On 17 December 2018 a new security of payment regime took effect in Queensland.
Newly commenced provisions in the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (BIF Act) have replaced the Building and Construction Industry Payments Act 2004 (Qld) (BCIP Act) and Subcontractors' Charges Act 1974 (Qld), introducing a number of key changes.
Payment claims do not need to be endorsed
A claimant is not required to state on a payment claim that it is made under the BIF Act.
Any written document, including a letter or an email, is capable of being a valid payment claim under the BIF Act and should be treated as such if it:
- identifies the construction work or related goods and services to which the claim relates;
- states the claimed amount; and
- requests payment of the claimed amount. A document bearing the word 'invoice' would satisfy this requirement.1
Reduced time period for issuing payment schedules
A payment schedule must be issued within 15 business days after the payment claim is given, or earlier if a shorter period is stated in the construction contract.2 This applies to both standard payment claims and complex payment claims regardless of the reference date.3
No new reasons for withholding payment to be included in adjudication response
Respondents are no longer permitted to include in the adjudication response new reasons for withholding payment that were not originally 'stated' in the payment schedule.4 This applies even if the adjudication is for a complex payment claim.5
Accordingly, respondents should ensure that payment schedules are prepared with the new regime in mind, setting out full and complete reasons for withholding payment.
No second chances before adjudication
Under the BCIP Act, if a respondent failed to issue a payment schedule, a claimant was required to give the respondent a 'second chance' notice before applying for judgment or adjudication.6 Under the new regime, if a respondent fails to pay the amount owed to the claimant in full by the due date, the claimant is not required to provide a 'second chance' notice before proceeding to adjudication. However, a 'warning notice' will need to provided to the respondent if the claimant intends to commence court proceedings to recover an unpaid amount owed to the claimant.7
Statutory reference date on termination
If the construction contract does not provide for a reference date after termination, a further reference date is now deemed to arise on the date of termination.8
Claimants now have one last opportunity to access adjudication following termination.
New offence for failing to pay adjudicated amount
If an adjudicator decides that a respondent is required to pay an adjudicated amount, the adjudicated amount must be paid within 5 business days of the adjudicator's decision, unless a later date is determined by the adjudicator in accordance with the BIF Act.9
Consequences of non-compliance
The consequences for a respondent that fails to comply with the provisions of this new regime may be significant. For example, failing to provide a payment schedule in time will result in deemed liability for the full amount claimed.
New disciplinary measures have been introduced, with the imposition of statutory penalties and prosecution by the QBCC in circumstances such as when a respondent fails to pay an adjudicated amount in time.
What you need to know
- The newly commenced security of payment regime in Queensland applies to construction contracts entered into before or after 17 December 2018.
- The new adjudication regime applies to all payment claims issued on or after 17 December 2018 (those issued prior are still progressed under the BCIP Act).
- You should be aware of the key risks for respondents in the new regime. Do you have appropriate training and administrative measures in place to ensure you properly identify and adequately respond to payment claims from contractors and subcontractors?
- If you fail to comply with the new regime, the consequences (particularly new penalties) are significant.
1 BIF Act s 68.
2 BIF Act s 76(1).
3 Under s 18(3) of the BCIP Act, a respondent had 30 business days to issue a payment schedule for complex payment claims served more than 90 days after the reference date.
4 BIF Act s 82(4).
5 BIF Act s 24(5).
6 BCIP Act s 20A(2).
7 BIF Act s 99(2).
8 BIF Act s 67(2).
9 BIF Act s 90.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.