The Queensland Government has passed further amendments to the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (BIF Act) in an attempt to clarify how project bank accounts (PBAs) are to operate.
The BIF Act provides sweeping changes to existing construction and licensing legislation in Queensland.
Subcontractors charges
WARNING - A subcontractor’s charge that is inconsistent with subsection (1) is of no effect and does not attach – talk to Merlo Law today before its to late – did you know under the sweeping new laws it may be to late when your head contractor goes into liquidation?
A subcontractor’s charge not apply to domestic building work unless that work is carried out for the purpose of a business conducted by the individual either alone or as a member of a partnership. You need to consider other options now. talk to Merlo Law today before its to late.
What work can I put a charge over??
No second chances. Its not as simple as it seems, don’t make critical mistakes. You only get one chance. Talk to Merlo Law today.
You can put a charge over work for a contract that is labour, whether skilled or unskilled, carried out by a person in connection with—
the construction, decoration, alteration or repair of a building or other structure; or
drain, embankment or other excavation in or on land; or
placing or fixing materials, plant or machinery used or intended to be used for the above; or
the alteration or improvement of a thing; or
the demolition, removal or relocation of a building or other structure; and
Work includes—
the supply of materials used by a subcontractor in connection with other work the subject of a contract; or
the manufacture or fabrication, wherever it happens, of project-specific components for a contract; or
the supply of labour for a contract, other than labour that is only administrative in nature; but
BUT does not include—
the mere delivery of goods sold by a vendor under a contract for the sale of goods; or
labour done by a person under a contract of service; or
labour done by a person in connection with the testing of materials or the taking of measurements; or
a contract for the hire of plant or machinery not intended to be incorporated into work mentioned.
Provided they meet the above criteria each subcontractor for the contract is entitled to a charge over money payable to the contractor under the contract; or another subcontractor under a higher subcontract.
A subcontractor’s charge secures payment in accordance with the subcontract of all money that is payable, or is to become payable, to the subcontractor for the subcontracted work.
You must still comply with your contracts dispute resolution process
A Subcontractor’s charge will be valid although provisions of your subcontract must still be complied with. Failure to comply with contractual dispute resolution processes can and will mean you are ultimately defeated when you have to go to court to enforce payment of your Subcontractor’s charge. Talk to Merlo Law today before its to late.
Provisions which will apply
Examples of provisions which establish a procedure for dispute resolution include but are not limited to:
Any clause for certification of the amount, quality or value of work that has been performed; or
a provision establishing a procedure for the resolution of a dispute about the amount, quality or value of work that has been performed.
Things expressly not covered by subcontractor’s charge
A subcontractor’s charge can not include the following:
Damages for breach of contract or in tort;
an amount payable on the basis of an extra-contractual remedy, including, for example, as reasonable compensation for work done;
damages or other relief under another chapter or another Act; or
damages or other relief under an Act of another State or the Commonwealth.
Don’t be fooled – a head Contractor cannot assign the debt owed.
An assignment, disposition or charge of any kind that is made or given by a contractor for money that is or is to become payable to the contractor under the contract has no effect against a subcontractor’s charge.
Risks
There are always ‘unknowns’ involved in serving a subcontractors’ charge. We set out the most relevant of those as we see them:
Where there is no money to be secured and no security. Only money payable to the contractor or security held under the relevant contract can be secured. Where there is no money payable and no available security, the legs; result is a subcontractor will not have secured the amounts owed to them, even though you have properly completed all steps required under Chapter 4 of the BIF Act.
There may not be enough money secured to satisfy the charges of all subcontractors. Where this is the case, secured money is shared between the subcontractors in proportion to their claims.
‘Caught on a technicality’. Subcontractors’ charges are very technical - minor errors often result in a Notice of Claim being invalid.
Strict time limits. Time limits for subcontractors’ charges are strict. You must make a subcontractors’ charge within three months of ‘completing the work’ within Chapter 4 of the BIF Act. You must commence proceedings within one month of serving your subcontractors’ charge.
A subbies charge is a powerful tool but it’s of limited value if you need your money NOW and no use if you will be insolvent before you get your hands on it – talk to Merlo Law today about preventative planning, good contract management and how to utilise the BIF Act best for your business.
This publication considers legal and technical issues in a general way. It is not intended to be legal advice. Any legal advice is qualified on the basis that the reader should immediately confirm the information relied upon with Merlo Law. We look forward to being of assistance.
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