BUILDING INDUSTRY FAIRNESS (SECURITY OF PAYMENT) ACT 2017

Security of Payment Reforms.

Introduction: BIF Reforms
Operational December 17, 2018.

Three strands of regulation in focus:

• Amendments to the QBCC Act

• Greater penalties for unlicensed building work
• Prevention of illegal phoenix activity through “influential person” provisions
• Strengthening of Minimum Financial Requirements (MFR) through regulation.
• Enactment of the BIF Act
• Contract term fairness regulation development
Today’s
Agenda.
1. The reform of the security of payment regulation

2. The overview of the Project Bank Accounts

Security of Payment.
•The contractor’s rights under chapter 3 and 4 of the BIF Act are mutually exclusive
and an election is to be made by the contractor which regime to claim under.

December 17, 2018

BCIPA replaced by Chapter 3
•Progress payments and the adjudication process
and Chapter 5 of the BIF Act.
•Appointment of adjudicators

•Apply to all construction work and supply of related goods and services
previously covered by BCIPA.
 Reference
Date

•Worked out under terms of Key Change

contract; OR
•Last day of the month Reference date survives the
construction work was first termination of the contract.
carried out, goods/services were
supplied.
 Payment
Claim

•Must be written & identify Key Change

construction work/goods/services
to which the progress payment No further requirement for
relates, the amount claimed & payment claim to state it is
request payment.
•Strict time frames apply for claim made under legislation.
response
 Payment
Schedules
•Payment schedule must be given to the
claimant within 15 business days of
payment claim or timeframe prescribed
by contract (whichever is earlier), if full
payment cannot be made.
•Where payment is not made in full by
the due date, failure to submit a
payment schedule is an offence
Key Changes
• Substantial penalties apply for
failure to submit a payment
schedule. Respondent may be liable to 100 penalty units
($13,055 for individuals and $65,275 for body corporate)
• Respondent may only give
adjudication response in reply
to adjudication application
if it has submitted a payment
schedule
Important Notes
No notice needed to proceed to adjudication
•Where no payment schedule is submitted, and full payment is not made
otherwise, the claimant may proceed straight to adjudication

New adjudication application timeframes

•Application relating to failure to give payment schedule and pay the full amount
stated in payment claim – Now increased from 10 business days to 30 business
days after the due date for the progress payment or the last day the respondent
could have given the payment schedule.

•Application relating to amount stated in the payment schedule being less than
amount stated in the payment claim – Now increased from 10 business days to
30 business days after the claimant receives the payment schedule.
Subcontractors’ Charges
•On 17 December 2018 the Subcontractors’ Charges Act 1974 was replaced by
chapter 4 of the BIF Act.

Notable changes:
Definition of ‘works’
•There is no longer a requirement that the works must be carried out ‘upon the land’.
The new definition removes this limitation potentially expanding the scope of the
provisions to building services and consultant’s work.

Simplification of the claim process

1. Only three relevant forms are now in use under the BIF Act.
2. Notice of Claim can now be given to ‘the person obliged to pay the money under
the contract’.
3. The same timeframes still apply for giving of a notice of claim.
Continued…
Remains the same:
4. The claimant must supply a copy of the Notice of Claim to the contractor and a
holder of any security
5. The Notice of Claim may be withdrawn by the claimant wholly or partly at any
time by serving the Notice of Withdrawal.
6. The contractor served with a Notice of Claim must give a response within 10
business days
7. Recovery must start within 1 month after Notice of Claim is given or within 4
months after balance of the retention amount is payable under the contract.

New: Penalties for non-compliance

Not responding to Notice of Claim or not responding to the request for information
about building contract or security are punishable by disciplinary action under the
QBCC and a fine of 20 penalty units ($2,611.00)
Project Bank Accounts
•The introduction of legislation to secure funds for building projects. PBA’s are trust
accounts, which must be established and maintained by the head contractor for the
duration of the construction project.

March 1, 2018
PBAs Commenced on Gov Projects
•PBA’s currently operate only to capture 1st tier subcontractors,
however a rollout to the entire subcontractor chain is planned.

•Roll into private sector for work valued over $1 million – not currently
before 1 March 2019.
 What does
it apply to?

•The scope of construction projects to

which PBAs apply is wide, however
there are exclusions.
Exclusions
• Civil, engineering, public
transport infrastructure
• Residential construction
(<3 units)
 The head contractor establishes
PBAs for each of the eligible
A subcontractor
construction project, comprising
submits a progress
of three separate accounts:
claim to the head
• General trust account;
contractor.
• Retention trust account;
• Disputed funds trust account
The head contractor submits a progress
payment instruction to the bank (after the
payment schedule is issued). This will set
out the amount to be paid from the PBA to
each beneficiary to the trust (i.e. the head
contractor and the 1st tier of
subcontractors).
The principal deposits the payment, in The bank simultaneously
accordance with the payment pays the head contractor and
schedule, into the PBA’s general the 1st tier of subcontractors
account. This payment discharges the in accordance with the
principal’s obligation to pay the head progress payment
contractor. instruction.
The head contractor
submits a payment
claim to the principal.
The principal’s superintendent
assesses the claim and notifies
the head contractor of
agreement or disagreement
with the claim via a payment
schedule.
In accordance with the payment
instruction, the bank also moves
the retention money from the
PBA’s general account to the
retention money subaccount in
the PBA.
Important matters…
1. Head contractor is liable to cover any shortfalls in the PBAs from own funds
2. The head contractor is not to pay itself until all payments are made to the
subcontractors pursuant to the BIF Act.
3. The head contractor is not entitled for compensation of administration of PBAs or
bank fees.
4. The PBAs records must be kept by the head contract for a period of 7 years.

Penalties for non-compliance

Severe penalties are imposed for non-compliance with the PBA provisions. Maximum
500 penalty units for failure to establish the PBAs ($65,275.00)

Some contraventions carry imprisonment terms. For example, max 200 penalty units
(ie. $26,110.00) or 1 year’s imprisonment for failure to pay the subcontractor out of
the PBA.
Thank you.
Questions?

Paul Rojas
Partner

T 07 3009 8444
E p.rojas@rcrlaw.com.au
L15, 270 Adelaide Street
Brisbane City
www.rcrlaw.com.au