3 Things to Consider Before Enforcing a Debt

22 Aug 2016

Business, collection, customers, Debt, guide, help, law, legal, process, profit, program

3 Things to Consider Before Enforcing a Debt

It is an unavoidable reality in doing business that from time to time you will encounter customers or clients who either can’t, or won’t, pay outstanding debts. The question is then whether these debts can be enforced, and if so, whether it is cost effective and practical to do so.

There are many factors that come into play when deciding what, if any, steps to take in enforcing a debt. Some key things to consider are often the need to protect your brand, desire to continue trading with the debtor, and the cost of steps to force the debtor to pay.

Ultimately the decision on whether or not to pursue a client for an outstanding amount comes down to a commercial decision by the business owner. However, from a cost-effectiveness point of view, and as a matter of practicality, we have provided essential factors to bear in mind when deciding on whether or not to use the courts to pursue the debtor for payment.

When?

The first question you need to ask yourself is how old is the debt, or when was the debt owed? The answer to this can determine whether or not the debt is recoverable.

Depending on the circumstances it is not unheard of for businesses, or liquidators, to try and recover debts that have been owing for a number of years. While the rules vary, and it is important to consider the particular circumstances surrounding the debt, an action to recover a debt owing under a contract must be brought within 6 years of when the cause of action arose.

As a general rule, the cause of action will have arisen when the debtor is in default of their obligation to pay. For example, where an invoice required payment within 7 days of the date of that invoice, the cause of action will arise on the 8^th day after then invoice is issued if there is no payment.

Where?

Any assessment of the cost-effectiveness and practicality of recovering a debt requires consideration of where the debtor is located.

Many contracts will contain jurisdiction clauses allowing the creditor to commence proceedings in a specified jurisdiction. For example, a Queensland business may require that a customer agree that any dispute is to be heard in the Brisbane Courts.

However, as discussed in some of our previous articles, commencing court actions and ultimately getting a judgment is often only the start, with subsequent enforcement action required. Where the debtor’s assets are located in another state (or even another country), enforcement against those assets will require that the judgment be registered in that jurisdiction. This will generally incur further costs.

What?

When deciding whether or not to enforce a debt, knowing about the financial circumstances of the customer is essential.

Any question as to the cost-effectiveness of recovering a debt requires a consideration of whether the debtor has the ability to pay the debt, whether the creditor has any information regarding assets owned by the business, or even whether the debtor’s business continues to trade at the time of enforcement.

Where the creditor lacks information regarding the debtor it is often necessary to commence what are called examination proceedings. These are proceedings, once you have obtained judgement, requiring the debtor to provide information regarding their ability to pay.

Commonly, the debtor (or a company officer) fails to respond and this can ultimately result in a warrant for their arrest. If, or when, they are apprehended they may reveal that there are no assets against which the judgment can be enforced.

Alternatively, the creditor may be aware of where the debtor is carrying out business and whether there are particular assets that may be seized. In this case, recovering the debt may be as simple as obtaining a warrant to seize and sell those assets, with the proceeds of the sale going towards repaying the debt as well as any costs incurred in pursuing the debt.

How We Can Help

If you require advice regarding prospects or options for commencing proceedings, or if proceedings have been commenced against you and you need advice on you options to defend those proceedings Streten Masons Lawyers can provide advice on all stages of the court process. Contact us at info@smslaw.com.au or call on 07 5428 1111 to talk about how we can help your business through the process.

Building up to Bankruptcy

smsl-admin78

26 Jul 2016

Building and Construction law, Litigation

Comments: 350

advice, bankruptcy, building, collection, construction, Debt, guide, insolvency, legal, money, tips

Building up to Bankruptcy

How Insolvency Could Stop Your Construction Firm

If you are a licensed builder in a company that is winding up due to bankruptcy, there are a number consequences set out by the Queensland Building Services Authority (QBSA) which you should be aware of.

When a company can no longer satisfy its debt obligations and must be declared bankrupt, it is insolvent. An insolvent company may go through a winding up period, that is, the orderly wrapping up of affairs and closing down of a business, also known as an event.

When an ‘event’ occurs in a company where you hold the role of director, secretary, or influential person, you may be deemed an “excluded person” pursuant to section 56AC of the Queensland Building Services Authority Act 1991 (Act).

What are the consequences of this occurring?

When one event occurs, you will become an “excluded person” for a period of five years unless you can make appropriate submissions to the QBSA to have you deemed to be a “permitted individual”. This application must be made to the QBSA within 28 days after you receive notice from the QBSA that they intend to deem you an excluded individual.

Where a second or subsequent event occurs you will receive a second or subsequent notice from the QBSA, who has the power to deem you an excluded individual for life. When an individual is excluded for life, this means they can never be a licensee, director, or secretary of a licensee company. Again, the individual only have 28 days to apply to the QBSA to be categorised as a permitted individual.

What should I do first?

Where you receive such an exclusion notice you should immediately contact your professional advisors so that steps can be taken to determine whether you should make an application. Your advisor will properly prepare the application on your behalf; there are a variety of factors which must be considered to comply with the requirements of the legislation and give you the best chance of succeeding in your application.

The QBSA has considered my application and it has been refused, what do I do next?

Where the QBSA decides that it will not categorise a person as a permitted individual, you are at liberty to apply for a review of that decision through the Queensland Civil and Administrative Tribunal (QCAT).

The QCAT member will then conduct a new review of the matter to decide if the QBSA decision should have been to categorise the person as a permitted individual. These are important and complicated applications and once again you should instruct competent lawyers to act on your behalf in the application.

Where can I find help?

At Streten Masons Lawyers we can help if you are currently owed money by a person who you fear may become a bankrupt. We can also assist if you are owed money by a debtor and want to initiate bankruptcy proceeds against them. Contact Jeremy at Jeremy@smslaw.com.au or call on 07 5428 1111 to talk about how we can help your business.

By Jeremy Streten

The Facts behind Debt Collection Processes

smsl-admin78

12 Jul 2016

Commercial Law, Debt recovery

Comments: 611

aid, Business, courts, Debt, guide, help, law, legal, litigation, process, recovery

The Facts behind Debt Collection Processes

Any business in the Business Legal Lifecycle will inevitably be faced with the situation where a supplier or contractor to the business is pursuing them for payment of a tax invoice. The business has either not paid the supplier or contractor for cash flow reasons or for the more common reason – the invoice is disputed.

Having a debt collection process as part of a business is imperative to itssurvival. Successful businesses also have procedures in place to deal with the situation where they are being pursued by a supplier or contractor.

The key to dealing with the situation is communication and documentation. If the invoice is disputed the reasons for the dispute must be put in writing to the creditor. Telephone calls are fine however we recommend that any telephone is followed up with an email confirming the details of the conversation.

We recently spoke to a client regarding a well utilised document in the debt recovery process – a creditor’s statutory demand for payment of a debt (statutory demand). The client had received a statutory demand from a creditor and had disputed the invoices received. In the past the creditor had contacted them by telephone a few times to discuss the invoices. Unfortunately due to illness to the business owner and a very busy business the statutory demand was not responded to within the timeframe (strictly 21 days from the date of service).

The effect of not responding within the 21 day time period meant the client was forced into making payment for the invoices as the costs and lost time to oppose any Court action was prohibitive. Had the client documented all the details of the dispute with the creditor and had a process to deal with statutory demands the outcome in our experience would have been vastly different.

Communication and responding to invoices where disputed becomes particularly important within the building and construction industry. The process to deal with payment claims/invoices under the Building and Construction Industry Payments Act is a must for any business in the industry to avoid unfavourable decisions. The timeframes are strict and cannot be extended.

One of our clients was facing some cash flow issues and had an outstanding debt to a supplier. Our client had a process in place which included written communication to the creditor. The creditor appreciated the communication and due to the transparency of our client the creditor agreed to a generous payment schedule.

If you have recently received a statutory demand or you would like to know more about how we can help introduce the process into your business to deal with outstanding debts, contact our office’s dispute resolution expert Craig Mason by email craig@smslaw.com.au or (07) 3667 8966.

What You Really Need to Know about the Court Process…

smsl-admin78

06 May 2016

Commercial Law, Corporate law, Criminal Law, Debt recovery

Comments: 158

case, court, Debt, dispute, enforcement, guide, hints, litigation, peak, process, sneak

What You Really Need to Know about the Court Process…

A common question that clients ask us when we first meet to discuss their options relating to a dispute is what exactly does legal action – or the court process – involve. The answer to that is that it depends entirely on the scenario.

In particular, the type or nature of the legal dispute often determines the court in which legal action is commenced, and flowing from that the path which those proceedings follow. However, a particularly common scenario we encounter are disputes over outstanding monies which are generally heard in the State Courts (as opposed to Federal Courts).

Monetary Jurisdiction of the Courts of Queensland

Clients often come to us explaining that they are either owed money by a debtor, or another party is claiming they are owed money and have already commenced proceedings or are threatening to do so.

In both instances, one of the first questions we will ask the client is how much? The reason for this is that broadly speaking there are three levels of courts in Queensland of increasing rank, these being:

The Magistrates Court

The District Court

The Supreme Court

In relation to monetary disputes these courts have financial jurisdiction limits. The effect of which is that the size of amount in dispute determines the court in which that dispute is heard. Generally the costs of legal action increase in accordance with the seniority of the court in which the matter is determined, this can have significant cost implications for clients.

While the monetary jurisdiction limits are subject to change, currently they are:

Magistrates Court: less than $150,000.00

District Court: between $150,000.00 to $750,000.00

Supreme Court: anything in excess of $750,000.00

To complicate matters further the nature of the dispute or the relief sought can affect the court in which proceedings should be commenced. The nature of the disagreement may be different to the court which appears to have jurisdiction due to the amount in dispute. Also where a dispute relates to property often the monetary limit will be determined by the value of the property that is in dispute.

The Legislation

In any event, as a result of a piece of legislation called the Uniform Civil Procedure Rules (or UCPR for short), once proceedings have been commenced the procedure as to how the litigation is to be conducted is fairly consistent between the courts.

The UCPR sets out how proceedings are to be commenced, the form that those proceedings are to take, and what each party is required to do, and when.

The Pleading Stage

While, depending on the circumstances, proceedings may be commenced by either an Originating Application or a Claim and Statement of Claim, in the case of monetary disputes the Claim and Statement of Claim is far more common.

A Statement of Claim sets out the Plaintiff’s case and why they are entitled to the relief set out in the Claim; in this instance the amount of money claimed.

The Plaintiff in the proceedings will file their Claim and Statement of Claim with the appropriate court and then serve those documents on the Defendant(s).

The Defendant must then file and serve a Defence within the prescribed time limits. Should the Defendant also determine they have a Claim for money against the Plaintiff they may file and serve a Counter Claim with the Defence.

The Plaintiff may then elect to file and serve a Reply, or if the Defendant has made a Counter Claim, a Reply and Answer, addressing the matters raised by the Defendant in their pleadings.

At this point, should no amendments be made and no further responses be exchanged between the parties, pleadings will close.

Alternatively, one or both of the Parties may determine the documents currently filed and served by the other party do not sufficiently describe or establish their case. To obtain these details a request for what is called Further and Better Particulars is made, this sets out the claimed deficiencies and seeks additional information.

The consequences of not complying with a request for Further and Better Particulars can be severe, including, ultimately, having pleadings struck out.

Should a Defence not be filed within the prescribed time limit, the Plaintiff may proceed to seek Default Judgment against the Defendant. This dispenses with the need for (and cost of) a trial and allows the matter to be decided in the Plaintiff’s favour simply by fact that the Defendant has not defended the proceedings.

Disclosure and Settlement Conference or Mediation

Unless a particular document is protected by an exception (for example if it is a privileged legal document), if it is relevant to the matter and in the possession of that party, they must advise the other side of that document. This is what is known as the duty of disclosure.

Therefore, once pleadings have closed, the party’s exchange a ‘List of Documents’ to comply with this duty. The Parties may then require that the other side produce copies of any documents noted on their List of Documents for inspection.

Before or after disclosure the matter is often (or in the case of the Magistrates Court, must be) referred to some form of Mediation. In the Magistrates Court this takes the form of a Settlements Conference with the assistance of the court, while in the higher courts the meditation is arranged by the parties outside of the Courts.

Regardless, the end result is that an impartial mediator attempts to assist the parties to arrive at some form of commercial resolution. Where this is not possible the final stage is to request that the matter be set down for a trial.

Trial

The final, and normally by a significant margin, most expensive stage in the legal process is a trial to resolve the matter.

Simply put, the parties put their case and supporting material to a Judge or Magistrate who then makes a determination.

Proceeding to a trial can be a burden (both on finances and time) on both parties, as counsel will often need to be engaged both to prepare for, and appear at, the Trial. Further the trial may run for a number of days and the parties themselves may often be required to give oral evidence, requiring considerable time away from their employment.

The end result of a trial will be that one party wins and the other loses, this can have significant cost consequences for the losing party. However, even when a party is successful in prosecuting a case to final judgment, generally any order for costs will not cover the entirety of their legal costs.

Enforcement

Finally, it does not necessarily follow that once an order in made in the client’s favour, payment will be made by the unsuccessful party. Often it will prove necessary to commence further proceedings, or take further actions, to enforce the judgment.

Depending on the unsuccessful party, this may take the form of Statutory Demands, Bankruptcy Notices or enforcement warrants.

If you require advice regarding prospects or options for commencing proceedings, or if proceedings have been commenced against you and you need advice on you options to defend those proceedings Streten Masons Lawyers can provide advice on all stages of the court process. Please contact us on 07 3667 8966 to make an appointment with one of our expert solicitors.

By Jeremy Streten

Winding up Companies and the Role of the Liquidator

smsl-admin78

09 Feb 2016

Uncategorized

Comments: 227

Business, coaching, companies, Debt, ending, guide, help, insolvency, liquidator, recovery, tips

Winding up Companies and the Role of the Liquidator

Is it worth killing the cow to get the milk? If you are the creditor of a company this is the question that you will eventually face when the company won’t (or feels that it can’t) pay those amounts that are owing.

The answer to this question lies, in part, in the powers of the Liquidator, and what they can do once appointed, as it is the Liquidator who will be tasked with recovering the outstanding money.

The Problem

A company is considered a legal person. A key benefit of incorporating and conducting business through a company is that the liability of the company is limited to its assets (there are exceptions such as personal guarantees or insolvent trading). There is no recourse against shareholders or officers of the company.

Therefore, where the situation arises that the liabilities or debts of the company exceed these assets one possible outcome is that a creditor of the company may place the company into liquidation and appoint a liquidator.

What is liquidation?

The purpose of liquidation is to wind up the affairs of the company with a view to ultimately ending the legal existence of the company. To accomplish this there will be an investigation into the financial circumstances of the company.

Resulting from this investigation a list of creditors and assets of the company will be identified, unusual transactions may be flagged for further investigation or action and a dividend may be issued to creditors before the company is ultimately deregistered and ceases to exist.

These tasks are performed by an independent person (or persons) called a Liquidator.

Role of the Liquidator

As noted above, the first and foremost duty of a liquidator upon appointment is to commence an investigation into the affairs of the company. To assist in this role liquidators are granted extensive responsibilities over the affairs of the company including the transfer of the powers of management from the directors to the liquidator.

The Liquidator may then investigate transactions entered into by the company. While there are a number of different rules, where the company has made payments recently the liquidator may be able to call for these funds to be repaid to the company.

Ultimately, the liquidator will attempt to gather in all amounts owing to the company, sell off the valuable assets of the company and collect a pool of funds to pay out to the various creditors of the company.

If you are dealing with a company that is refusing to make payment, and are unsure about how or if you should place that company into liquidation, we can provide expert advice on the best course to pursue. Contact Craig Mason at Craig@smslaw.com.au or call us on 5428 1111 or 07 3667 8966.

By Craig Mason

The Dillema of Bankruptcy

smsl-admin78

22 Mar 2015

Commercial Law

Comments: 3092

agreement, bankruptcy, Business, Commercial law, contract, Debt

Are you considering bankrupting a person who owes you money?

Where a person falls in to debt that they are unable to pay, placing them in to bankruptcy can be a solution.

What is bankruptcy?

Bankruptcy is a process whereby a trustee is appointed over a person’s assets in order to distribute all of their assets ensure that all creditors (persons who are owed money) receive payment for debts owed. This can either be entered into voluntarily or a creditor may place a person into bankruptcy if they are owed $5,000.00 or more.

Typically once a person is placed into bankruptcy anyone who is owed money can make a claim (also called a proof of debt) to a person’s assets. The person being declared bankrupt must then provide a statement of affairs to the trustee which details all assets presently held. In these cases it is normal that only a partial amount of the debt is repaid, with the remainder forgiven upon being discharged from bankruptcy. If the creditor is unaware that the debtor is going to become bankrupt, the debts may not be repaid at all.

What effect does bankruptcy have?

If your debtor is unable to pay you debts owed, you are able to put them in to bankruptcy.

Once a person is declared as a bankrupt it can have severe consequences in relation to obtaining any form of credit, and the information will stay on a person’s credit file for a number of years. Bankruptcy can also have an impact on a person’s lifestyle, especially if they are a company director in which case they must cease to hold this position. An agreement they are party to, for example a joint venture, may also deem an event of default upon an act of bankruptcy and place them in breach.

The period of bankruptcy is initially three years from the filing of the bankrupt’s statement of affairs, however can be extended for a period of up to five additional years by the courts. It is important to note that these debts and obligations must be present at the date of bankruptcy in order for them to be discharged. Any debt or liability incurred after the date of bankruptcy is considered to remain owing.

Which types of debts are discharged upon being declared bankrupt?

Typically debts that related to standard money owed to any creditor are discharged upon being declared bankrupt, however as noted above, the liability for this debt must be incurred prior to the date of bankruptcy. Certain types of debts are not discharged upon being declared bankrupt and the obligation to pay this money remains.

Section 82 of the Bankruptcy Act 1966 provides an exhaustive list of debts that are not discharged, which are referred to as ‘non- provable debts’. These include:

HECS debt;
Court imposed fines or penalties;
Maintenance agreement obligations under the Family Law Act 1975 ;
Money owing for breach of a civil penalty provision under the Corporations Act 2001; and
Money owing under relevant proceeds of crime legislation.

How we can help

At Streten Masons Lawyers we can help if you are currently owed money by a person who you fear may become a bankrupt. We can also assist if you are owed money by a debtor and want to initiate bankruptcy proceeds against them. Call our office on (07) 3667 8966 to find out more about how we can help you.

Rhennen Ford – Solicitor

What happens to my debt when I die?

smsl-admin78

04 Nov 2014

Debt recovery, wills and estates

Comments: 1258

Debt, estate planning, wills

What happens to my debt when I die?

Creating a will helps to ensure that all of your assets are distributed the way want them to be. It is important to note, however, that your financial responsibilities at time of death affects whether everything is distributed according to your wishes.

Who is responsible for my debt if I die?

You are the only person responsible for your debt. The executor of your estate is responsible for distributing your assets in order to pay your debts, but is not liable themselves for paying them.

Your assets are distributed in a manner that will pay back any debts that you may have at the time of your death. This may affect any plans you have to leave specific amounts of money or assets to family members.

For example, if John owns a home worth $100,000 and has a mortgage over the home with $80,000.00 owing at the time of his death, his executor is obligated under the Succession Act 1981 (Qld) to pay his debt before distributing any of his other assets under his will.

What if there is not enough to pay my debts?

If you do not have enough assets in your estate to repay all of the debts you owe then your estate may be declared bankrupt and a bankruptcy trustee may be appointed to finalise your debts.

What if I leave a house with a mortgage owing to a family member?

If you leave to someone a piece of property that has a registered mortgage over it with a part amount still owing, that person takes the property subject to that mortgage. This applies in any situation where there is a lien or charge over property.

For example, if Jenny owns a home worth $100,000.00 and still has $20,000.00 owing when she dies, the beneficiary of that piece of property under the Will can take ownership of the property. The beneficiary will obtain the property at the full value minus the money that is still outstanding as a debt to the bank.

Typically, the bank will call on the executor of the estate to repay the amount owing under the mortgage, or if there are not enough funds in your estate to pay the debt, the property will be sold with the residue falling part of your estate.

What about my superannuation fund?

Your superannuation fund is slightly different to your normal monetary or tangible assets.

A superannuation fund is not considered as part of your estate automatically. If you have nominated a beneficiary (a ‘binding death nomination’), the trustee of your superannuation fund has the power to distribute any money in the fund according to your direct instructions. This is called a Superannuation Fund Death Benefit, and the beneficiary is solely entitled to the money held within it, regardless of whether your estate has any debts owing.

If you do not nominate a direct beneficiary, the trustee of your superannuation fund will determine how the money is to be paid. Typically the money is paid in to your estate for your executor to distribute. In this situation the money must first be distributed so as to pay off outstanding debts.

How can we help

The team at Streten Masons Lawyers specialises in helping people clients with Wills and Estates. To find out how we can help you, make an enquiry today.

By Jeremy Streten

Debt Recovery

smsl-admin78

27 Oct 2014

Debt recovery

Comments: 301

bankrupt, bankruptcy, Business, Debt, debt recovery, Streten Masons Lawyers

Debt Recovery: When an individual is declared bankrupt

At Streten Masons Lawyers we use our debt collection experience to your advantage. How? We deliver a letter of demand to the debtor which includes a period of time in which the debt is payable, which in our experience this maximises your chance of recovery. If payment is not made as requested in the letter of demand, Court proceedings can be immediately filed.

In the event of a bankruptcy…

If an individual is declared bankrupt by the Courts, a Trustee is appointed to take control of the insolvent person’s estate in order to turn the assets into cash to distribute equally among unsecured creditors (those who do not hold security for payment of the debt).

Secured creditors may commence debt recovery by disposing of the asset securing the loan (e.g. a bank would do this if mortgage payments are not made on a house). Bankruptcy proceedings are handled in either the Federal Court or the Federal Magistrates Court, depending on the complexity.

When a company is declared insolvent the Court has the power to ‘wind it up’ and appoint a Liquidator, whose responsibility is to turn the assets into cash and distribute it in the order set out in the Corporations Act.

The creditor and the liquidator firstly recover their costs, followed by certain entitlements to employees. The balance is distributed among unsecured creditors. Winding up proceedings are handled in either the Supreme Court or the Federal Court.

How we can help

If you need assistance in recovering a debt please complete our online debt recovery enquiry or contact Craig Mason at Streten Masons Lawyers.

Craig Mason

Director
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Let Streten Masons Lawyers & Optimum Recoveries reduce your risk of debt

smsl-admin78

15 Oct 2014

Debt recovery

Comments: 461

Debt, debt recovery, law, legislation, Optimum Recoveries, queensland, Streten Masons Lawyers

Let Streten Masons Lawyers & Optimum Recoveries reduce your risk of debt

“CPA Australia reports that 32% of ASX listed companies are confronting the risk of financial catastrophe with one of the main issues being negative cash flow – That’s more than during the global financial crisis.”

How will your business survive these difficult times?

Do you use the Personal Property Securities Register (“PPSR”) to secure your interest in goods sold?
Are you ready for the new Building & Construction Industry Security of Payments Act?
Are you aware that a breach of the Privacy Act could cost your business up to $1.7 million?

If you answered ‘no’ to any of these questions, then continue reading the Optimum Recoveries blog article: Risky Business – Are you exposed?
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Building & Construction: What can BCIPA do for you?

smsl-admin78

19 Aug 2014

Building and Construction law

Comments: 328

BCIPA, building, claim, claims, construction, contract, Contracts, Debt, legislation, queensland

Cash flow is one of the biggest problems facing the building and construction industry, which is why the Building and Construction Industry Payments Act 2004 (Qld)(BCIPA) was introduced as means of expediting the debt collection process in the industry.

In an attempt to make the process fairer and more efficient, some big changes are coming to BCIPA in the very near future, and as such it is vital that you understand the requirements and time frames when serving or responding to a BCIPA payment claim.

What is a Payment Claim?

If you are in the building and construction industry, a Payment Claim is a document that can be served on the other party that describes the construction works or related goods and services performed under a contract and the amount owing. The number of payment claims that you can issue will be determined by your contract, or if it is not dealt with in your contract, a maximum of one a month may be issued.

Benefits

The reason that Payment Claims are so useful for someone seeking payment is that they provide a much faster and cost efficient avenue to reclaim the debt. If a Payment Claim is not adequately responded to within the specified time period, you may be able make an application straight to the court for judgment and successfully side step the potentially expensive back-and-forth of the litigation process.

Alternatively, if a Payment Claim is validly disputed by the provision of a Payment Schedule, or if no Payment Schedule has been received and the debt remains outstanding, then an external adjudicator can be appointed to resolve the matter. The idea behind this is that an adjudicator will have industry specific knowledge, be cheaper than proceeding to litigation, and more time efficient.

Draw-backs

There are very strict requirements in regards to the contents of a Payment Claim to ensure that it is valid. If these requirements are not complied with and the document is not served in the relevant time period then you will not be able to proceed straight to an Application. There is no scope for error with a BCIPA Application, so if you are unsure about the form and timing of your Payment claims, give us a call.

Changes and effects

There are a number of key changes to BCIPA that will be coming into effect in September this year. Strict compliance is essential to a successful BCIPA Application, so it is important that you become familiar with the aspects of the system that will be tweaked once the amendments take effect.

Changes to Adjudicators

An ‘Adjudicators Registry’ will be established that will monitor and appoint adjudicators and provide information about their skills and areas of expertise. The establishment of the Registry will make it a lot easier to find and appoint the best adjudicator for the job.

Changes to time frames

The time that you have to make a payment claim is being reduced from 12 months to 6 months from the date that the works have been completed, however, you can agree on a different time period in your contract. If no time period is agreed in the contract, then the 6 month period will apply.
If you are sending out the final payment claim, the time to serve the payment claim will be whichever of the following comes later: the period agreed in the contract, 6 months from the completion of the works, or 28 days from the end of the defects liability (under the contract).

Complex Payment Claims and Standard Payment Claims

The amendments now split payment claims into two categories – complex and standard. Different time periods will apply depending upon what type of payment claim you have issued.
A complex payment claim is one that is either for a payment greater than $750,000.00, a latent condition under the contract, or a time-related cost under the contract. All other payment claims will be standard.
If your payment claim is a complex one, the other party now has 15 business days to respond rather than 10. The time period to respond will be extended to 30 business days if the payment claim was served more than 91 days after the date agreed in the contract.
The other party will also have extra time to provide their adjudication response, with time increased to either 10 business days for standard payment claims or 15 business days for complex payment claims.

How we can help

If you have a problem getting someone to pay on time, please contact us as soon as possible so we can ensure that your payment claims have been correctly served and help you with any proceedings under BCIPA.

Samantha Wooding

Solicitor