Protecting your payment rights

Frequently asked questions

 

Invoices

What happens to invoices issued before the 17 December 2018 when the Building Industry Fairness (security of Payment) Act 2017 commences?

Invoices issued before 17 December 2018 will continue under the requirements of the  Building and Construction Industry Payments Act 2004 (BCIPA) until the matter is resolved.  This includes requiring the endorsement that it is a Payment claim made under the Building and Construction Industry Payments Act.

Payment claims (also known as progress payment claims/invoices/requests for payment) issued prior to the commencement of the BIF Act will continue under the existing BCIPA Act until the matter is resolved.

Does a payment claim need to be an invoice?

Under the BIF Act, the endorsement (this is a payment claim made under the BCIPA Act) will no longer be required. Simply stating that it is an invoice is enough. From 17 December 2018 the basic requirements for a payment claim is that it is a written document that; 

  • Identifies the work that it relates to;
  • States the amount owed (the claimed amount); and
  • requests payment.

What happens if I receive an invoice to pay in full but then receive an extra request for another payment of an unapproved variation, do I have to issue a payment schedule?

If you receive an invoice, and you do not intend to pay in full and by the due date, you should always issue a payment schedule stating the amount, if any, you intend to pay and the reasons for withholding payment. For example in this case you would state that the invoice will not be paid because it is an invalid payment claim.

How will it be decided when an invoice is received or given? Is it based on when it is received or the date on the invoice? What if someone sends you an invoice by post that is backdated and then looks to enforce a shorter pay period? This question was asked from both the point of view of the claimant and respondent.

If the invoice is sent by email then the send and receive date and time is recorded. If an invoice is sent by post then it can be difficult to validate. If you want a level of assurance, you can use registered post or provide a statutory declaration. This is not a new issue – it is a current issue in relation to adjudication. It is important to have a good relationship with your contractors/subcontractors and have open communication.

What is a valid payment claim?

From 17 December 2018 the basic requirements for a payment claim is that it is a written document that; 

  • Identifies the work that it relates to;
  • States the amount owed (the claimed amount); and
  • requests payment, simply stating that it is an invoice meets this requirement. 

You need to make sure that you issue valid payment claims. This means that they are given within the correct timeframes, only one is given per reference date and that they include some basic information. 

What are correct timeframes?  

For your normal progress payments this is:

  • within the time specified under the contract; or
  • within 6 months after work was last carried out. 

For your final payment claim this is: 

  • within the time specified under the contract; or
  • within 28 days of the end of the defects liability period.  

The other timeframes that you need to be aware of is that a payment claim must be given on (or after) a valid reference date. Your contract will specify when your reference date is. Usually it is on the last business day of each week, fortnight or month or can be at staged completions.

If you don't have a written contract in place or your contract doesn't specify when you are to make a claim for payment; then the default reference date is the last day of each month. 

Sending payment claims and schedules

Can payment claims and payment schedules be provided by email?

Yes - If your contract specifies your communication channels or if it can be proven that emails are the usual method of communication between both parties.
The QBCC always recommends having a written contract which specifies appropriate communication channels. Our website has free contracts that you can print and use.

 If there is  no contract, the legislation allows for payment claims and payment schedules to be provided via provable usual methods of communication between the parties. 

Home owners and payment claims

Does adjudication apply if we are contracting with a homeowner and have a payment dispute?

No, if you have a payment dispute with a homeowner you will have to seek legal advice on payment disputes under your contract.

However, if the homeowner is an owner builder or who is a building contractor under the QBCC Act or is having work completed on a private residence for the purposes of a business such as a home hairdressing fit out, then adjudication can be used.

How can I get paid by a homeowner who is withholding my payment?

The QBCC provides a free early dispute resolution process where a homeowner and a QBCC building contractor are in dispute. It applies to contracts for domestic building work in excess of $3,300 where concerns regarding defective building work, non-completion and contractual issues arise prior to completion of the contract.

In November 2017 section 42E commenced which allows the QBCC to investigate and pursue anyone who is a party to a contract and does not fulfil their contractual obligations causing significant financial loss, this includes investigating and prosecuting building owners or developers.

The QBCC has not had any such powers in the past. A Notification of Offence form should be completed and returned to the QBCC to investigate.

Timeframes

Can you make the claim earlier in the month?

Your contract should outline your reference date (or date to issue your progress payment claim). You risk issuing invalid payment claims if you issue before your progress payment claim can be made OR by issuing more than one claim per reference date

If we don’t have a contract what is the due date for payment?

If a contract specifies the payment terms then the due date for payment will always be the payment terms under the contract. 

If the contract doesn't state when the due date for payment is, then the BIF Act states that the time for payment will be 10 business days from the date the payment claim was received.

If the default days are on the 31st of the month, people will miss out on payment on 31st December

Reference dates depend on what is in the contract. If there is no contract or the contract is silent then the default reference date is the last day of the month. However, the legislation states that a business day is from 12.00am – 11.59pm and does not include:

  • weekends,
  • public holidays,
  • date notice was given,
  • 22nd December – 10 January

If the place where a document is presented is having a public holiday, that day  cannot count as a business day. When counting business days the date that a notice is served on a party is always day 0. Start counting the day after.

What will happen if you make payment before the due date for payment but due to a delay in electronic transfer, the money is not received by the other party until after the due date for payment? Is that a breach of the legislation?

QBCC is taking an educational approach and recognises that these changes will require significant behavioural change in the industry. We will first look to educate rather than penalise. It's important that persons get paid and the changes aim to make this process quicker and easier. The changes encourage communication between parties rather than penalise persons for not paying the day after the due date. It is important to note that if the amount stated in a payment claim is paid before an adjudicator makes a decision, the adjudication is considered withdrawn. 

Reference dates – My contracts currently require a payment claim to be made on or before 22nd day of the month. I then use this information to claim from the principal which will be on the 25th day of the month. It is hard for me to include any other claims if they are received after 22nd day of the month. How is this supposed to work if the BIF Act requires me to allow someone to issue a payment claim on or after a reference date.

You can choose to issue a payment schedule in response outlining why you are not paying. This may be based on the agreement in the contract which was to make a claim on the 22nd of the month. However, you may wish to get legal advice. You could be in breach of the current BIF and BCIPA Act requirements which allows for a payment claim to be made on or after a valid reference date.

You can continue to use these agreements but it is possible that they are invalid based on the requirements in the legislation. If you go to adjudication, your reason for not paying (based on the claim being made after the agreed reference date) may be invalid.

Example – Would sending an email saying that you wish to issue an invoice next week for work completed be considered as the start of the timeframe for responding to a claim for payment?

The intention of the laws is to encourage communication. If you receive a claim for payment that you do not agree with, then respond with a payment schedule.

The law does not allow you to trick someone into paying something that is not owed based on a vague email. If you wanted to send someone an email and let them know that you have completed a job and will send them an invoice shortly, make it clear that it isn’t a claim for payment and that you will follow up with an invoice shortly.

Contracts and payment claims

What format does the contract have to be in?

The contract should be a written and agreed to document that it is fair and meets legislative requirements. Our website has free contracts that you can print and use.
For the purposes of adjudication, a contract could be written notes, email chain or even diary notes that show an agreement or other arrangement for 1 party to carry out work or goods and service for another party. 

At a minimum, your contract should cover who, what, where, when and some other general conditions around payment terms. These are: 

  • The name and contact details of the parties involved including the licence numbers and ACN or ABN. 
  • List the site address and provide a description of the work that is to be carried out. 
  • List a start date and when the work is to be completed by. 
  • It should specify how much is to be paid for the work (a contact price). 
  • Detail the timing of payments such as how often a reference date will occur and the length of the payment period; and 
  • Other payment terms such as whether any retention is being held and how long the defects liability period is.  

 

Definitions

What is a reference date?

A reference date is the date a claim for a progress payment may be made. The reference date is in the contract; or if the contract is silent, the last calendar day of the named month and last day of each subsequent month. E.g:

  • 11 October – work on site completed
  • We don’t have a contract that specifies the date to issue my progress payment claim
  • The default timeframes set out under legislation provide a timeframe for you in this case. You can issue your payment claim on or after the last day of the month

However, if a contract is terminated and the contract does not provide for, or intends to prevent, a reference date surviving beyond termination, the final reference date for the contract is the date the contract is terminated.

·What is considered ‘construction work’ for the purposes of accessing adjudication?

The construction, alteration, repair, restoration, maintenance, extension, demolition or dismantling of buildings or structures, whether permanent or not, roadworks, power lines, telecommunication apparatus, aircraft runways, docks and harbours, railways, inland waterways, pipelines, reservoirs, water mains, wells, sewers, industrial plant and installations for land drainage or coast protection etc. Section 65 of the BIF Act provides a comprehensive list.

 What is considered ‘related goods and services’ for the purposes of accessing adjudication?

  • Goods arising from or for use in construction work – plant, materials (hired or otherwise) and components to form part of any building or structure.
  • Services arising from or for use in construction work - labour to carry out construction work, architectural, design, surveying or quantity, soil testing.

Section 66 of the BIF Act provides a comprehensive list.

What is a penalty unit?
Using penalty units is a way of standardising the value of penalties across legislation. In Queensland currently, the value of a penalty unit is $130.55. To ascertain the value of the penalty, you would multiply the number of penalty units by the value of a penalty unit. 

What is a response period?

A response period is the time for responding to a payment claim. It is the earlier of the period stated in the construction contract for responding to a payment claim BUT no later than 15 business days after receiving a payment claim. What you will be responding with is called a payment schedule. A payment schedule - is a written document that:

  • identifies the payment claim to which it responds; 
  • states the amount of the payment, if any, that the respondent proposes to make;
  • if the amount is less than the amount specified in the payment claim, the payment schedule must state the reasons for withholding payment; and 
  • includes any other information prescribed by regulation.

For example If the work is completed on 11 October and the Subcontractor issues their progress payment claim on the 15th of October and we don't have a contract that specifies the reference date (or date to issue a progress payment claim), the default date stated in the legislation applies. This is the last day of the month.

If you don't intend to pay in full and ontime by the due date, respond in writing stating how much you intend to pay, if any, when, and reasons for withholding monies. In this case you may state that it is an invalid payment claim.

NOTE: DUE DATE FOR PAYMENT -   if there is no contract or the contract is silent on the due date for payment, then the legislation provides a timeframe for you of 10 business days for payment from the date you receive the progress payment claim. If you do not pay in full, you must give a payment schedule by the end of the response period being 15 Business days. 

General

What if the money owed is under $3300?

There is no minimum amount when accessing adjudication. However, adjudication fees may be up to $620 so if the matter is not decided in your favour you may be out of pocket.

What is the protection for a principal or head contractor doing work for a developer?

You should seek legal advice to go through the contract prior to entering into a contract with a developer. This will help you understand what you are agreeing to, including payment terms and possible termination of contract clauses. Both can still use adjudication seeking resolution of their payment disputes.

In November 2017 section 42E commenced which allows the QBCC to investigate and pursue anyone who is a party to a contract and does not fulfil their contractual obligations causing significant financial loss, this includes investigating and prosecuting building owners or developers. The QBCC has not had any such powers in the past. A Notification of Offence form should be completed and returned to the QBCC to investigate.

Are there any exclusions to accessing adjudication?

Yes:

  • Work outside Queensland
  • Work done on mining sites
  • loan agreements
  • if the contracted party is for domestic building work (unless the owner is an owner builder and holds an owner builder permit)
  • Employees

Can I use adjudication if I have a project bank account set up?

Yes. The project bank account has an account set up for disputed monies to be held whilst going through a payment dispute. However, if after 60 days (since transfer to the disputed funds account) the disputed amount is still being held in the disputed funds account and is no longer the subject of an ongoing dispute resolution process, the head contractor must return the amount to the general trust account  via payment instruction (or retention account if applicable).

Subcontractors’ charges – how does someone higher in the chain know if the person making the claim of charge has been paid or not? How can they validate that they aren’t lying?

Subcontractors’ charges are enforced by a court. Part of the process requires the contractor to respond and validate the claim (and also introduced a penalty for not responding). There is more information about the process available on the HPW website. It is really important to get legal advice and understand that you cannot use both adjudication and Subcontractors’ Charges provisions.