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Court Proceedings and BCIPA

The Building and Construction Industry Payments Act 2004 (BCIPA) allows a claimant to file court proceedings for a debt due if a respondent fails to pay the scheduled amount (if a payment schedule was issued) or the claimed amount (if there was no payment schedule) by the due date.

However, before filing court proceedings the claimant must give the respondent a second chance to serve a payment schedule. The claimant must serve a notice on the respondent stating that the respondent may send a payment schedule within 5 days of receiving the notice. If the respondent does not send a valid payment schedule the claimant can issue court proceedings. If the respondent does send a valid payment schedule and the claimant disagrees with its reasons for withholding payment, the claimant may issue adjudication proceedings.

BCIPA further states that if court proceedings are brought by a claimant to recover the debt owing the respondent cannot:

  • Raise a counterclaim; or
  • Raise any defence in relation to the matters arising under the construction contract.

Before BCIPA, building related court cases were particularly messy and drawn out. If you issued court proceedings against a party for an unpaid debt, they would typically make a claim against you (a counterclaim) or raise a defence in relation to workmanship issues, incomplete work or other contract breaches. It did not matter if the counterclaim was genuine or not because it had the same effect of:

  • slowing down the court proceedings;
  • adding to the complexity of the court case;
  • adding to the claimant’s legal costs; and
  • increasing the time period the claimant had to wait to judgment for the money owed, if at all.

There will always be messy construction disputes, but BCIPA tries to separate these messy disputes from the simple cases of unpaid debts.

BCIPA stops the defendant/respondent from being able to raise a defence or counterclaim; the case is no longer classed as a dispute and becomes a simple matter of debt recovery. The defendant/respondent then can only raise technical arguments, for example:

  • whether the payment claim was in accordance with the Act;
  • whether the reference date was correct;
  • whether the correct party has been served; or
  • whether the claimant’s misleading conduct brought about the respondent’s failure to deliver a payment schedule.

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