Payment Claims in the Construction Industry

We have previously touched on the new Building Industry Fairness (Security of Payment) Act 2017 ("the BIF Act") and summarised some of the changes effected by its introduction.  The following article will explore how progress payments are claimed under the new regime.

Making a Payment Claim

Making a Payment Claim (also known as a progress payment) under the BIF Act is one of the ways you can obtain payment for work completed or the provision of goods and services within the building and construction industry in Queensland.  It is a fast-track "pay now, fight later" system designed to minimise the need for Claimants to go to court.

Under the previous regime (the Building and Construction Industry Payments Act 2004 ("BCIPA")), a Payment Claim was only valid if it was endorsed.  That is, the Payment Claim specifically provided that it was made in accordance with BCIPA.  The new regime removes this requirement, and accordingly, any tax invoice rendered that identifies the works completed and the value of same will constitute a valid Payment Claim.

I've received a Payment Claim what do I need to do?

The BIF Act also imposes an obligation on the recipient (known as the Respondent) of a valid Payment Claim to respond to same by issuing a Payment Schedule, unless of course, payment is made in full by the due date.  Essentially, a Payment Schedule will set out how and when the Payment Claim will be paid.  Under the BIF Act, a Respondent is now required to make payment of the debt, or issue a Payment Schedule, within 15 business days of receiving the Payment Claim (or earlier, if specified in the Contract).

What if I fail to comply with a Payment Claim?

Importantly, there are now no second chances to issue a Payment Schedule.  Under the previous regime, a Claimant was required to notify a Respondent of an intention to apply for adjudication by serving them with a Notice of Intention to Apply.  This was essentially a "second chance" for a Respondent to issue a Payment Schedule (or make payment of the debt).  The BIF Act has abolished this requirement, and now a Claimant can make an application for adjudication without notice.

Accordingly, failure to comply with a Payment Claim (either by making payment or issuing a Payment Schedule on time) may have serious consequences, including a fine of up to 100 penalty units (currently $13,055.00).  Further a Claimant may:

• make an application for adjudication;
• commence court proceedings (subject to applicable notice requirements); and/or
• suspend work until three business days after the Payment Claim has been satisfied.

We understand that making or responding to a claim can be confusing and stressful, especially if you are unsure of the timeframes and drafting requirements.  If you need assistance in understanding your rights and obligations under the new regime, one of our friendly, local experts may be able to assist.

Contact us on 07 4963 2000 or via our online contact form.