Subcontractors’ charges provide a way for subcontractors to secure payment of amounts owed to them under a contract by someone who is higher in the contractual chain. It may also be used to secure retention monies held under the contract.
If you lodge a subcontractors’ charge for outstanding payments, this will ‘leap frog’ the contractor who owes you money and be applied to someone further up the contractual chain. In doing so, money owed to the contractor, can be frozen while the dispute is being decided and redirected to you after the dispute is decided by QCAT or the courts.
Before you lodge a subcontractors’ charge
Before you consider lodging a claim for subcontractors’ charges, it is strongly recommended you seek legal advice from someone with experience in payment disputes in the construction industry.
Here are some things you need to consider before pursuing this process:
- if you lodge subcontractors’ charges, you will not be able to access the adjudication process as a means to resolve the payment dispute – you need to pick one or the other
- a subcontractors’ charge will only apply if there is still money owing to the contractor by the person higher in the contracting chain – if they have been paid all remaining amounts owed under their contract – subcontractors’ charges cannot be used
- strict time limits apply for lodging subcontractors’ charges – within three months after practical completion for the work
- the subcontractors’ charges process is very technical and minor mistakes made on written documents, can render your claim invalid – always seek legal advice and assistance before lodging a subcontractors’ charge.
Who can lodge a subcontractors’ charge?
Any subcontractor who has been engaged by a contractor under a building contract to carry out ‘work’ as defined by as defined under section 105 of the Building Industry Fairness (Security of Payment) Act 2017 (BIF Act).
This could include labour carried out in connection with construction, demolition, alteration, repair of a building, plant or machinery used for these types of work under a building contract.
To lodge a charge, you also need to make sure:
- your claim for payment is in accordance with your subcontract and
- your claim is for payment for work done under your subcontract and
- you will be able to prove your entitlement to your claim.
Please note, subcontractors’ charges do NOT apply to domestic building work or damages for breach of contract or where it relates to money held in a project bank account or retention trust account.
What information do I need to lodge a charge?
To lodge a subcontractors’ charge, you must first issue a notice of claim form to the contractor who engaged you:
To complete this form, you’ll need some information about the contract under which you have been engaged to perform this work. If you don’t have this information, you can ask the contractor for this in writing and they must respond to your request within ten business days. Failure to do so is an offence and can be reported to the QBCC to investigate using the notice of offence form on myQBCC.
Make sure your claim:
- specifies the amount of the claim
- provide details of the work delivered or the goods and services supplied
- is certified by a qualified person (such as a registered Architect, Professional Engineer, Surveyor or licensed Building Supervisor)
- is supported by a statutory declaration from you.
How and when do I lodge a charge?
Make sure you give your notice of claim form (PDF, 194KB) to both:
- the contractor who owes you the money and
- the relevant person higher in the contract chain who pays the contractor.
You can submit your notice of claim at any stage during a subcontract but no later than three months:
- after completion of work – for money owed under a contract or subcontract
- after expiry of the defects liability period under the contract – for retention monies.
What happens next?
Response required within 10 days
Within ten business days of receiving your claim, the contractor must send a Response to a notice of claim form (PDF, 60 KB) to you as well as the person higher in the contract chain who pays them.
In this form, the contractor must declare if they accept (in full) or dispute your claim (in part of in full).
If the contractor fails to respond to you within the specified timeframe is an offence and can be reported to the QBCC to investigate by lodging a notice of offence form on myQBCC.
If contractor accepts liability
If the contractor accepts liability for your claim, the person higher up the chain will pay you either the full claimed amount, or the amount stated in the contractor’s response which they have accepted liability for paying.
Disputed charges go to court
If the contractor does not accept liability for the full claimed amount, you must enforce the charge by commencing court proceedings within one month from when the notice of claim was first given. If however the claim is for the retention amount only, court proceedings must be commenced within four months after the due date for payment of the retention amount.
If you miss these timeframes for commencing legal action, you may be able to piggyback on proceedings commenced by another subcontractor.
Can I withdraw my claim?
A notice of claim for Subcontractor’s charges can be withdrawn at any time, wholly or partly.
If you decide to partly or wholly withdraw your claim:
- complete and send a Withdrawing a notice of claim form (PDF, 64KB) to all relevant parties.