The subcontractors’ charges provisions in Chapter 4 of the Building Industry Fairness (Security of Payment) Act 2017 (BIF Act) provide a powerful tool for subcontractors looking to secure payment.
Subject to the requirements of the BIF Act, subcontractors who are unsecured creditors are elevated to secured creditor status by completing prescribed Form S122 available on the QBCC website and serving those forms on parties up the contractual chain (eg. the head contractor and principal).
There are legal pitfalls to navigate to ensure these QBCC forms are completed correctly and served on the parties up the chain within time to effect a valid subcontractor’s charge. To maintain the charge, Court proceedings must be commmenced within 1 month of isseu of the Form S122. Suppliers, wet hire companies and manufacturers, depending on the nature and extent of their services, may also qualify as subcontractors under the Act and issue a valid charge under the Act securing their debt.
Subcontractors’ charges are readily used in the liquidation scenario, where a higher subcontractor or head contractor appears to have cashflow difficulty, or goes into administration or liquidation. This approach may also be a useful alternative where a relationship breakdown has occurred at the single contract level and better served or long standing commercial relationships exist between the subcontractor and other parties up the contractual chain.
The subcontractors’ charges provisions in Chapter 4 of the Building Industry Fairness (Security of Payment) Act 2017 (BIF Act) provide a powerful tool for subcontractors looking to secure payment.
Subject to the requirements of the BIF Act, subcontractors who are unsecured creditors are elevated to secured creditor status by completing prescribed Form S122 available on the QBCC website and serving those forms on parties up the contractual chain (eg. the head contractor and principal).
There are legal pitfalls to navigate to ensure these QBCC forms are completed correctly and served on the parties up the chain within time to effect a valid subcontractor’s charge. To maintain the charge, Court proceedings must be commmenced within 1 month of isseu of the Form S122. Suppliers, wet hire companies and manufacturers, depending on the nature and extent of their services, may also qualify as subcontractors under the Act and issue a valid charge under the Act securing their debt.
Subcontractors’ charges are readily used in the liquidation scenario, where a higher subcontractor or head contractor appears to have cashflow difficulty, or goes into administration or liquidation. This approach may also be a useful alternative where a relationship breakdown has occurred at the single contract level and better served or long standing commercial relationships exist between the subcontractor and other parties up the contractual chain.
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