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The Queensland Subcontractor’s guide to: Building and Construction Industry Payments Act 2004 vs Subcontractors’ Charges Act 1974

1_construction_workerThere is always a concern as a subcontractor that you will not be paid for the job you have done.

The main difference is that under the Subcontractors’ Charges Act 1974 (SCA), you can secure a payment that will be due to you whereas, The Building and Construction Industry Payment Act (BCIPA) will give you a rapid return for payment of a progress claim when it falls due and/or the right to recover.

This information is specific to Queensland claims.

BCIPA Claims:

Under the BCIPA, if you (as Claimant) have a progress payment due, you must;

  1. Issue a Claim (‘the Claim”) to the respondent with the words “This is a claim under The Building and Construction Industry Payment Act 2004”;
  2. State a time for payment;
  3. State the sum of the progress payment, or how it has been calculated.

When the Respondent (principle contractor, owner builder etc) is served with this progress claim, they must within 10 business days of receiving the Claim

  1. Either pay the sum due under the claim;

or if they dispute the amount;

Provide to the claimant a Payment Schedule  which will set out

  1. Why they dispute the amount;
  2. How much they will pay; and

If a Payment Schedule has been served, then the Respondent must

  1. Pay the undisputed amount identified in the Schedule with 10 business days of the claim.

If a Payment Schedule has not been served, then the Respondent is liable for the full sum.

If the Respondent does the following:

  1. Provides a Payment Schedule but does not pay the sum;
  2. Provides a Payment Schedule and the Claimant disputes the sum within it;
  3. Does not provides a Payment Schedule and does not pay the sum;

Then the Claimant can lodge an application for Adjudication under the BCIPA.

SCA Claims:

If you are concerned that the principle may withhold payment, or maybe unable to pay the full amount due to you, then you would make a claim under the SCA.

Some examples of when this may occur is when you require protection from an insolvent builder by securing the monies owed by the developer to that builder and directing some of those monies you. This bypasses a potentially insolvent builder. It will in effect restrain them from dispersing money which would otherwise go to someone above you (for example a contractor), and instead would direct the payment to you as subcontractor.

You cannot lodge a Notice of Charge after  the money has already been paid to the builder, or if the entire debt to the builder has been paid by the developer.

The Notice?

When serving your Charge on your superior, you must:

  1.  Include the amount and particulars of the claim as prescribed by a qualified person (architect, engineer, etc., as per s 10A) and state that you require the employer/subcontractor to take the necessary steps to see that it is paid or secured (s 10(1)(a))
  2. Provide a statutory declaration;

What time limits apply for the Notice?

A notice of charge can be given at any stage during the subcontract period, but the following time restrictions apply after the completion of the subcontract:

  1. for contract monies – Within (3) three months after the completion of works.
  2. for retention monies – Within (3) three months of the expiration of the maintenance period.
  3. for monies held under a security – Within (3) three months of the expiration of the release period.

If the money is due before completion, the charge can be made in respect of money payable to you at the date of the notice (such as retention money), or money to become payable to you for work already done by the contractor at the date of notice.

What happens when a Charge is served?

When someone is served with the Notice of Charge, they must within 14 days:

Give a “contractor’s notice” to the developer, stating that the builder:

  1.  Accepts liability to pay the claimed amount;
  2. Disputes the claim; or
  3. Accepts liability to the amount stated in the “contractor’s notice”, but otherwise disputes the claim.

When a builder provides a notice accepting the liability,  the developer will pay the amount to the subcontractor. Payment of the sum must be made immediately.

If the builder does not accept the liability, the subcontractor’s must take the next steps to enforce the charge, essentially proving the debt.

At least the money will be secured as the developer should not pay any monies to the builder or risk also having to the debt to the subcontractor.

Still not paid?

If you lodge a Notice of Claim under this act, and within 35 days of lodging same you are still not paid, you can:-

  1. Suspend work if you have not been paid.

If a dispute arises in respect of the monies, the subject of the notice of claim and if such a dispute is not resolved within 1 month after the notice has been given, proceedings must be brought in a Court of Law to resolve the dispute, otherwise the notice has no force and effect.

If a sub-contractor should fail to commence legal proceedings within the necessary time limit after a notice is issued, the sub-contractor may still be able to pursue his claim only if another sub-contractor has given the necessary notices and commenced legal proceedings within the required time limit. The first sub-contractor does this by applying to a Court for an order that his claim be joined in the claim of the second sub-contractor as provided by Section 13 of the Act.

Be careful

If you have lodged a Charge improperly, or have failed to comply with certain requirements of the Act, you may be held liable for damages incurred by the builder. This could be as a result of the developer withholding money payable to the builder due to your apparent subcontractor’s charge. Prior to lodging a Charge, we recommend that you speak with either Master Builders Association, BSA or seek legal advice.

If you would like more information or want to obtain the best possible chance of a successful outcome in your dispute, please contact our Commercial Litigation Department Manager, Amanda Heather on direct line 07 5506 8245, email aheather@attwoodmarshall.com.au or free call 1800 621 071.

We have an experienced dedicated Commercial Litigation team that practices exclusively in these areas.

Please click here to access our team brochure with details of our professional staff.

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Charles Lethbridge

Charles Lethbridge

  • Senior Associate
  • Commercial Litigation
  • Direct line: 07 5506 8240
  • Mobile: 0421 885 195