FAQ FOR SUBCONTRACTORS & TRADE CONTRACTORS
Can you help me with my construction business?
We work for subcontractors and trade contractors just like you. We can review your construction contracts or subcontracts so you know the risks before your sign. We also make recommendations on changes to the contracts to better protect your interests.
We can draft construction contracts for you and your subcontractor business or trade contractor business, reflecting the way you want and expect to do business and the terms you require in your contracts.
We can work with you on your construction disputes, your construction adjudication matters, and any other aspects of your construction litigation, so that you can get experienced and sound legal advice and representation.
We can help you get paid, using the power of legislation such as the Building Industry Fairness (Security of Payment) Act 2017, QBCCA and other legal instruments and strategies to help you get paid for the work you do.
Can someone not pay me because they haven’t been paid for the work
Very simply, the answer is “no”.
“Pay when paid” clauses in construction contracts have been illegal since 2004, however the actual practice of not paying subcontractors until payment has been received from a payer, has been rife in the industry for years.
If you have a subcontract the longest you should wait for payment is 25 business days, whether or not the person paying you has been paid themselves.
The only reason you should not receive payment by the due date is if you have received a valid payment schedule raising a dispute. The amount not in dispute still needs to be paid by the due date.
Please remember that paying by the due date, whether you have been paid or not, also extends to your own subcontractors. If you have not been paid, it is not a reason not to pay your own subcontractors.
Want to learn more about how to get paid for the work you do, and pay others, under the Building Industry Fairness (Security of Payment) Act 2017? Sign up anytime 24 hours a day 7 days a week to our easy video-based online course Guide to Getting Paid Using BIF Security of Payment.
Have, Do, Is or Does
Have you any testimonials from your clients?
For testimonials from our subcontractor and trade contractor clients, select Testimonials from the About menu on our www.subcontractors.arbuildinglaw.com.au site.
Do the progress claim changes in the BIF Act apply to trade contracts with investors?
The BIF Act changes do apply to trade contracts with anyone apart from a resident owner (that is someone who lives in the house or intends to live in the house within 6 months of your work being complete).
This means that the BIF Act changes to progress claims apply to construction contracts with investors (whether residential investors or commercial), developers, body corporates, real estate agents acting on behalf of landlords, landlords (both commercial and domestic), Councils, Associations and small businesses etc.
In other words, if someone is buying construction work or related goods and services, it is more than likely that the progress claim changes to the BIF Act will apply.
Does a payment schedule under the BIF Act need to state the words “payment schedule”?
A payment schedule merely needs to:
- Identify the payment claim it relates to;
- State the amount the payer agrees to pay; and
- State the payer’s reasons for not paying, if the amount that the payer agrees to pay is less than the amount claimed in the payment claim.
I got a letter from a liquidator of a company I did work for and it says I have to pay back what I was paid. Do I have to pay?
When a liquidator gets appointed, one of the first things the liquidator does is send out letters to all of the people that have received money from insolvent company in the 6 months leading up to the liquidation. The letter will be made in reliance on the unfair preferential payments sections of the Corporations Act 2001 (Cth).
Although the liquidator is required to send out the letter, it does not mean you have to pay back all of the money and that is because the Corporations Act has a number of defences available, including:
- you entered into the contract in good faith; and
- you had no reasonable grounds for suspecting that the company was insolvent at that time or would become insolvent.
We have helped a number of clients in the same situation as you. In all of those situations, we have sent a letter to the liquidator explaining the defences and how they are applicable to our client’s situation and neither we nor our clients have heard from the liquidator again.
 Please note that this is not the complete list of defences.
Do I really need to use a contract for domestic building work?
If you are carrying out work for more than $3,300 you must use a contract.
If you don’t use a contract you could receive fines and penalty units from QBCC.
If you are carrying out work between $3,300 and $20,000, you need to use a level 1 regulated contract. A level 1 regulated contract, includes the following information:
The names of the parties to it, including your name as it appears on your licence;
Your licence number;
A description of the subject work;
Any plans and specifications for the work;
The contract price or the method for calculating it, including your reasonable estimate;
A provision that states the date for practical completion or how the date is to be determined;
A conspicuous notice advising the owner of its possible right to withdraw from the contract.
If you are carrying domestic building work for $20,000 or more, you need to use a level 2 regulated contract. A level 2 regulated contract needs to include the following information:
The names of the parties;
Your licence number;
A description of the work;
Any plans and specifications for the work;
The contract price or the method for calculating it, including your reasonable estimate;
The date for the start of the subject work at the building site, or how the date is to be determined;
The date for practical completion or how the date is to be determined;
A statement of each of the statutory warranties that apply to the subject work;
A conspicuous notice advising the owner of its possible right to withdraw from the contract;
If the contract price is fixed, it must state the contract price in a prominent position on the first page of the contract schedule; and
If the contract price is not fixed, the method for calculating it, including any allowances, must be stated in the contract schedule.
If the contract price may be changed under a provision of the contract, the contract must state on the first page of the contract schedule:
a warning to that effect; and
a brief explanation of the effect of the provision allowing change to the contract price.
Does the BIF Act apply to a pest control business?
Yes, if the pest control business enters into a contract, in which it is to carry out construction work or supply related goods and services.
The meaning of ‘construction work’ under the BIF Act is much broader than we commonly use. Under the BIF Act, the meaning of construction work includes:
“any operation that forms an integral part of, or is preparatory to or is for completing…”, “the construction, alteration, repair, restoration, maintenance, extension, demolition or dismantling of buildings or structures” and includes:
(i) site clearance, earthmoving, excavation, tunnelling and boring; and
(ii) the laying of foundations; and…”
A perfect example of this would be the installation of a termite barrier and termite control system around a new home. The termite control work forms an integral part of the construction of the new house and as part of its work the pest controller also supplies related goods. As a consequence, the pest controller’s contract is for construction work and the supply of related goods. This means that the pest controller can use the BIF Act to enforce payment.
There are some occasions when a pest controller will not be able to use the BIF Act, including:
- If the contract is with a resident owner. A resident owner is someone who lives in the house or intends to live in the house within 6 months of the work being completed.
- If the contract does not involve construction work. For example, spraying or laying bait for inspects such as cockroaches or laying traps for vermin is not construction work so the BIF Act does not apply.
Do I need a contract if I enter a commercial contract over $10,000?
If you enter into a commercial contract (as a trade contractor, subbie or superior contractor) for over $10,000 you need to have a written contract. The contract needs to state (s 67G QBCC Act):
“(a) the scope of the building work the subject of the contract;
(b) when the building work is to be completed;
(c) the amount to be paid for carrying out the building work or, if appropriate, how the amount to be paid for carrying out the building work is to be worked out;
(d) the parties’ agreement about retention amounts and securities to be held;
(e) the name of the building contractor who is the contracted party for the building contract;
(f) the licence number of the building contractor mentioned in paragraph (e), as it appears on the building contractor’s licence card;
(g) the address of the land where the building work is to be carried out.”
If you don’t have a written contract, QBCC can fine you up to $10,444 (80 penalty units), whether you are the superior contractor or a subbie.
If I dispute a claim I have received from one of my subbies, what should I do?
If you dispute a payment claim/invoice you have received from your subcontractor, there are two issues you need to be on top of:
- How to resolve the dispute?
- How to protect your interests in this new BIF Act world?
Resolving the dispute?
Miscommunication is the biggest cause of disputes, so pick up the phone and talk to your subcontractor and find out if you can resolve the issue.
How to protect your interests in this new BIF world?
Whether you resolve the dispute and agree to pay less than the claimed amount or you are unable to resolve the dispute, but you think you should pay less, YOU MUST SEND A PAYMENT SCHEDULE within 15 business days of receiving the invoice/payment claim (or within less time if stated in your contract).
If you don’t send a payment schedule and you don’t pay the amount claimed by the due date, you are liable:
- To pay the full amount; AND
- To pay a QBCC fine (if received).
Under the BIF Act, is every invoice I receive now a payment claim?
Every invoice you receive for construction work or related goods and services, could be a payment claim under the BIF Act.
To be a payment claim, the invoice needs to:
Be sent on or after a reference date (the date from which you are entitled to send a payment claim under your contract or the last day of the month);
Be the only payment claim sent for the reference date;
Identify the construction work or related goods and services;
State the claimed amount; and
Request payment (stating “invoice” is enough to fulfil this).
What do you do?
We’re your construction lawyers in Queensland. As a construction law firm, we focus on practising in our specific area of the law, which is building and construction law. Here in Queensland, we perform for our subcontractor and trade contractor clients:
Construction contract reviews, subcontract reviews and trade contract reviews
Construction contract drafting, subcontract drafting and trade contract drafting
Construction dispute, construction litigation and construction adjudication work
What can’t you do?
For subcontractors’ and trade contractors’ legal work we don’t perform (such as conveyancing, environmental, human resources, tax, company, etc...), we can refer you to other law firms which can carry out the work for you.
What happens when I engage your services?
In compliance with the Queensland Law Society’s strict requirements, we are clear and transparent about our legal fees when people or organisations consider engaging us to work on their matters.
The pre-engagement process for subcontractors and trade contractors starts off with you contacting us to tell us about your legal matter and you asking us whether we may be able to help you. At that stage, we’ll have a conversation to find out enough information for us to estimate whether or not we can help. If we think we can help you, we’ll send you an engagement pack (containing an engagement letter, disclosure notice and costs agreement) which describes the scope of work we believe you want us to work on, our estimates of costs (depending on our assessment of your matter, some cost estimates may be based on time based charges and others may be fixed fee) and our terms and conditions of engagement.
If we think we are unable to help you, we will refer you to one or several other law firms for you to consider approaching for help.
What are your working hours?
We work Monday to Friday, our business hours are 9am to 5pm (Australian Eastern Standard Time).
What community interests do you support?
A sample of the community interests we support include:
Scarlett May Foundation
The Smith Family
Women in Building and Construction
Mates in Construction
Great Barrier Reef Foundation
What is a reference date and is it important?
The reference date is the date from which you are entitled to send a valid payment claim under the BIF Act. If you send a payment claim before the reference date, your payment claim will not be valid under the BIF Act and you will not be entitled to use all of its protections to enforce payment.
In other words, knowing what your reference date for every contract you work on is vital to being able to enforce payment.
What’s the licensing ramifications if I don’t send a payment schedule?
If you receive a valid payment claim and you don’t:
- send a payment schedule within 15 business days of receiving the payment claim; or
- pay the amount claimed by the due date,
you can receive a maximum penalty of 100 penalty units, which equates to $13,055.00.
What should I do if I get served with court documents?
If you are served with court documents, there are two things you should do immediately:
- Check the court document to see how long you have to file a defence or respond to the documents. Often it will say 21 or 28 days.
- Decide if you dispute the claim or agree the debt is owed.
If you dispute the claim, you should get legal advice immediately.
If you agree that you owe the debt, you should pay it as soon as possible.
If you agree you that owe the debt, but you can’t afford to pay it and want to pay the debt off in instalments, it is best to seek legal advice to help you negotiate a payment plan, while still preserving your rights.
The subcontract with the head contract has a number of indemnities - What is the problem with indemnities?
In large commercial subcontracts you are likely to find a number of indemnities.
Indemnities are when you assume all liability and “indemnify” the builder from losses, legal claims and damage.
It is understandable and even reasonable to expect that you should indemnify the builder for the work that you have carried out because if you construct defective work, you should be responsible to fix it or pay to fix it. However, the issue with indemnities occurs when the indemnity goes beyond the work you have carried out or your actions and starts covering:
- work carried out by the builder and/or other subcontractors;
- the pre-existing condition of the site;
- design or engineering of the works or the materials, which do no form part of your contract;
- safety of the site, accidents where others are responsible or partially responsible.
In addition, it is paramount that you always check whether your insurance covers the indemnity or whether the indemnity needs to be amended to reflect your insurance cover. At the end of the day, if you agree to an indemnity that is outside your insurance cover, you will not be insured and that is not in your or the builder’s interests. In most cases, builders understand this type of need for amendment and are very agreeable to changes.
Where can I find information on your team?
Please visit our Meet Our Team page.
Where are you located?
We are located at 1/86 Shore St W, Ormiston QLD 4160, Australia.
Who do you help?
As construction lawyers, we help subcontractors and trade contractors with their construction projects and construction industry businesses.
Who are your alliance partners?
A sample of our alliance partners are listed below:
Why should I choose your firm to work for me?
Perhaps as a subcontractor or trade contractor you may also want to ask "How do I know you'll understand me and my interests in my legal matters?" and "How will I know and understand the legal advice you give me?".
The team at Aitchison Reid Building and Construction Lawyers listen. We’re friendly, ethical and professional, and we make the law easy to understand because we write and speak in plain English.
So that you feel consulted on the pace and direction of your construction contract drafting, construction contract review, construction dispute or construction adjudication matter and so that you know and understand what is going on and being done for you, we involve you.
As our legal practice’s specialisation includes construction law, our focus helps you save time and expense.
We live and breathe construction law and the construction industry every day:
We keep up to date with building and construction law;
The language of the construction industry is what we speak and understand every day;
Through a variety of ways, we are entrenched in the construction industry;
Through our team’s members' professional training, business training and industry training;
Through our team's members' life and business experiences (members of the team having built or renovated homes, been raised in families earning livelihoods within the industry, or having previously worked for businesses in the industry prior to joining our team); and
Physically because we choose to have our office based in an industrial zone ( 1/86 Shore St W, Ormiston QLD 4160, Australia).
Why is getting legal advice worth the costs involved?
Getting good and proactive frontend legal advice about your subcontractor business or trade contractor business and your business’s construction contract risks and problems before they happen is less expensive and more cost effective than waiting for those risks to turn into big problems and construction disputes.
However, even once a big problem or construction dispute occurs, it is always more cost effective to get good construction dispute and litigation advice from experienced construction lawyers, such as Aitchison Reid here in Queensland.
Although seeking legal advice is a cost to your construction business’s budget, we focus on providing you and your business cost effective value for your money and budget.
Please note that if you have a construction dispute, it is always important to act fast and get legal advice from an experienced construction lawyer as soon as possible.