Australia: A brave new world – major changes to the construction industry in Queensland

Last Updated: 25 August 2017
Article by Troy Lewis and Stephen Burton

Most Read Contributor in Australia, August 2018

A brave new world - Project Bank Accounts, increased powers of the QBCC and the amendment and amalgamation of the Security of Payment and Subcontractors Charges legislation

Last night, in accordance with one of its key election promises the Queensland Government introduced the Building Industry Fairness (Security of Payment) Bill 2017 (Bill) into Queensland Parliament. The stated objects of the Bill are:

  • to improve security of payment for subcontractors in the building and construction industry and increase ease of access to the security of payment legislation
  • the creation of a framework to establish Project Bank Accounts (PBAs)
  • to modernise and simplify the provisions for making a subcontractors charge
  • to provide increased ability for the Queensland Building and Construction Commission (QBCC) to oversee and regulate the building and construction industry.

On the assumption that the Bill is passed into law it will mark a significant change in the manner in which business is done in the industry and require all participants to ensure they fully understand and comprehend the various amendments and alterations to the current regimes in place. In many instances the effect of the amendments is to limit or remove perceived indulgences to Respondents in relation to security of payment claims and return to the original model whereby a failure to comply with timeframes had potential dire consequences. Significant amendments and alterations to the current security of payment regime in Queensland are as follows:

  • Removing the requirement to state on a payment claim that the claim is made under the legislation
  • The statutory creation of a new or additional reference date on termination of the contract if the contract does not provide for one
  • Removal of the Respondent's second chance to serve a payment schedule in all circumstances
  • Removal of the ability for a Respondent to include new reasons in an adjudication response which were not raised in a payment schedule
  • Increased timeframe for the Claimant to lodge an adjudication application
  • The creation of specific offences for a failure to comply with certain parts of the legislation including the service of payment schedule (irrespective of whether it is intended to pay the full amount) and payment of an adjudicated amount within five business days
  • Providing that a Claimant can make a claim for each reference date (section 70 of the Bill) as compared with from the reference date (section 12 of the current legislation). On reading the balance of the Bill we expect that the legislature did not intend a move from the current position however query whether this proposed change does in fact do exactly that.
  • An ability for the legislature to, in the future, limit the size of an adjudication application or adjudication response.

Insofar as the Bill deals with what is currently the Subcontractors Charges Act there are limited substantive or practical amendments to the operation of the legislation albeit we would anticipate that industry will find the legislation easier to follow and read than its predecessor. One change however is that a Contractor served with a notice of claim of charge must respond within the reduced time period of 5 business days advising whether the Contractor accepts liability (or part thereof) for the amount claimed. Failure to do so constitutes an offence.

The Bill also seeks to grapple with the vexed concept of who is an "influential person" insofar as it is relevant to the QBCC's supervisory and disciplinary powers. It also extends the concept of an "excluded individual" to anyone who was a director or influential person in the period of 2 years (extended from 1 year) prior to the company going into liquidation.

A significant part of the proposed reform has been focused on the issue of Project Bank Accounts. If the Bill is passed into law PBAs will come to fruition. The Explanatory Notes to the Bill discuss a two phase approach for the implementation of PBAs, the first phase to apply to government building and construction projects of between $1 million and $10 million and to commence on 1 January 2018 with the second phase to implement PBAs in relation to all building and construction projects with a value in excess of $1 million, commencing on 1 January 2019.

The Explanatory Notes to the Bill state that it is not intended for PBAs to apply to engineering and infrastructure projects including bridges, roads and ports.

The Bill places an obligation on the Head Contractor to establish the PBA within 20 business days of entry into the first subcontract for the project. Significant penalties exist for failure to do so. It is to do so by opening three separate trust accounts as follows:

  • general trust account
  • retention trust account
  • disputed funds trust account.

The Head Contractor and each Subcontractor to the Head Contractor are beneficiaries of the PBA.

During the life of the project, payments to be made from the Principal to the Head Contractor are deposited into the general trust account. In the normal course this will be the certified or scheduled amount in response to the Head Contractor's monthly progress claim. Practically, following the Head Contractor's assessment of each of the Subcontractor's claims the process under the PBA is that the Head Contractor will issue a payment instruction to the financial institution where the PBA has been set up identifying the amounts payable to each of the Head Contractor's Subcontractors and instructing such payments to be made from the PBA as well as identifying the amount payable to the Head Contractor after payment to the various Subcontractors.

Where the Head Contractor is aware there will be insufficient funds in the PBA to cover the amount payable by the Head Contractor to a Subcontractor the obligation is on the Head Contractor to deposit into the general trust account an additional amount to cover the shortfall. Similarly where there is any such shortfall the Head Contractor is strictly prohibited from withdrawing any amount to pay itself until any and all Subcontractors are paid in full (unless the Head Contractor is doing so to pay an amount pursuant to an adjudication decision or court order).

If there are insufficient funds in the general trust account to pay each of the Subcontractors the amounts owing in full they are each entitled to be paid from the general trust account in proportion to the amounts due to be paid to each Subcontractor. There is an obligation on the Head Contractor to then pay the shortfall payable to each Subcontractor into the disputed funds trust account.

In relation to retention monies these are required to be held in the retention trust account and each amount must specifically identify the Subcontractor each retention amount relates to.

The Bill makes it clear that all payments to subcontractors must be processed through the PBA. Finally, in response to industry feedback the Bill enables an extension of the PBA in the future to Subcontractors further down the contractual chain and attempts to limit the potential liability of those operating the PBA.

The Holding Redlich Construction and Infrastructure team will be holding a breakfast seminar in Brisbane on 13 September to discuss the Bill in further detail. Please use the link here to register for this event.

Additionally, we will also be holding briefing and information sessions in Cairns, Townsville and Toowoomba on the following dates to discuss the practical effect and application of these amendments:

Cairns - 30 August 2017

Townsville - 14 September 2017

Toowoomba - 5 October 2017

We hope that you can join us at these events.

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions