On 10 November 2017, the Building Industry Fairness (Security of Payment) Act 2017 (BIF Act) introduced a suite of reforms to ensure Queenslanders who work in our building and construction industry are paid for the work they do. On 11 September 2018, amendments to clarify some of the provisions under these reforms commenced.
Reforms relating to progress payments, adjudication and subcontractors’ charges will commence on 17 December 2018. When the reforms commence, they will replace the existing Building and Construction Industry Payments Act 2004 (BCIPA) and Subcontractors’ Charges Act 1974.
The progress payment reforms will result in the following changes:
- payment claims will not have to include specific wording indicating they are made under the legislation. An invoice will be considered a payment claim as long as it sets out the amount claimed, and the construction work (or related goods and services) it relates to.
- a payment schedule must be issued in response to every payment claim, unless the full amount of the payment claim is paid by the due date. The payment schedule must be issued within 15 business days (or earlier if provided in the contract) after the payment claim has been provided.
- a maximum penalty of 100 penalty units may apply for not supplying a payment schedule where a claim is not paid in full by the due date.
A range of changes will apply to the adjudication process including:
- new application timeframes of up to 30 business days
- if a payment schedule is not issued, a respondent cannot issue any response to an adjudication application
- should an adjudication decision require a payment to be made, this must be paid within five business days or another date set by an adjudicator. A maximum penalty of 200 penalty units may apply for failing to pay the adjudicated amount.
- in deciding the proportion of an adjudicator’s fees to be paid by both parties, the adjudicator must consider the conduct of both parties to the adjudication
- the Adjudication Registry will automatically issue a certificate to claimants for all adjudication decisions.
The reforms to subcontractors’ charges include:
- modernised and simplified legislative provisions
- new, simplified forms to be available on the Queensland Building and Construction Commission (QBCC) website by 17 December 2018
- when a subcontractor provides a notice of claim of charge, the contractor receiving the notice must respond to the subcontractor (and give notice to the person higher in the contractual chain) within 10 business days of receiving the notice of claim. The response is to advise if the contractor agrees with or disputes the claim. A maximum penalty of 20 penalty units may apply.
Defects liability period notice
The BIF Act will also make changes to the QBCC Act in relation to requirements for retention monies or security held under a building contract. The QBCC Act already provides some requirements however these will be strengthened.
The BIF Act will introduce:
- a statutory default defects liability period of 12 months from the date of practical completion where a contract does not provide for a defects liability period
- a requirement for the person (excluding principals) withholding a retention under a building contract to notify the person they are withholding the retention from within 10 business days of the defects liability period ending (five business days under a higher subcontract)1
- significant penalties for not paying a retention or security to a contractor, where it has been withheld without a reasonable excuse, at the end of the defects liability period. A maximum penalty of 200 penalty units or one year’s imprisonment may apply.
For more information refer to the HPW website, the QBCC website and the Building Industry Fairness (Security of Payment) Act 2017.
If you have any questions regarding the security of payment reforms, please email SecurityofPayment@hpw.qld.gov.au.