The building industry is currently feeling the pressure as supply chain issues and logistical concerns continue to be a challenge. With the recent collapse of major companies and the prediction that more are yet to come, it is important to understand your entitlements and responsibilities when it comes to payments. The Building Industry and Fairness (Security of Payment) Act 2017 (BIFA) was introduced to help people in the building industry get paid for the work that they deliver or goods that they supply. This article series will outline:
- how to make a payment claim and how to respond to a payment claim (Part 1);
- the adjudication of a payment claim (Part 2); and
- if unsuccessful at adjudication, what next? (Part 3).
How to make a payment claim
A payment claim is a written document that needs to include the following:
- identifies the construction work or goods and services;
- the amount of the progress payment; and
- requests payment of the amount.
If you are a head contractor for a non-residential building contract, you will also be required to provide a supporting statement with your payment claim to the principal or owner. The supporting statement is a written document which lets the principal or owner know if all subcontractors have been paid or any outstanding payment owing to the subcontractor.
When to make a payment claim
The timeframe to make a payment claim is referred to as the reference date and will usually be found in the contract. If there is no timeframe stipulated in the contract, then you can make a payment claim on the last day of the month in which the construction work you are claiming for was completed or the goods or services were supplied. After that, it will be the last day of each later month.
Responding to payment claims
If you are given a payment claim, then you must respond with a payment schedule within the timeframe stated in the contract. If no timeframe is stated, then you must respond 15 business days after the payment claim was given. However, you are not required to provide a payment schedule if the amount in the payment claim has been paid in full on or before the due date.
If you fail to provide a payment schedule within the timeframe, then you will be liable to pay the full amount in the payment claim.
It is important that you fully understand timeframes for when you are to provide a payment schedule. Keep in mind of any public holidays that may not be included within the timeframe and the blackout period defined in the BIFA which is from 22 December to 10 January which will not be included within the timeframe.
In the case Allencon Pty Ltd v Palmgrove Holdings Pty Ltd  QDC 90 the subcontractor provided a payment claim on 24 December 2022 and the Contractor responded with a payment schedule on 28 January 2022 but only paid part of the claim. The subcontractor claimed that the payment schedule was provided late and therefore they were entitled to the full amount in the payment claim.
The subcontractor claimed that the payment schedule should have been provided by the 14 January as the contract stipulated that a payment schedule is to be provided within 21 calendar days after receipt of a claim for payment. However, due to the blackout period in the BIFA the Court found that the earliest date a payment schedule was required was on 28 January 2022.
If you are not paying the full amount in the payment claim then you will need to provide proper reasoning as to why in the payment schedule. It is not sufficient to just say ‘incomplete work’ or ‘pending’. Make sure to provide detailed reason as to why you are not paying the full amount.
Lamont Project and Construction Lawyers’ team has extensive knowledge of the BIFA and the requirements around payment claims. If you have any questions about any matters raised in this above article as it relates to your specific circumstances, please contact Lamont Project & Construction Lawyers.
The content of this article is for information purposes only; it does not discuss every important topic or matter of law, and it is not to be relied upon as legal advice. Specialist advice should be sought regarding your specific circumstances.
Contact: Peter Lamont or Vanessa George
Phone: (07) 3248 8500
Address: Suite 1, Level 1 349 Coronation Drive, Milton Qld 4064
Postal Address: PO Box 1133, Milton Qld 4064