If you have received a claim for a progress payment from a party who is (or claims to be) entitled to a progress payment under a construction contract (i.e. a contract, agreement, or other arrangement, under which a party undertakes to carry out construction work for, or to supply related goods and services to, another party), you must respond to that payment claim within at least 15 business days (or any shorter period agreed to). The deadline to respond to a payment claim cannot be extended in any circumstances.

Failing to respond to that payment claim by your deadline:

1. Is an offence punishable by a maximum fine of $14,375 for an individual and $71,875 for a corporation;
2. Gives the Queensland Building and Construction Commission grounds for giving notice that a type of disciplinary action may be taken against a person who holds, or previously held, a licence to carry out building work in Queensland, such as (among other things):
   1. Following the giving of proper notices, the preparation of a certificate to the effect that the recipient of the payment claim is liable pay the amount claimed (which can be filed in Court as a judgment for a debt in favour of the party who gave the payment claim);
   2. Imposing a penalty of $28,750 on an individual or a penalty of $143,750 on a corporation;
   3. Suspending, imposing conditions on, or cancelling a building licence
3. Makes you liable to pay the amount claimed on the due date for the progress payment.

If you fail to respond to a payment claim by your deadline, and you want to avoid these consequences, you might be able to argue that the payment claim is invalid because it does not comply with the statutory requirements. Section 68 of the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (‘BIF Act’) requires that a payment claim:

1. identifies the construction work or related goods and services to which the progress payment relates; and
2. states the amount (the claimed amount) of the progress payment that the claimant claims is payable by the respondent; and
3. requests payment of the claimed amount; and
4. includes the other information prescribed by regulation.

Naturally, these requirements exist to help parties involved in a commercial construction project to assess and administer progress claims. However, it is not always easy to identify whether a payment claim is valid.

In Ausipile Pty Ltd v Bothar Boring and Tunnelling (Australia) Pty Ltd [2021] QCA 223, findings were made that a payment claim, made in good faith, will not be invalid merely because it claimed amounts under more than one (1) construction contract and any issues with validity of a payment claim must be first raised in a payment schedule, not at an adjudication.

In that case, Bothar Boring and Tunnelling (‘Bothar’) entered into a design and construct subcontract with Ausipile for the design of a secant pile launch shaft at Quota Park, Biggera Waters. Bothar entered into a separate arrangement with Ausipile for the wet hire of a crawler crane. Bothar held back payments to Ausipile and Ausipile served a single payment claim for amounts owing under both contracts.

The Court of Appeal held that the payment claim was not invalid for the purposes of the BIF Act, finding, per Morrison JA:

“Provided a payment claim is made in good faith and purports to comply with s 75(1) of the Act, the merits of that claim, including questions as to whether it complies with s 75(1), is a matter for adjudication after having been raised in a payment schedule. A recipient of a payment claim cannot simply sit by and raise that point later, if it is not put in a payment schedule in response.”

Recently, Rose Litigation Lawyers assisted a head contractor in responding and preparing a comprehensive payment schedule to an alleged payment claim for the sum of $348,000 which did not comply with the requirements of a payment claim under the BIF Act in any respect.

If you require any assistance in preparing a payment schedule, Rose Litigation Lawyers are available to assist to ensure your compliance with the BIF Act.