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By Richard Cowen & James Morgan, Tucker & Cowen, Solicitors, Brisbane.

On 1 July 2018, chapter 3 (“BIF/3”) of the new Building Industry Fairness (Security of Payment) Act 2017 (Qld) will replace the Building Construction Industry Payments Act 2004 (Qld) (“BCIPA”).

BIF/3 applies to construction contracts whether entered before or after the commencement of BIF/3 (other than to the extent the BCIPA continues to apply to any unfinished matters triggered before the commencement of BIF/3).

BIF/3 does not apply to construction contracts made with resident owners (unless the resident owner holds an owner-builder permit relating to the work or is a building contractor as defined in the Queensland Building and Construction Commission Act 1991). BIF/3 does not apply to construction contracts to the extent the construction contract deals with construction work carried out, or related goods and services supplied, outside Queensland.

Important changes to be aware of

  1. A payment claim under BIF/3 is an invoice identifying construction work or related goods or services and stating an amount payable. There is no longer any requirement that the invoice state it is a payment claim under BIF/3.
  2. The date of termination of a construction contract is now an additional date on which a payment claim can be given.
  3. If a payment claim is not paid in full, a payment schedule must be given. A failure to give a payment schedule attracts a maximum fine of 100 penalty units ($12,615 for an individual and $63,075 for a company).
  4. A payment schedule must be given within 25 business days after the day the payment claim is given or the shortest period under the construction contract for responding to, or paying the full amount stated in, the payment claim, whichever is earliest. This deadline applies irrespective of the amount claimed in the payment claim.
  5. There is only one window of opportunity to give a payment schedule.
  6. An amount is owed if no payment schedule is given, or if the payment schedule proposes to pay any amount less than the amount claimed in the payment claim. A proceeding may be commenced in court claiming the amount owed if that amount is not paid. However, a warning notice must be given within 20 business days after the due date for the progress payment and the proceeding in court must not be commenced until 5 business days after giving the warning notice.
  7. An adjudicator can decide that the amount owed is greater than the amount the payment schedule proposes to pay.
  8. The deadline for making an adjudication application is 30 business days after the due date for the progress payment, the giving of the payment schedule, or the deadline for giving a payment schedule, whichever is later. However, if the adjudication application relates to a failure to pay the full amount stated in the payment schedule, the deadline is 20 business days after the due date for the progress payment.
  9. The adjudication response must not include any new reasons for withholding payment that were not included in the payment schedule. Any attempt to do so must be considered by the adjudicator when deciding who will bear liability for the adjudication fee and the adjudicator’s fees and expenses. It does not matter how much money is claimed in the payment claim.
  10. If an adjudicator decides that an amount is payable, that amount must be paid. A failure to make that payment attracts a maximum fine of 200 penalty units ($25,230 for an individual and $126,150 for a company).

Tips for the building industry

  • Always ensure your construction contract is in writing and contains no provisions that are of no effect under section 200(2) of the Building Industry Fairness (Security of Payment) Act 2017 (Qld) or void under the Queensland Building and Construction Commission Act 1991 (Qld).
  • Always respond to a payment claim under BIF/3 by giving a payment schedule or paying the claim in full. Take care to ensure that any payment schedule includes every single reason for withholding any payment.
  • Consider filing a claim in a court if you remain unpaid despite no payment schedule having been given, or the payment schedule proposing that any amount be paid. Consider making an adjudication application if the payment schedule proposes to pay less than ought to be paid.
  • Queensland Courts cannot review the merits of adjudicator’s decisions. A Queensland Court can only declare void an adjudicator’s decision to the extent the adjudicator did not have jurisdiction to make all or part of the decision in the first place.
  • Consider filing a claim seeking final determination of your rights under the construction contract. This option is always available. This option may be preferable to seeking a declaration that the adjudicator’s decision is wholly or partly void for jurisdictional error.

Contact the author directly by email or by telephone.

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