THE GOOD AND THE BAD - QLD'S AMENDED SECURITY OF PAYMENT LAWS FOR CONSTRUCTION INDUSTRY

Since we strive for objective information sharing, I'll let reader's decide which of these changes belong in the good/bad category.

1) Fine and disciplinary action able to be taken if no Payment Schedule given.

By now everyone has heard about this. The objective is to compel more Respondents to give Payment Schedules every time there is a non/short-payment. Complications arise with the ambiguity of what might be a Payment Claim under the *BIF, that requires a Payment Schedule. (also see point 6)

2) Respondent must pay an Adjudicated Amount to the claimant on or before the time it is due.

Previously, an unpaid Adjudicated Amount couldn't really be chased up by the Queensland Building and Construction Commission (QBCC), unless it fell within the policy parameters of a Monies Owed Complaint, which got ditched by the Commission the moment enforcement proceedings were commenced in a Court. Little success was guaranteed.

Now, with the threat of disciplinary action and fine, Respondent's have actual consequences for not paying an Adjudicated Amount.

3) Fine for a failure to pay a retention amount.

The days of making a Claimant write a special little letter requesting that retention be released are gone. Parties holding retention are now required to simply release the funds at the due date - regardless of whether or not there has been a claim given for their release.

4) **QBCC Act Part 4A amended so that notice to be given about the expiry of the defects liability period.

The timeframe for giving the notice depends on the contractual circumstances.

1. If the DLP is not linked to another building contract (eg: head contract), the Party holding the retention must give a notice within 10 business days before the end of the DLP stating:

• the date the DLP ends;
• the amount of retention to be paid; and
• the date the retention is intended to be paid.

2. If the DLP is linked to another building contract (head contract), and the party holding the retention is only given a notice themselves under the head contract after the period of 10 business days prior to the expiry of the contract DLP has commenced, the party holding retention must give their notice within 5 business days of receiving a notice under the head contract.

This amendment to the QBCC Act ironically coincided with the High Court Decision in Maxcon Constructions Pty Ltd v Vadasz [2018] HCA 5 which confirmed that any contract provision that made release of retention (or the expiry of a DLP) contingent upon a third party contract be rendered void because it is a "Pay when Paid" provision.

So here we have QLD legislators taking our QBCC Act in one direction (specifying special circumstances where a subcontract is "linked" to a head contract), and the High Court concurrently creating long awaited legal precedent to resolve the age old battle of "we haven't reached PC yet, so you can't have your retention yet".

Curiously, section 74 of the BIF still prohibits pay when paid provisions, but because the QBCC Act amendment sits squarely within Part 4A (which is on the list of legislation that an Adjudicator must take into consideration in reaching his/her decision), this amendment has once again reignited the argument that the High Court spent so much money resolving.

5) Adjudicator MUST now decide whether or not a Payment Claim is frivolous or vexatious

There is no supporting subsections within the BIF that assist the Adudicator in understanding what it can take into consideration when reaching a decision on this point. For example, when it comes to deciding who pays what portion of the Adjudicator's fees, the Adjudicator MUST take into consideration the conduct of the Parties, and MAY take into consideration whether or not the respondent participated in the Adjudication, whether the Claimant had reasonable prospects of success, and even any other matter that the Adjudicator considers relevant.

6) They took away the requirement to state on a Payment Claim that it is a Payment Claim made under the BIF

This now leaves it up to the Respondent to assess every single "invoice" or document requesting payment in respect of its validity under the BIF. It also makes it very difficult for a Claimant to issue a Progress Claim under the Contract, and not under the BIF, which used to be a way of 'testing the waters' to see if a Claimant could get paid without 'burning' a reference date.

NSW have just passed a bill to reintroduce the requirement to endorse their Payment Claims because this wasn't working down there.

7) The BIF **Regulations include a provision that limits the number of pages that can be used for Submissions in an Adjudication Application where the claimed amount is less than $25k

Thought to be a way to stop the Parties from inundating Adjudicators with boxes of paperwork for claims where the Adjudicator's fees are now fixed to pro-rata $620 - $2070 for claimed amounts less than $25k, the Regulations limit the written submissions to 10 pages, but Parties can still include these other documents:

• The Contract between the Parties;
• Payment Claim and documents given at the same time in support of it;
• Payment Schedule and documents given at the same time in support of it;
• A document relating to the contract given to the other party eg: a notice for EOT, or Variations;
• An expert report about a matter to which the claim relates; and
• A statutory declaration about a matter to which the Payment Claim relates.

Submissions are typically the written document from a Party explaining the documents that it has put forward for consideration, and the facts and reasons that it contends that its position is the correct position.

If you wish to discuss any of these issues further don't hesitate to Direct Message me.

**BIF = Chapter 3 of the Building Industry Fairness (Security of Payment) Act 2017 (QLD)

BIF **REGULATIONS = Building Industry Fairness (Security of Payment) Regulation 2018

** QBCC Act Part 4A = Part 4A of the Queensland Building and Construction Commission Act 1991 (QLD)