Security of Payments Act- The proposed brave new world becomes reality

On 23 August 2017 we advised of the introduction of the Building Industry Fairness (Security of Payment) Bill 2017 (Bill) into parliament and provided a detailed summary of the significant amendments proposed to three key pieces of legislation relevant to the Queensland construction and infrastructure sector, being the:

  1. Building and Construction Industry Payments Act;
  2. Subcontractors Charges Act; and
  3. Queensland Building and Construction Commission Act.

We can today confirm that the Act was passed late yesterday afternoon by state parliament.

Despite the fact that a number of amendments were made to the Bill which was placed before parliament on 22 August 2017, from a practical perspective the steps necessary from members of the sector to respond to the new Act are generally consistent with those necessary to respond to the Bill. In this update we will focus solely on the differences between the Bill and the Act which have day to day practical ramifications for those in the industry. For a more detailed summary of all of the changes being made by the Act, please click here to read our update from 23 August 2017 which set out in greater detail the amendments proposed by the Bill (now the Act).

Practically speaking the major changes in the Act from the Bill involve the security of payment legislation and, in particular the timing of payment schedules. In a significant change from the regime under the Building and Construction Industry Payments Act (Previous Act) and that proposed under the Bill, a party will now be required to serve a payment schedule within the shorter of:

  1. The timeframe stated in the Contract;
  2. The due date for payment stated in the Contract; or
  3. 25 business days after service of the payment claim.

The above timeframes will apply irrespective of whether the payment claim is a complex or standard claim.

Additionally, in a response to the outcry from industry regarding the requirement to serve a payment schedule in response to every payment claim (even if the amount of the payment claim was to be paid in full) the Act contains a provision making clear that a payment schedule is not required if the full amount of the payment claim is to be paid in full and is paid in full within the shorter of the three timeframes noted above.

Further, and again, in response to industry feedback and concern regarding the increasing of the relevant time period for excluded individuals and excluded companies from one year to two years the Act now contains an exception if the individual can satisfy the commissioner that at the time he/she ceased to be a director, secretary or influential person, the company was solvent.

Whilst it has not changed from the Bill, it is also imperative to note the following three important practical changes from the Previous Act:

  1. There is no second chance to serve a payment schedule. If a payment schedule is not provided strictly within the time period stated in the Act the Claimant will be entitled to apply for judgment and/or adjudication and a Respondent will not have a second chance to serve a payment schedule; and
  2. The ability to add new reasons in an adjudication response has been abolished. It is therefore imperative that any and all reasons are included in the payment schedule; and
  3. A payment claim is no longer required to state that it is made under the Building and Construction Industry Payments Act.

The exact date of commencement is currently unknown, however speculation to date has generally suggested a commencement date of early to mid January.

If you would like any further information in relation to the new Act and how it may impact your business please do not hesitate to contact us.

AuthorsTroy LewisPartner & National Head of Construction and Infrastructure, Holding Redlich and Stephen Burton, Partner, Holding Redlich

 

 

Metis builds capacity for professionals to:

Our clients include:

AECOM, Jacobs, WSP, GHD, Laing O’Rourke, Fulton Hogan, Vision Australia, NSW Health Infrastructure, The City of Parramatta, The Department of Infrastructure and Regional Development, SMEC, Norman Disney and Young. Learn more. 

Our programs are: 

Related Posts