The Tide is Turning For Subcontractors in Queensland

There is finally some good news for Gold Coast subcontractors. The Building Industry Fairness (Security of Payment) Act 2017 (“BIFSPA”) has been passed by state government but as at 1 February, 2018 it has not commenced.  Upon commencement, it will have major reforms to the building and construction industry in Queensland.  The BIFSPA provides for new procedures for payment claims that will be more favourable than the previous legislation for Queensland and Gold Coast subcontractors.  Our partner Justin Mathews, a Gold Coast lawyer holding specialist accreditation in commercial litigation explains why.

The BIFSPA applies to payment claims made after its commencement so that existing construction contracts will to that extent be subject to the Act.  A payment claim must be given within 6 months of completion of the work unless the relevant construction contract provides otherwise.  Under the BIFSPA a reference date arises upon termination of a construction contract that entitles a claimant to submit a payment claim to recover work done up to and upon termination of the contract.  This represents a significant change for the benefit of subcontractors who previously have suffered a loss of rights when contracts are terminated by contractors, often for dubious reasons.

As you might be familiar with, payment schedules are responses to payment claims, and often will be the first sign of a developing problem between a subcontractor and a contractor.  Under the BIFSPA, a payment schedule must be submitted no later than 25 business days after the day the payment claim is given or earlier if stated in the relevant construction contract.

What happens if you don’t receive a payment schedule under BIFSPA?  The amount in the payment claim is payable by the due date for the relevant progress payment.  The amount can be recovered either through a court or upon adjudication.  The claimant does not have to give notice to the respondent giving the respondent a second chance to submit a payment schedule.  If proceeding through a court, a claimant must give a 5 business day’s warning notice of the intention to commence proceedings and the notice must be given within 20 business days of the due date for the progress payment.  The claimant can then commence proceedings and apply for judgment.  The respondent cannot defend the claim or raise a counterclaim with respect to matters arising under the construction contract.  If the claimant elects to proceed to make an adjudication application it must be lodged within 30 business days after the later of the due date for the relevant progress claim or the last day when the respondent could give the payment schedule.  Penalties and disciplinary action apply for a failure to provide a payment schedule in response to a payment claim.

What happens if you receive a payment schedule under BIFSA?  The claimant may apply for adjudication.  Time limits apply.  An application for adjudication must be lodged within 30 business days after the claimant receives the payment schedule.  Strict time limits apply for respondents to submit an adjudication response.  A respondent cannot raise a point in the adjudication response that is not in the payment schedule.  The BIFSPA provides for short time frames for adjudication decisions to be made.

Justin is a Gold Coast lawyer who has represented numerous contractors in litigation and adjudication under the Security of Payment legislation in Queensland and New South Wales.  For all enquiries in respect of making systems, invoices, and payment schedules compliant with the new requirements of BIFSPA please contact Justin Mathews of our office on 07 5574 0111, or email justinm@qbmlaw.com.au.