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Building & Construction News Alert: Security of Payment Discussion Paper

News Alert 10 February 2016

Submissions and views are called for on a security of payment discussion paper released by the Department of Housing and Public Works.

In December last year the Minister for Housing and Public Works Mick De Brinni released a discussion paper calling for submissions by 31 March 2016 on various topics, but generally in respect of security of payment. The paper broadly canvasses five options in respect of security of payment and reviewing the current legislative responses. In addition, the paper calls for submissions in respect of amendments already made to the Building and Construction Industry Payments Act, the Queensland Building and Construction Commission Act and calls for further consultation on the Subcontractors Charges Act.

Of the five options canvassed to improve security of payment the Department seem to favour project bank accounts or PBA trust accounts, as well as retention trust fund schemes with the paper pointing to various trials taking place in Australia (NSW, WA and NT) as well as effective schemes having been undertaken in the UK since 2007.  

Depending upon the success of trials in NSW and other states and territories, it seems likely that at least one of these options will be seriously considered for introduction within Queensland. While the retention trust fund scheme does safeguard retention money, it does not safeguard contractual stage payments as the PBA system does. Both schemes disadvantage contractors who use retention monies as working capital. 

Of note is the call for submissions in relation to the Subcontractors Charges Act which suggests that ‘the Act is hard to understand and use with only minor non-compliances.....resulting in claims being ruled invalid.’ Legal practitioners will only reflect agreement with that stated position as the Act has had a very chequered past in terms of its interpretation.  While originally enacted in 1974, amendments to it have been done in a piecemeal way failing to clarify drafting anomalies and difficulties.  It is in the category of act that needs to be reviewed in its entirety.

It is heartening to see a Government take that project on, as most have found that task too difficult.

The discussion paper can be found here and the industry is encouraged to respond so truly responsive legislation can be enacted.

If you have any queries regarding this News Alert or require building and construction legal advice please do not hesitate to contact Tony Mylne, Partner, Brisbane Construction Team.


Tony Mylne, Partner
Brisbane

News Alert 10 February 2016
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