Scheduling Compliance – Payment Obligations in the Construction Industry
Timely payments in the construction industry are essential. Whether you’re completing the works and require payment or you’ve received a payment claim, time is of the essence. A quick glance at the history of construction disputes reveals that without a seamless transition between works rendered and paid, building projects can (and often do) come to a halt.
To secure the effective, efficient and fair process for securing payment, the Building Industry Fairness (Security of Payment) Act 2017 (QLD) (the “BIF Act”) was introduced. This article outlines parties’ legislative rights and obligations in the construction industry to pay or to be paid on time.
Payment Claims & Payment Schedules
The BIF Act facilitates the payment of works rendered by “payment claims” and “payment schedules”.
(a) identify the construction work or services to which the progress payment relates;
(b) state the amount (the claimed amount) of the progress payment that you claim is payable;
(c) expressly request payment of the claimed amount; and
(d) only be issued on or from the contractually defined Reference Date.
(“Valid Payment Claim”)
Should you choose the latter option, it is critical that the payment schedule:
(a) is served within the time required under the construction contract or by no later than fifteen (15) days after the date you received the payment claim;
(b) clearly outlines that the payment schedule is in response to the payment claim;
(c) clearly states what dollar amount, if any, you intend to pay in response to the payment claim; and
(d) if you intend to pay less than the amount requested in the payment claim, a valid reasons as to why you are withholding payment—for example, does the payment claim relate to a variation that was not agreed between the parties?
(“Valid Payment Schedule”)
Lessons from disputes
Recent disputes have highlighted:
- a payment claim for multiple contracts is invalid;
- a standard ‘invoice’ with an accompanying statement detailing the works may satisfy the requirement of a Valid Payment Claim;
- a detailed email in reply to a payment claim may satisfy the requirement of a Valid Payment Schedule.
- a payment schedule that merely “recommends” rather than clearly stipulating a dollar figure for payment will be deemed invalid.
- a clause in a contract which attempts to bypass or vary the definition of payment claim or payment schedule under the BIF Act is invalid and of no effect.
Importantly, whether or not a document is a payment schedule (or payment claim) must be readily ascertainable—at least ordinarily—without the assistance of a lawyer. This mirrors somewhat of a “pub test” for the construction industry and reflects the courts’ reluctance to probe documented communications in an overly technical manner.
Although dated, Chesterman J’s statement in Minimax Fire Fighting Systems Pty Ltd v Bremore Engineering (WA) Pty Ltd & Ors accurately summarises the purpose of payment claims and payment schedules:
“The Act emphasises speed and informality. Accordingly one should not approach the question whether a document satisfies the description of a payment schedule (or payment claim for that matter) from an unduly critical viewpoint. No particular form is required. One is concerned only with whether the content of the document in question satisfies the statutory description”
In other words, the BIF Act must be your first and last point of call when assessing whether you have issued a Valid Payment Claim or whether you are responding with a Valid Payment Schedule.
Implications for the tardy or unprepared
Failing to issue a Valid Payment Claim as a builder can have catastrophic consequences; failure to reach practical completion due to liquidity issues is but one example.
Failing to issue a Valid Payment Schedule can be just as problematic; the amount in the payment claim becomes payable by default. If not pursued as a liquidated debt, the claimant may request adjudication—in the latter event, you will be precluded from making a response in opposition to the payment claim before an adjudication decision is made.
Both examples serve as a reminder to take a proactive rather than reactive approach to payment in the construction industry.
Whether you’re completing works and require payment or you’ve received a payment claim, Miller Sockhill Lawyers can assist in ensuring you comply with your obligations under the BIF Act
 BIF Act, ss 75 – 78.
 BIF Act, s 68.
 BIF Act, ss 67, 68.
 BIF Act, s 76(2).
 BIF Act, s 76(1).
 BIF Act, s 76(1)(a),(b).
 Ausipile Pty Ltd v Bothar Boring and Tunnelling (Australia) Pty Ltd  QSC 39.
 ACP Properties (Townsville) Pty Ltd v Rodrigues Construction Group Pty Ltd & Anor  QSC 45, .
 ACP Properties (Townsville) Pty Ltd v Rodrigues Construction Group Pty Ltd & Anor  QSC 45,  – .
 Kangaroo Point Developments MP Property Pty Ltd v RHG Construction Fitout and Maintenance Pty Ltd  QSC 30, ; Melaleuca View Pty Ltd v Sutton Constructions Pty Ltd  QSC 226, .
 Kangaroo Point Developments MP Property Pty Ltd v RHG Construction Fitout and Maintenance Pty Ltd  QSC 30, .
 Style Timber Floor Pty Ltd v Krivosudsky  NSWCA 171, .
  QSC 333.
 Melaleuca View Pty Ltd v Sutton Constructions Pty Ltd  QSC 226, .