If you are a subcontractor working in Queensland, you are probably aware of the relatively recent changes to the Security of Payment laws. Security of Payment refers to your right as a subcontractor to payment. These changes have been quite extensive and generally, operate in favour of subcontractors. However, it is important to ensure that you understand the changes and your rights and obligations when entering into contracts with head contractors. This article will discuss some of the key changes to the Security of Payment regime.
The Effect of the Security of Payment Reforms
The changes to the Security of Payment regime have been implemented through the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (the Act). Any contracts dealing with Security of Payment executed after 17 December 2018 need to comply with the legislative changes. This article will discuss some of the key changes to the Security of Payment regime in Queensland.
Your payment claim no longer needs to state that it is made under this new Act. Your head contractor can no longer oppose your payment claim because it does not contain a reference to the Act.
A payment schedule is a written notice that your head contractor must give you if they do not intend to pay the full amount specified in a payment claim by the payment due date.
Your head contractor now has to serve their payment schedule either within:
- the period specified in the contract; or
- 15 business days after receiving your payment claim.
The payment schedule also needs to include full reasons for withholding payment.
If your head contractor fails to do so, you no longer need to give them a second opportunity to serve the payment schedule. You also do not need to notify them that you are bringing an adjudication application. With the new changes, you can go straight to bringing an adjudication application.
Head contractors could also face a fine of up to $13,055 as well as disciplinary action from the Queensland Building and Construction Commission (QBCC) for failing to respond to a payment claim in time.
If the contract does not contain a due date for payment, it will now be 10 business days from the date you serve your payment claim.
The time frames to bring an adjudication application are now longer than they were under the previous legislation.
The time frames to bring an adjudication application are now:
- Thirty business days after your head contractor served their payment schedule;
- Twenty business days after the date for payment (if your head contractor failed to pay in accordance with the payment schedule); or
- Thirty business days after the last date for payment or the last date to serve a payment schedule.
There are also new limits on the submissions that you and your head contractor can submit. If you are claiming $25,000 or less in your payment claim, the submissions will be limited to a maximum of 10 pages with a font of at least 10 and margins of at least 2.54cm.
The definition of a reference date has also changed slightly under the new Act. A reference date is the date on, or after which, you can claim payment from a head contractor. This means that you can only issue a payment claim to a head contractor on or after the reference date. If the contract does not specify a reference date, the date is the last day of the month in which the:
- construction work was first carried out; or
- related goods and services were first supplied under the contract.
It is also the last day of each later month.
The new Act also clarifies the reference date if a construction contract is terminated. It states that if a construction contract is terminated and the contract does not provide a reference date on termination, the date of termination will be the final reference date. This means you will be able to submit a payment claim from the date of termination.
Changes to Security of Payment legislation means that you will need to update your contracts with head contractors to reflect the changes in legislation. In particular, your payment claims no longer need to contain a reference to the Act. There has been a change in requirements for payment schedules. In addition, the timeframes to bring an adjudication application have extended. The definition of a reference date has also changed. If you have any questions about the recent amendments and how they affect your contracts, get in touch with LegalVision’s construction lawyers on 1300 544 755 or fill out the form on this page.
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