Payment disputes

What is a payment dispute?

A dispute relating to building and construction work may arise when parties to a contract or other agreement disagree about:

  • the amount of money being claimed
  • the amount of money proposed to be paid or that has been paid is less than expected
  • the date payment is due or is proposed to be paid
  • if an amount required to be paid, has not been paid in full or at all
  • the quality and satisfactory completion of work in accordance with the contract.

Options for resolving disputes over payment

While there are a number of options to resolve disputes over payment, it’s really important to be aware of the following:

  • communication between the parties involved should always be the first step
  • not all options will be suitable or available for every dispute
  • some options have limited timeframes for commencing action
  • you should seek legal advice prior to pursuing options as there can be serious consequences (including financial costs) for taking actions when you’re not entitled to.

Options for resolving disputes – the pros and cons

To help you decide which options may be best suited to your situation, we’ve compiled a list of the advantages and disadvantages for each payment dispute resolution option.

Adjudication

When parties are in dispute about an amount owed for construction work, the person seeking payment can lodge an adjudication application with the Registrar.

Advantages

  • rapid decision on dispute (timeframes for adjudicator making decision apply)
  • the adjudicator’s decision is enforceable in court if not paid
  • non-payment of the decision is an offence enforced by QBCC
  • generally cheaper and faster than going to court (fees are capped for smaller claimed amounts under $25,000)
  • can be used at the same time as suspending work.

Disadvantages

  • fees apply and vary depending on the amount being claimed
  • strict time requirements for making application and limitations apply
  • can still end up in court if the adjudicator’s decision is not paid.

Monies owed complaint

You can use a monies owed complaint to notify the QBCC when a QBCC licensee has not paid money they are liable and due to pay.  

Advantages

  • free to lodge a monies owed complaint
  • no time limitations on when the complaint may be lodged with the QBCC
  • investigation by QBCC with possible action against licensee, including licence suspension or cancellation
  • can be used at the same time (or after) suspending work, lodging subcontractors’ charges or commencing legal proceedings (QCAT or court) – but can only be used after an adjudication decision has been made.

Disadvantages

  • can only be used against a QBCC licensee
  • The QBCC can’t make a decision on who is in the right or in the wrong or settle the dispute
  • The QBCC can't make the other party pay, however action taken by the QBCC such applying demerit points or suspending or cancelling the person’s licence can encourage prompt payment of the debt.

Queensland Civil and Administrative Tribunal (QCAT)

The Queensland Civil and Administrative Tribunal (QCAT) is an independent, accessible and in some cases less expensive pathway to payment dispute resolution for amounts up to the value of $25,000.

Advantages

  • QCAT can make a decision on the dispute
  • can be used at the same time as a QBCC monies owed complaint and suspending work
  • time restriction: no later than 20 business days after the due date for the payment, the claimant must give the respondent a completed written notice of intention to start legal proceedings.

Disadvantages

  • associated fees
  • has strict time requirements and limitations
  • can only hear matters involving amounts up to $25,000
  • the claimant must wait five business days after giving the respondent written notice of intention to start legal proceedings, before taking further action.

Subcontractors' charges

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.

Advantages

  • freezes money owed by a higher person in the contractual chain
  • can be used at the same time as a QBCC money owed complaint, suspending work and court proceedings.

Disadvantages

  • is only effective if the higher person has money not yet paid to the contractor
  • strict time requirements and limitations
  • cannot be used in conjunction with adjudication – it’s one or the other
  • is only temporary until a court decision is made on the dispute​
  • needs legal advice 
  • costs of legal advice.

Suspending work

If you’re a subcontractor and someone owes you money, you have a choice to suspend work in order to encourage payment from that person.

Advantages

  • free, unless legal advice is sought
  • may influence a quicker payment result without the need to escalate through other channels
  • can be used at the same time as a QBCC monies owed complaint, adjudication, QCAT, court proceedings and subcontractors’ charges
  • stops further payment debt accruing.

Disadvantages

  • two business days’ notice is required
  • does not provide a decision on the dispute
  • fees may apply if legal advice is sought
  • may inflame the situation
  • other options to resolve the dispute are needed.

The courts

A claimant may choose to legally pursue an outstanding payment through the court system, which includes the Magistrates, District or Supreme Courts.

Advantages

  • delivers a decision on the dispute
  • can be used at the same time as a QBCC money owed complaint and suspending work.

Disadvantages

  • potentially costly legal advice and fees.
  • time requirements and limitations apply.