BIFSOPA Claims
In late 2018, the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (“BIFSOPA”) replaced the outdated Building and Construction Industry Payments Act 2004 (Qld). The updated legislation was passed to ensure builders and subcontractors get paid on time for the work they do. The Act provides a fast and reliable payment system that acts as a safeguard for money owed to builders and subcontractors for their supply of relevant goods and services.
Under the BIFSOPA, when a builder or subcontractor makes what is referred to as a ‘payment claim’ (which may simply be in the form of an invoice) to their principal contractor, one of two things must happen: (1) payment must be made in full by the due date outlined on the payment claim OR (2) if the principal contractor doesn’t agree to the claim amount, a payment schedule must be issued within 15 business days. This payment schedule must identify in writing the amount which the principal contractor intends to pay, as well as the reasons for paying a different amount than what was originally claimed. The QBCC outlines five main reasons for providing a payment schedule as that the principal contractor:
- believes the claim was given incorrectly (eg; not on the correct reference date, or didn’t include required information)
- doesn’t believe the payment claim was intended to be given to them
- is withholding a retention amount from the full amount claimed
- disagrees wholly or partially with the amount stated in the payment claim (eg; not all the work was completed as claimed or agreed)
- believes there are other contractual performance issues.
Once subcontractors receive the payment schedule, they can either agree with the amount stated in the schedule and wait to be paid or disagree with all or part of the amount stated in the schedule and take further action. This further action is typically taken in the form of mediation, conciliation, or adjudication. Adjudication is a quick and effective way to resolve disputes and is often used when time is of the essence. It is important to note that an adjudication application must be made in the approved form within strict timeframes.
If the principal contractor doesn’t provide a payment schedule within 15 business days, they’re taken to have accepted the payment claim in full and must pay the amount claimed within 30 business days.
