Construction and Infrastructure update: Building Industry Fairness (Security of Payment) Act 2017 (Qld) ― new reforms now in effect

Feb 11, 2019

On 17 December 2018, a new wave of reforms were introduced to Queensland’s security of payment regime. The new reforms are part of the Building Industry Fairness (Security of Payment) Act which was passed by the Queensland Parliament in October 2017.

Provided below is a summary of the key reforms that recently came into effect.

No ‘second chance’ to provide a payment schedule 

Respondents are now no longer entitled to a ‘second chance’ to provide a payment schedule if they:

  • do not give a payment schedule; or
  • fail to pay the whole or any part of the claimed amount by the due date for payment of the claimed amount.

Prior to the 17 December 2018, if a respondent failed to give a payment schedule and failed to pay the whole or any part of the claimed amount by the due date for payment of the claimed amount, then the claimant was entitled to apply for adjudication of the payment claim, provided that the claimant first provided the respondent with a ‘second chance’ to provide a payment schedule (by serving the relevant notice on the respondent).

Payment claims no longer to be endorsed with ‘opt in’ wording

Under the new regime, payment claims for construction work or related goods and services no longer require specific ‘opt in’ wording for the protections of the Act to apply.

Previously, payment claims in Queensland needed to be expressly endorsed as payment claims under the former security of payment legislation.

Reasons for withholding payment must be identified early

Section 82(4) of the Act prevents a respondent from relying on any new reasons for withholding payment that were not included in the payment schedule when given to the claimant.

If any new reasons are included by the respondent, the adjudicator may require the respondent to resubmit the adjudication response without those new reasons.

Previously, respondents were able to raise new reasons in an adjudication response, which were not included in the payment schedule, in response to a complex claim (i.e. a claim for over $750,000).

Disciplinary action for respondents

A respondent who does not give a payment schedule by the due date or pay the claimed amount in full by the due date may now incur a penalty of 100 penalty units $13,055 (current as of 11 February 2019). Further, a failure to give a payment schedule is now also grounds for taking disciplinary action against the respondent under the Queensland Building and Construction Commission Act 1991.

What should you do?

In light of the significant changes to Queensland’s security of payment legislation, respondents should now treat every claim for payment according to the Act and ensure that a payment schedule is provided in response to every payment claim or any claim for payment.

Respondents also need to ensure that they include all reasons for withholding payment in the payment schedule (even for claims over $750,000).

More information

For more information, or to discuss the recent reforms or any other security of payment issue, please contact Darren Cain, Principal Lawyer and Head of KCL Law’s Building and Construction practice, on (03) 8600 8835 or dcain@kcllaw.com.au, or Dominic Brown, Lawyer, on (03) 8600 8851 or djbrown@kcllaw.com.au.

Author

More information on the author, Dominic Brown.

KCL Law is a leading firm in the area of security of payment adjudications and judicial review of adjudications, having been involved in many leading cases.

Note: This update is a guide only and is not intended to constitute legal advice.

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