Building Industry Fairness

Under the new legislation, there is no longer a requirement for a payment claim to state that it is one made under the Act.

Now, Payment Claims must simply comply with three requirements:

1. Identify the work to which it relates;
2. State the amount claimed; and
3. Request payment of the claimed amount by way of an invoice.

Timeframes applicable for the submission of payment schedules have been changed. A payment schedule must be served within 15 business days of receiving the payment claim unless a shorter period is specified in the contract.

There will no longer be any second chances for contractors to submit a payment schedule if it is not submitted within the time required. A failure to serve a payment schedule results in the full amount of the claim being due and payable by the due date for payment. Subcontractors may pursue their right to this amount at adjudication or in Court and the contractor cannot raise any substantive defence.

There have also been a number of amendments in respect of the adjudication process.

A subcontractor now has 30 business days to lodge an adjudication application.

Under significant new changes a contractor cannot include new reasons in an adjudication response which were not raised in the payment schedule. In addition, the failure to provide a payment schedule is an offence. The only circumstance in which a contractor is permitted to not serve a payment schedule is if the contractor pays the full amount by the due date for payment.

The Act also introduces a new or additional reference date after termination of a contract, if not already provided for in the contract. This enables subcontractors to claim for work done by way of a payment claim from the last reference date up to an including the date of termination of the construction contract.

Payment claims made on or after 17 December 2018 are governed by Building Industry Fairness Act and not under BCIPA even though your construction contract may have been entered into before 17 December 2018.

Here are some key points for subcontractors under Building Industry Fairness Act including:

• Payment claim does not have to state that it is made under Building Industry Fairness Act;
• Payment schedules must be lodged in respect to a payment claim. A failure to lodge a payment schedule constitutes an offence under Building Industry Fairness Act;
• Payment schedules must be served within fifteen business days of receiving a payment claim unless a shorter period is specified in the Construction Contract;
• If no payment schedule is received within the required time frame a subcontractor can proceed to recover the amount owing by adjudication or commencing proceedings in a court of appropriate jurisdiction. A warning notice must be sent first by the subcontractor prior to proceeding.  The contractor is precluded from relying upon the construction contract to raise a defence or setoff;
• If a payment schedule is served an adjudication application must be filed and served within thirty business days;
• A contractor cannot raise a new reason in an adjudication response which was not raised in the payment schedule;
• A reference date also arises upon the date that a construction contract is terminated by either party, entitling the subcontractor to issue a payment claim for work done from the last reference date up to and including the date of termination of the construction contract.

These features of the Building Industry Fairness Act have been enacted to assist subcontractors to recover monies outstanding in a quick and cost effective manner.

Please contact Justin Mathews of our office who specialises in building and construction matters for further information and assistance by email on justinm@qbmlaw.com.au or 0755740111.