After many years of contractors being exhausted financially and delayed by having disputes over payment run through the court system, in 2004 Queensland joined other states in making legislation designed to fast track the determination of claims to payment. That legislation was then revised in 2017 to the current Building Industry Fairness (Security of Payment) Act 2017. The security of payment legislation is a statutory regime for builders and subcontractors to utilise to recover monies owing for payment claims for work done under a construction contract by following a process to adjudication.
Adjudication is fast and cost effective in comparison to the onerous process of a court, and a “must use” tool for contractors and subcontractors and starts by the making of a “payment claim” which I will discuss briefly today.
A valid payment claim is essential to making a successful adjudication application as an Adjudicator will not be able to decide whether anything must be paid unless the payment claim is valid.
The requirements for a valid payment claim under the Act include:
- it must precisely identify the work done in it and what is claimed for each item of work;
- it must state the amount claimed to be owing;
- it must request payment of the amount claimed (an invoice format satisfies this requirement);
- the payment claim must be made on an available reference date.
A reference date is a date stated in the construction contract that states the date for the making of a progress claim for work done (e.g. 25th day of each month, or last day of the month etc). If there is no date specified in the construction contract to make a progress claim, the reference date is worked out by applying section 67 of the Act. The reference date will be the last day of the month in which the work commenced and the last day of each latter month.
A payment claim must be served by the party who carried out the construction work on the party who is liable to pay for the construction work under a construction contract. Proper service of a payment claim is an essential requirement to proceed to an adjudication. Service of a payment claim must be effected in accordance with section 102 of the Act and/or section 39 of the Acts Interpretation Act 1954. If a payment claim is not validly served, it will be invalid and consequently an adjudication application to recover payment pursuant to the payment claim will fail.
In my next article, I will discuss what is needed to respond when a payment claim is received.
Meet The Author!
Meet the author of this blog article, Justin Mathews. Over the next several weeks, we will post a series of articles relating to Queensland building and construction matters written by Justin.
Justin is a registered Adjudicator in Queensland under the Building Industry Fairness (Security of Payment) Act 2017 and also in the Northern Territory under its security of payment legislation, and an accredited specialist in commercial litigation.
He represents a number of Queensland building contractors and other parties in building and construction disputes both through the adjudication process and in the various state courts of Queensland, New South Wales, and Northern Territory, as well as advice in relation to contractual matters, and QBCC regulatory matters including matters involving the statutory warranty scheme.
In these articles Justin will discuss a number of matters of interest to members of the Queensland building and construction industry.
For enquiries concerning building matters, Justin can be contacted by email justinm@qbmlaw.com.au or Ph: (07) 5574 0111.
