Project bank accounts disputed funds accounts, retention trust accounts – what now??

Did you know the Queensland Government has passed further amendments to the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (BIF Act) in an attempt to clarify how project bank accounts (PBAs) are to operate.

Get your hand out of the cookie jar

The amendments aim to further restrict a head contractor’s ability to access amounts in PBAs.

Previously as drafted, Head contractors were able to contort the intent of the laws by relying on the fact that if an amount in the PBA was not due and owing, it was fair game.

Head contractors will not be able to withdraw amounts from the general trust account in circumstances where:

The head contractor is “liable to pay” any subcontractor amounts, which are amounts certified, stated in a payment schedule or assessed as payable (e.g. by the superintendent);

Disputed fund account

The money is tied up – possibly for years.

Head contractors will not be able to withdraw any amount from the disputed funds account until after the conclusion of the period in which an appeal may be commenced or otherwise the end of the appeals process. 

Once the laws are in place this will mean head contractor may be required to hold an amount in the disputed funds account for conceivably years – e.g. after the adjudication process, after application to set aside the adjudication decision, after any appeal, etc.).

Further, the amendments provide that:

Head contractors will be prohibited from withdrawing any amount from the retention trust account until after the expiry of the defects liability period, unless the withdrawal is:

• to make payment to the relevant subcontractor;

• by order of a court; or

• to make payment to another subcontractor engaged to correct the defects in relation to the first subcontractor’s defective work, subject  to the head contractor having an entitlement to pay itself the amount under the original subcontract to which that retention amount relates.

Payment schedules – if you don’t have a good reason right now, you don’t have a good reason later

Be warned – the proposed amendments stipulate that the time respondents have to issue a payment schedule will be reduced to the earlier of the period stated under the contract;

or

15 business days after the payment claim is given to the respondent – this was previously 25 business days in the last amendments.

Get help now

The war in these areas is continually being amended and developed as the Commission trials and rolls out its provisions. Penalties are strict. In the midst of COVID19 crisis, You can expect to see rapid regulation in strict terms from a Commission which has already made it very clear that it intends to ‘take a broom to the construction industry’.  

Don’t take a risk on incurring heavy penalties and loss of license. Get help immediately and contact Merlo Law.  

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This publication considers legal and technical issues in a general way. It is not intended to be legal advice. Any legal advice is qualified on the basis that the reader should immediately confirm the information relied upon with Merlo Law. We look forward to being of assistance.