On 1 October 2020, some changes were made to the Queensland Building and Construction Commission Act 1991 (Qld) (the QBCC Act), the Building Industry Fairness (Security of Payment) Act 2017 (QLD) (the BIF Act) and the Building Act 1975 (Qld) (the Building Act).
These changes are very important for those who work in the building and construction industry. In this series of articles, we explore some of the key changes and what you need to do to stay compliant.
The first change we’ll be looking at is the new requirement for a supporting statement to accompany payment claims.
From 1 October 2020, you must ensure that your payment claim is accompanied by a supporting statement if:
- there is a subcontract for the construction contract; and
- the construction contract is not also a subcontract for another construction contract.
In other words, if you are a head contractor engaged directly by the principal or owner and you’ve engaged subcontractors to carry out a part of the work, then you must include a supporting statement with your payment claim. This new obligation does not apply to contracts for domestic building work where the owner is a resident owner.
So, what has to be included in the supporting statement?
The Act states that the supporting statement is a written document either:
- declaring that all subcontractors have been paid all amounts owed to them by the claimant at the date of the payment claim (option 1); or
- if any subcontractor has not been paid amounts owed to them, then the statement needs to provide details of:
- the subcontractor’s name;
- the unpaid amount;
- the details of the subcontractor’s unpaid payment claim;
- the date the subcontractor carried out the construction work or supplied the related goods and services;
- the reasons the amount was not paid in full; and
- that all other subcontractors have been paid the full amount owed to them by the claimant.
When trying to figure out which supporting statement to attach to your payment claim, you must first understand when money becomes due and owing to a subcontractor.
If a subcontractor has issued a payment claim to a head contractor, but the due date for payment does not arrive until after the date the head contractor submits its payment claim, then the money is not owed to the subcontractor and the head contractor can make the declaration in accordance with option 1.
However, if the subcontractor remains unpaid when the head contractor submits its next payment claim, the head contractor must provide the supporting statement in accordance with option 2.
If a subcontractor has issued a payment claim to a head contractor but the head contractor disputes the payment claim and issues a payment schedule stating that $nil is payable, then the money is not owed to the subcontractor and the head contractor can still make the declaration in accordance with option 1.
The supporting statement does not need to be a separate document to the payment claim. If you have paid all subcontractors on time, the payment claim simply needs to contain a notation with words to the effect of:
“Pursuant to section 75(7) of the Building Industry Fairness (Security of Payment) Act 2017, [INSERT NAME OF CLAIMANT] declares that all subcontractors have been paid all amounts owed to them by the claimant at the date of giving this payment claim.”
Failure to comply with this requirement does not invalidate your payment claim. However, it is an offence under the QBCC Act not to comply with the provision. The maximum penalty is $13,500.
If you have any questions about supporting statements or anything to do with adjudication and the recent legislative changes more generally, then make the expert move today and contact Axia Litigation Lawyers. Because at Axia – Every Move Matters!