on.

Second – put somebody in charge of managing that system. Their job is to check what comes in and what date it was received. They then:

  1. figure out the relevant person to respond;
  2. inform that person of the deadline for the response;
  3. diarise the response date and, if necessary, follow up to ensure a response has been sent within time.

Last – ensure that everybody follows the system. Your accountants, your site managers, your directors – everyone.

Of course, for major projects you might set up an individual group or system to manage claims on a particular job, but generally the process is going to be the same.

This way you can hope to minimise the risks that a payment claim will slip through the cracks and you find yourself arguing from a position of weakness months down the track.

Got a better method? Let us know – how are YOU going to ensure that all payment claims get dealt with now that they might not look like payment claims?

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