Subcontractors’ Charges legislation offers subcontractors a chance to maximise their chances of recovery by skipping a head contractor and getting paid directly by the principal.
But it only works if you do it right.
How do Subcontractors’ Charges Work?
Let’s say you’re owed money by contractor X.
You hear on the grapevine that X is in some financial trouble, and you’re about to issue a big invoice upon completion of the job.
You also know that X is about to finish up their contract with developer Y, which means there’s a good chance that developer Y is about to pay X some money.
You’re worried that the money Y pays to X is going to disappear and you’ll be unable to collect.
This is a good scenario for a subcontractor’s charge.
You finish your work, send your invoice, and then submit a claim under the Act. You send it to X and Y. X has a chance to respond, but in this case might agree that you are owed the amount claimed (they don’t have to agree, but let’s pretend they do).
Unless X pays you in the meantime, Y is obliged to withhold from their payment to X an amount sufficient to pay you. Following that, if you aren’t paid by X then Y will pay you directly.
Of course, it might not happen straight away, and you don’t always know whether Y owed X any money. But if X is in trouble then this might be your best bet to get paid.
Subcontractors Charges’ Timeframes
The first and most important thing you need to be aware of is that the Subcontractors’ Charges regime is full of important timeframes. If you miss them, then in some cases you’re completely out of luck – your claim simply won’t succeed.
The most important ones for most people are:
- The claim must be made and submitted to the right parties within 3 months of completing the work;
- If you’re not paid, Court proceedings need to be commenced within 1 month after the claim is made.
Not All Work is Covered
One thing to be aware of is that not every kind of work is automatically covered by Subcontractors’ Charges. Some kinds of work are excluded completely, and some might only be claimable in part. This is something to double check in your particular circumstances before wasting time or money on a charge.
What if you Receive a Claim of Charge?
If you’re a developer or a head contractor and receive a claim of charge, then the Act gives you a number of options going forward, each of which depends on your circumstances.
For example, if you’re a head contractor and the amount claimed is in dispute, then the Act gives you a chance to make that clear, but isn’t the forum in which you would actually argue the dispute.
If you’re a developer and have massive claims against the contractor for defects or delays, then perhaps you might argue that you don’t owe anything to the Contractor and therefore have no obligations to withhold. Again, the Act allows you to do this, provided you go through the correct process to make your position clear.
What you shouldn’t do if you receive a claim of charge is to ignore it.
Where do the Lawyers Come into Subcontractors’ Charges?
Batch Mewing Lawyers regularly advises major subcontractors wishing to maximise their chances of recovery under the Building Industry Fairness (Security of Payment) Act 2017 (Qld).
Batch Mewing Lawyers also regularly advises contractors and principals who receive forms issued under the Act.
We assist with:
- Understanding the legislative framework (including timing and technical issues) as part of formulating overall dispute resolution strategies.
- Drafting the forms required.
- Commencing or defending proceedings to enforce charges.
- Negotiating commercial outcomes.
- Drafting and negotiating settlement deeds.