CPD Security of Payment 2012/3 – Entitlement part 2

John Lowry FAIQS, AIAMA, ICECA, Reg Adjudicator (Qld)

ENTITLEMENT – Part 2

Entitlement is your right to payment of the amounts claimed in your payment claims. It also establishes your rights in relation to the amounts you are required to pay to your suppliers and subcontractors. Your entitlement to payment is established by two things, CONTRACT and LEGISLATION.

In the last column, we looked at how your contract establishes your entitlement to payment. This column will show you how legislation in Queensland protects your entitlement to payment.

Queensland has very strong legislation for contractors, compared with other States. Your entitlement to payment is protected with three State laws. These are:-

  • The Subcontractor’s Charges Act 1974
  • The Queensland Building Services Authority Act 1991 (QBSA); and
  • The Building and Construction Industry Payment’s Act (The Payment’s Act).

The Subcontractor’s Charges Act is, to some extent, the odd man out, but it has a place. It may not be used together with the Payment’s Act. The essence of this Act is to secure unpaid subcontractors’ money’s that have not already been paid to a contractor. Once secured, the debt must still be proved in the court system. In my view, this Act has been poorly administered by the industry and, as a result, it has not enjoyed popular support. The tendency has been to use this Act to salvage a subcontractors’ position when a contractor is about to or has gone into legal protection (administration or receivership).

[New South Wales amended its security of payment act to deal with the problem of securing upstream monies by allowing respondents to reach above the contract to a higher contract.]

The QBSA Act protects contractors in a number of ways. All the important contractual protections of the QBSA (part 4A) are included in the Payment’s Act. However, it is a double edged sword, because it can be used against you if you do not meet your obligations.

The key payment protections are:

67I – Directions given under building contracts,

67J – Set-offs under building contracts,

67K-M – Limits of retention amounts

67P – late progress payments,

67U,W – Implied conditions for prompt payment (payment terms).

It is very important to fulfill your responsibilities under the QBSA to protect your position under the Payment’s Act.

The Payment’s Act is the final piece of the puzzle. It sets up a legislated cash management process for the construction industry to guarantee prompt payment, if you elect to use it. It includes adjudication, a powerful method for quickly deciding disputed progress payments. It is very dangerous to ignore this Act.

The next column will look more closely at the key QBSA clauses that affect your right to receive or resist payment.

John Lowry is a director of AIQSANA, a Queensland Authorised Nominating Authority under the BCIPA, backed by the Australian Institute of Quantity Surveyors.

If you would like regular information and advice on trends in payment in the construction industry, subscribe to Payment (Really) Matters or write to admin@aiqsana.com.au.

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One Response to CPD Security of Payment 2012/3 – Entitlement part 2

  1. Sarra Chudasko says:

    Hi John,
    I met a Peter Lawry at a Wall and Ceiling function a couple of years ago. He had a programme to implement the Securities of Payments. Do you know him or off him. Would like more information on the tool he was using.
    Please reply to sarra@chadplaster.com.au – I am in Victoria

    Like

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