On 1 October 2020, new changes were introduced to security of payment regime. The Building Industry Fairness (Security of Payment) and Other Legislation Amendment Act 2020 (Qld) (“the Act”) presents new amendments to enhance payment protections to head contractors, subcontractors and other stakeholders in building and construction projects (“the Amendments”). Several important changes have been made to the adjudication process.
Previously, respondents were required to pay an adjudicated amount within five business days of the adjudication decision. Under the Amendments, the respondent must also notify the adjudication registrar that payment has been made and provide proof of same within five business days of making payment. Failure to do so carries a penalty of 20 penalty units.
Respondent’s may face disciplinary action and penalties, including significant fines, for failure to pay an adjudicated amount. The Amendments provide further enforcement options for applicants awaiting payment of an adjudicated amount.
Where an applicant is awarded an adjudicated amount, the applicant may make a payment withholding request to the higher party in the contractual claim. That is the party directly above the respondent in the contractual claim.
Once the higher party receives a payment withholding request, they must retain an amount up to the amount stated in the request, but no higher than what the higher party owes the respondent. Where a higher party fails to retain an amount, they become jointly and severally liable to pay the adjudicated amount and can recover this from the respondent as a debt.
In addition to making a payment withholding request under the Act, and where the applicant is a head contactor, the respondent can lodge a statutory charge over property the subject of the adjudication.
These changes represent important amendments to the Act which all building industry participants ought to familiarise themselves with.
Should you require further information regarding the above changes, please contact our construction litigation team on (07) 3847 3333.
The above information is intended as a selective overview of the changes to the Act and should not be interpreted or relief upon for legal advice.