Another important amendment is the reduction in the timeframe for a head contractor to provide a payment schedule, reduced from 25 business days to 15 business days. However, the provisions relating to progress payments do not commence until proclamation, currently expected to be 17 December 2018. The second reading of the Plumbing and Drainage Bill 2018 (Qld) (PD Bill) introduced a number of amendments to the BIF(SOP) Act. The PD Bill was passed on 5 September 2018 and the Plumbing and Drainage Act 2018 (Qld) was assented to on 11 September 2018. The explanatory notes to the PD Bill state:
'The proposed amendments are intended to address industry feedback received, to ensure industry participants understand their obligations under the Act and the policy objectives of the Act can be achieved.'
Amendment to payment schedule timeframe
The required timeframe for providing a payment schedule and response to a payment claim is reduced from 25 business days to 15 business days (or earlier if the relevant contract so provides).
The explanatory notes to the PD Bill state that the reduction to the timeframe means the claimant 'will know what it will be paid at an earlier time' and 'the opportunity to proceed to adjudication will also arise sooner'.
Amendments to project bank account provisions
The PBAs provisions of the BIF(SOP) Act have been amended by inserting phrases such as 'in connection with', 'in relation to' and 'relating to' when referring to amounts a subcontractor is entitled to be paid by reference to a relevant subcontract. This is intended to broaden and clarify the scope of payments to include all amounts payable outside the terms of the subcontract, for example, as a result of adjudication.
A new section 10A was inserted to clarify the existing references in the BIF(SOP) Act to 'liable to pay' and 'liable to be paid'. This means that a head contractor's liability to pay a subcontractor beneficiary arises at the earlier time—such as when a payment schedule is provided or 15 days after a payment claim is provided—rather than when the payment is due. This should avoid the circumstance where a head contractor might believe they were allowed to pay themself first, then 'top up' the trust account later.
Other notable amendments include:
- Shortfalls: Head contractors must top up PBAs 'immediately' after they become aware of a shortfall.
- Dealing with retention amounts: Under a new section 34A of the BIF(SOP) Act, a head contractor cannot withdraw funds from the retention trust account to pay themself until the end of the relevant defects liability period. However, they may withdraw amounts to pay another subcontractor beneficiary who is engaged to correct defects in the originally subcontracted work, provided the head contractor has an entitlement to pay itself the amount under the subcontract.
- Payment disputes: Clarification as to when a payment dispute arises: where a head contractor does not prepare a payment instruction to pay the full amount proposed under the payment schedule; where the head contractor fails to give a payment schedule and also fails to prepare a payment instruction to pay the full amount claimed in the payment claim. Also, a head contractor is not obliged to transfer the disputed amount to the disputed funds trust account to the extent that the amount is more than the contract price and is the subject of a payment dispute where the head contractor had failed to issue a payment schedule.
- Trust accounts name: When opening a trust account in relation to a PBA, the head contractor must ensure the account's name includes the word 'trust' not 'trust account' (ie the word 'account' is not required).
- Opening/closing trust accounts: A head contractor is now required to give notice to a subcontractor when opening or closing a trust account within five business days (reduced from 10 business days).
- Information about subcontracts: In circumstances where a PBA must be established after a subcontract has been entered into (eg due to an amendment to a contract which results in it becoming a PBA contract), the head contractor must give the principal the prescribed information within five business days after the PBA is required to be established.
- Who is a supplier: A subcontractor is not a 'supplier' for the purpose of a PBA if it is required to a hold a licence to supply goods or services under the Queensland Building Construction Commission Act 1991 (Qld), Building Act 1975 (Qld), Plumbing and Drainage Act 2002 (Qld) or Electrical Safety Act 2002 (Qld).
- Related entity: The definition of a subcontractor beneficiary's 'related entity' for the head contractor now includes the aunt and uncle of a person or of the person's spouse.