BIF Act: Your Sword and Shield for Payment Protection in Queensland

John Merlo
3 days ago
11 min read

Updated: 2 days ago

The pressure of an unpaid invoice in the construction industry is a stressful and unfortunately common experience. You've completed the work, met your obligations, and now the wait for payment stretches on, impacting your cash flow and the stability of your business. The important question on your mind is: what are your legal rights, and how can you enforce them? The answer for those in Queensland's building sector lies within a powerful piece of legislation known as the BIF Act.

This complete guide explains the Building Industry Fairness (Security of Payment) Act 2017 (QLD). We will break down the legislation into practical, easy-to-understand terms for contractors, subcontractors, and suppliers. Understanding this Act is not just about knowing the law; it's about empowering yourself to take control of your payments and secure the financial health of your business.

Here, you will learn:

What the BIF Act is and who it protects.
The important processes for making a payment claim and how to respond to one.
Your powerful right to suspend work for non-payment.
The strict timeframes that you must follow.
How to navigate disputes and recover what you are owed.

What is the BIF Legislation?

The Building Industry Fairness (Security of Payment) Act 2017, commonly referred to as the BIF Act, is a key piece of Queensland's construction law. Its main purpose is to ensure that everyone working in the contractual chain of a building project gets paid in full and on time. It replaced the previous regime, the Building and Construction Industry Payments Act 2004 (BCIP Act), to provide a stronger and simpler framework for payment protection.

The legislation was introduced to combat the historically poor payment culture within the construction industry, where smaller subcontractors and suppliers often bore the financial brunt of delayed or disputed payments.

The Queensland Government, through the BIF Act, established a rapid, low-cost system for resolving payment disputes to keep money flowing down the line.

A construction lawyer can give you specific advice on how this legislation applies to your situation, but understanding the core components is the first step for any industry participant.

Who Does the BIF Act Protect?

The BIF Act covers almost everyone who contributes to a construction project in Queensland.

This includes:

Head contractors and principal contractors
Subcontractors and trade contractors
Suppliers of building materials and equipment
Consultants such as architects, engineers, and surveyors
Plant and equipment hirers

Put simply, if you have a contract to carry out construction work or to supply related goods and services in Queensland, the BIF Act likely applies to you. It covers commercial, industrial, and civil projects, as well as some aspects of domestic building work. The team at our specialist building and construction law firm regularly assists clients from all corners of the industry in understanding their rights and obligations.

The Payment Claim and Payment Schedule: Your Core Tools

The entire BIF Act process revolves around two key documents: the payment claim and the payment schedule. Mastering their use is essential for both claiming payment and managing your liabilities.

What Makes a Payment Claim Valid?

The process begins with a payment claim. This is a formal request for a progress payment, which can be an invoice, provided it meets certain requirements under the Act.

To be valid, a payment claim must:

Be in writing.
Be addressed to the party liable to pay (the respondent).
Identify the construction work or related goods and services it relates to.
State the amount being claimed (the "claimed amount").
Request payment of the claimed amount.
Crucially, for head contractors making a claim to a principal, it must be accompanied by a supporting statement declaring that all subcontractors have been paid.

Failing to meet these requirements can render your claim invalid, forcing you to start the process again and causing significant delays.

The Important Role of the Payment Schedule

Once a payment claim is received, the respondent has an important decision to make. If they dispute any part of the claim, they must respond with a payment schedule. This document is their only opportunity to state their case.

A payment schedule must:

Identify the payment claim it is responding to.
State the amount of payment, if any, that the respondent proposes to make (the "scheduled amount").
If the scheduled amount is less than the claimed amount, provide detailed reasons for withholding payment. Vague reasons like "incomplete work" are insufficient; the reasons must be specific enough for the claimant to understand the basis of the dispute.

Failure to provide a compliant payment schedule within the strict time limits has severe consequences, often making the respondent liable for the entire amount of the claim. This is a common trigger for building and construction disputes.

Consequences of an Invalid or Late Payment Schedule

The BIF Act is unforgiving when it comes to deadlines for payment schedules. A respondent must provide a payment schedule within 15 business days of receiving the payment claim, or an earlier date if specified in the contract.

If a respondent fails to do so, they become liable to pay the full claimed amount on the due date. Also, they are barred from raising any reasons for non-payment in an adjudication application that they did not include in their payment schedule. This makes the payment schedule the single most important document for a respondent in a payment dispute.

What is the BIF Act Suspension Right?

One of the most powerful rights granted to contractors under the BIF Act is the right to suspend work for non-payment. This gives you major leverage to compel a party to meet their obligations without immediately having to resort to resolving a dispute through formal channels.

Under Section 98(1) of the BIF Act, a claimant may suspend carrying out construction work, or supplying related goods and services, under a construction contract if at least 2 business days have passed since the claimant gave notice of intention to do so to the respondent under section 78 or 92.

You are entitled to suspend work in two key circumstances:

You have served a valid payment claim, and the respondent fails to pay the full amount by the due date (as per Section 78).
An adjudicator has decided an amount is payable to you, and the respondent fails to pay that adjudicated amount (as per Section 92).

The Correct Procedure for Suspending Work

To legally suspend work, you cannot simply walk off the job. You must follow a strict procedure:

Provide Written Notice: You must first give the respondent written notice of your intention to suspend work under Section 78 or Section 92 of the Act.
State the Authority: The notice must explicitly state that it is being made under the Building Industry Fairness (Security of Payment) Act 2017.
Wait Two Business Days: After giving the notice, you must wait at least two business days. If payment is still not made, you may then lawfully suspend work.

Your right to suspend continues until you have been paid in full. Once payment is received, you must resume work within three business days.

Protections During Suspension

The BIF Act provides important protections for a claimant who has lawfully suspended work.

During the suspension period:

You are not liable for any loss or damage suffered by the respondent as a result of the suspension.
If the respondent tries to remove part of your scope of work from the contract due to the suspension, they are liable for any loss you incur.

This right is a major advantage for cash flow management. But getting the procedure wrong can expose you to a breach of contract or contract termination claim. We strongly recommend getting guidance from our team of experts to ensure you exercise your rights correctly.

Understanding BIF Act Timeframes

Timeframes under the BIF Act are extremely strict. Misunderstanding them can be fatal to a claim or a defence.

The "10 Business Days" Due Date

The phrase "10 business days" primarily relates to the due date for payment in the absence of a contractual term. Under the BIF Act, if a construction contract does not specify a due date for a progress payment, the Act imposes a default due date of 10 business days after the payment claim is made.

While many building contracts specify their own terms, they are subject to maximum timeframes set by law. If a contract is silent or contains a void "paid when paid" provision, the 10-business-day rule applies.

Payment Schedule vs. Adjudication Deadlines

Don't confuse the payment due date with other deadlines:

Payment Schedule: A respondent has 15 business days (or less if the contract states) after receiving a payment claim to issue a payment schedule.
Adjudication Application: Under Section 79(2), a claimant has specific deadlines to apply for adjudication:
- 30 business days when no payment schedule is provided by respondent
- 20 business days for non-payment of scheduled amount
- 30 business days when schedule amount is less than claim amount

What is a "Business Day"?

The Act's definition of a "business day" is another important detail. A business day is any day that is not a Saturday, a Sunday, a public holiday, or part of the Christmas shutdown period, which runs from 22 December to 10 January inclusive. This extended break prevents parties from being ambushed with claims during the holidays.

Navigating the Adjudication Process

If a payment dispute cannot be resolved, the claimant can apply for adjudication. This is a fast, informal process where an independent adjudicator, appointed by the Queensland Building and Construction Commission (QBCC), makes a final decision.

Starting an Adjudication Application

To begin, the claimant lodges an application with the QBCC Adjudication Registry. The application must be in writing, identify the payment claim and payment schedule it relates to, and include submissions detailing the claimant's arguments.

The timing for making an adjudication application is vital and governed by Section 79(2) of the BIF Act. The deadlines are:

30 business days from when the payment was due if no payment schedule was provided by the respondent
20 business days from when the scheduled amount was due to be paid if the respondent provided a payment schedule but failed to pay the scheduled amount
30 business days from when the claimant received the payment schedule if the schedule amount is less than the claimed amount

Missing these strict deadlines will prevent you from pursuing adjudication for that particular payment claim. The respondent is then given a short period to provide a response, but they can only raise issues that were included in their original payment schedule.

The Adjudicator's Decision

The adjudicator will review the submissions and make a decision on the amount to be paid, the date for payment, and the interest rate on any overdue amount. The process is designed to be much quicker and more cost-effective than going to court.

Enforcing the Adjudicator's Decision

The adjudicator's decision is enforceable as a court judgment. If the respondent fails to pay the adjudicated amount, the claimant has several powerful enforcement options:

Summary Judgment: The adjudication certificate can be filed with a court and enforced as a judgment debt, allowing for standard enforcement methods like issuing a warrant or a garnishee order.
Suspension Rights under Section 92: If the respondent fails to pay the adjudicated amount, the claimant may give notice of intention to suspend work under Section 92, following the same procedure as outlined in Section 98.
Standard Debt Recovery: The decision provides a powerful tool for recovering a debt through conventional court enforcement mechanisms.

For a detailed look at enforcement options, you can read our recent article on What Is a Statutory Demand?

Subcontractors Charges

The BIF Act provides subcontractors with an additional security mechanism known as a subcontractor's charge. This is a separate but related tool to the payment claim and adjudication process.

A subcontractor's charge operates as a security interest that attaches to money owing from a principal to a head contractor or from a head contractor to a subcontractor. This lets unpaid subcontractors secure payment from funds that are owed higher up the contractual chain.

How Subcontractors Charges Work

The subcontractor's charge mechanism works by:

Allowing a subcontractor to claim against money owed by a principal to the head contractor
Creating a charge over amounts that would otherwise be paid up the contractual chain
Providing security for unpaid amounts without needing to pursue the immediate contracting party
It works separately from the adjudication process, though both can be used together

This provides an important safety net, particularly where a head contractor or intermediate contractor may be experiencing financial difficulty but the principal still has funds available. It's another tool in the BIF Act's complete framework for securing payment throughout the construction industry.

Statutory Trusts

A major reform introduced by the BIF Act is the statutory trust account framework. For eligible projects (generally commercial projects over a certain value), head contractors must establish Project Trust Accounts (PTAs) and Retention Trust Accounts (RTAs). This framework is designed to quarantine funds, ensuring that money intended for subcontractors is protected and available, even if the head contractor experiences financial difficulty. The rules surrounding trust accounts are complex, and seeking advice from a construction contract lawyer is essential for compliance.

The Value of Expert Guidance

Navigating the BIF Act is essential for survival and success in the Queensland construction industry. It gives you a powerful framework to protect your right to payment, but its protections are only available to those who understand and follow its strict procedures and timeframes.

Key Takeaways

The BIF Act is Your Sword and Shield: It exists to ensure you get paid on time for the work you do, providing both offensive and defensive capabilities in payment disputes.
Master the Paperwork: A valid payment claim is your sword. A respondent's failure to provide a timely payment schedule makes them liable.
Time is Everything: The Act imposes strict deadlines. Missing a deadline can be fatal to your case.
Suspension is a Powerful Tool: You have a legal right to suspend work for non-payment, but you must follow the correct notice procedure under Sections 78 or 92.
Multiple Security Options: The Act provides various mechanisms including adjudication, subcontractor's charges, and statutory trusts to secure payment.
Legislation is Complex: Missteps can be costly, potentially jeopardizing your claim or exposing you to liability.

The BIF Act provides the rules of engagement for payments in the construction industry. Knowing these rules empowers you to act confidently, protect your cash flow, and build a more secure and successful business.

If you're facing a building dispute or need help with a payment claim, the next step is to seek expert legal advice. Contact Merlo Law today for a consultation to understand your position.

Frequently Asked Questions

Q: Can I make a BIF Act claim if I don't have a written contract?

A: Yes, the BIF Act can still apply if your contract is oral or only partially in writing. The key is proving an agreement existed to carry out construction work for a price. However, having clear written building contracts is always the best practice to avoid disputes.

Q: What happens if I miss the deadline to apply for adjudication?

A: The timeframes for adjudication are extremely strict. If you miss the deadline after receiving a payment schedule, you generally lose your right to have that specific payment claim adjudicated. You may need to include the amount in your next claim or pursue the debt through the courts.

Q: Is the BIF Act the same as a subcontractor's charge?

A: No, they are different but related mechanisms under the same Act. A subcontractor's charge secures money owed from funds payable higher up the chain. It's a separate process from the payment claim and adjudication stream but is another tool for security for payment.

Q: Does the BIF Act apply to work for homeowners?

A: The BIF Act's adjudication processes generally do not apply to domestic building contracts involving a homeowner who resides in or intends to reside in the property. These contracts are instead governed by specific provisions under the QBCC Act.

Q: What is a "supporting statement" under the BIF Act?

A: A supporting statement is a document a head contractor must provide with their payment claim to the principal, declaring that all subcontractors have been paid. Providing a false statement carries significant penalties from the QBCC.

Q: How long do I have to make a payment claim?

A: A payment claim must be made within the later of the period in the contract or 6 months after the completion of the work. For a claim arising from contract termination, the period is 28 days after the end of the last defects liability period. It is crucial to act promptly.

Q: Can I claim for variations or delay costs in a payment claim?

A: Yes, you can include amounts for a contract variation, delay damages, and other entitlements in a payment claim. However, you must be prepared to justify these amounts, as they are often the subject of disputes detailed in a payment schedule.

This guide is for informational purposes only and does not constitute legal advice. For advice tailored to your specific circumstances, please contact Merlo Law.