New Legislation for Security of Payment

The Queensland Government has introduced new reforms to improve security of payment in the building and construction industry.

In October 2017, the Queensland Parliament passed new laws, namely the Building Industry Fairness (Security of Payment) Act 2017 (BIF Act), which is designed to help subcontractors get paid for the work they have completed.

The changes that the BIF Act introduced will be implemented in stages. Some of the changes commenced on 10 November 2017.

These changes:

  • Increase powers for the QBCC to regulate the building and construction industry;
  • Introduction of Project Bank Accounts (PBAs)
  • Create new offences, increase penalties and widen grounds for disciplinary action for non-compliance;
  • Amend the ‘influential person’ and ‘excluded individual’ provisions to help address the issue of illegal phoenix activity; and
  • Consolidate investigators’ powers and procedures for pool safety and plumbing work.

Specifically, the changes to the QBCC Act include:

  • Expanded definition of ‘influential person’ for a company.
  • Introduction of escalating maximum penalties for:
      • unlawfully carrying out building work;
      • carrying out building work without a nominee;
      • unlawfully carrying out fire protection work; and
      • a licensed contractor engaging an unauthorised person for fire protection work.
  • A new offence for deliberate avoidance of contractual obligations causing significant financial loss.
  • A new offence for false and misleading advertisements.
  • A person will now be an ‘excluded individual’ if they were a director, secretary, or influential person for a company within 2 years of a relevant company event (e.g. the winding up of a company).
  •  A new statutory defects liability period of 12 months for payment of retention money if a building contract does not provide for a defects liability period.
  •  A new offence for failure to pay a retention amount in accordance with a contract.
  •  A new requirement for head contractors to provide a notice to subcontractors about the end of the defects liability period.
  • A new timeframe of 12 months for a person to request rectification of building work or remediation of consequential damage.
  • Timeframes for issuing, and complying with, directions to rectify or remedy will now be prescribed by regulation (compared to the timeframe of ‘at least 28 days’ currently prescribed in the Act for complying with directions).
  • An increased timeframe of 6 years and 6 months for the QBCC to issue directions to rectify after building work is completed or left incomplete.
  •  A new provision to allow a person issued a direction to rectify to apply for an extension of time.
  • New grounds for taking disciplinary action against a licensee which include:
      • a contravention of an offence provision in the Building Industry Fairness (SoP) Act 2017. 
      • not providing a notice for the end of a defects liability period.
      • The consolidation of investigators powers and procedures, for investigating pool safety inspectors and plumbing work, in the QBCC Act.

Ellen Mubwandarikwa