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Major Amendments Introduced to Queensland’s Security of Payment Legislation

securities payment legislationOn 23 July 2020, the Building Industry Fairness (Security of Payment) and Other Legislation Amendment Act 2020 (BIFOLA Act) received assent. Provisions of the BIFOLA have received proclamation with further provisions rolled out on 1 October 2020. 

The first tranche of amendments relating to Project Trust Accounts was rolled out on 27 August 2020. You may be familiar with ‘Project Bank Accounts’ as referred to in the Building Industry Fairness (Security of Payment) Act 2017 which is essentially a trust account whereby payments from the Principal to the Head Contractor are paid, amounts payable to a subcontractor and amounts the subject of dispute are held. The trust account must be held by a financial institution approved by the Queensland Building and Construction Commission. The phased introduction of Project Bank Accounts (PBA) will see private projects with a value about $1M requiring a project trust account. 

The phased implementation will occur as follows: 

1 March 2021 

From this date, the previously named ‘project bank account’ will now become ‘project trust account’ and will apply as follows: 

  • the contracting party (i.e. means the party to the contract for whom the building work is to be carried out) is the State, the contract price is $1 million or more but not more than $10 million, and more than 50% of the contract price is for project trust work (i.e. the erection or construction of a building, the renovation, alteration, extension, improvement or repair of a building among others including work prescribed by regulation to be project trust work); or 
  • the contracting party is a State authority (i.e. a corporation that is owned or controlled by the State) that has decided a project trust is to be established for the contract, the contract price is $1 million or more and more than 50% of the contract price is for project trust work. 

1 July 2021 

The project trust accounts regime will be expanded to include circumstances where the contracting party is the State, or a Hospital and Health Service and the contract is valued at $1 million or more. 

1 January 2022

The project trust accounts regime will be expanded to include the private sector and local government where: 

  • the contracting party is “a state authority, a local government, an individual, a private entity or a hospital and health service”; and 
  • more than 50% of the contract price is for project trust work; and 
  • the contract price is $10 million or more.

1 July 2022 

The extended application of project trust accounts and retention trusts to contracts for $3 million or more. 

1 January 2023 

All eligible contracts where more than 50% of the contract price is for project trust work and the contract price is $1 million or more. 

After the project trust account regime is fully integrated, subcontractors can take some comfort in knowing that there exists a retention trust, held primarily for their benefit with added protections for deposits to and withdrawal of funds from the retention trust account. This is especially important in these times of continued economic uncertainty. 

On 1 October 2020, the Building Industry Fairness (Security of Payment) Act 2017 was amended insofar as a person (the claimant) recovers money owing, as follows: 

  • the claimant must ensure the payment claim is accompanied with a supporting statement stating that all subcontractors have been paid all amounts owed to them by the claimant at the date of the payment claim; or if payment has not been made, the reasons the amount was not paid in full. 
  • When an adjudicated amount has not been paid in full, a head contractor can lodge a payment withholding request against a financier to their principal to withhold monies out of the related amount payable to the developer. 
  • When an adjudicated amount has not been paid in full, the head contractor may request a charge over the property where the work was carried out if it is owned by the respondent or a related entity.

Queensland Building and Construction Commission Act 1991 (QBCC Act)

The QBCC Act will be amended to implement new regulations on licences issued by the QBCC, enhance sharing of license information across jurisdictions, amendments about excluded individuals entitlement to a site supervisor’s licence and clarify the QBCC’s powers to impose a condition on a license restricting the scope of works. 

The following amendments were introduced on 1 October 2020

  1. prevent excluded individuals from holding a site supervisor licence;
  2. improve sharing of licensing information across jurisdictions; and 
  3. introduce a new penalty for delaying or obstructing the rectification of building work. 

(source: https://www.hpw.qld.gov.au/news-publications/legislation/building/bifola-2020)

Building Act 1975

The Building Act 1975 will be amended to improve the standards and to strengthen the regulatory framework of the certification and inspection process. These reforms will commence on 1 October 2020

Architects Act 2002 and Professional Engineers Act 2002

From 1 March 2021, the BIFOLA Act will improve the powers of the Board of Architects of Queensland and Board of Professional Engineers of Queensland to enter places, to search and seize, more thoroughly investigate complaints and impose conditions on an architect’s or professional engineer’s registration without their consent. 

What does this mean for you? 

Well, with the advancements made to the security of payment regime fast approaching, it is important that you consult with an experienced construction lawyer to ensure that you are aware of, and understand, the changes ahead of time. 

At Marino Law, we have an expert team of building and construction lawyers that can assist with all aspects of building and construction law from the contract negotiation and preparation stages through to enforcement and litigation of same. Contact us today for a consultation to discuss how we can assist you.

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