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More legal changes for building industry

You are here: Home / News / More legal changes for building industry

Key points

  1. New laws have been passed by the Queensland Government to make further changes to the project bank account and security of payment regimes.
  2. The date many of these laws will actually come into force has not yet been set – the Government has indicated that the roll out will commence from March 2021, but this depends on a number of factors including the continuing impacts of COVID-19.

The Changes
Last week, the Queensland Government passed the Building Industry Fairness (Security of Payment) and Other Legislation Amendment Bill 2020.  The Bill includes amendments to, amongst other legislation, the Building Industry Fairness (Security of Payment Act) 2017, the Building Act 1975 and the Queensland Building and Construction Commission Act 1991.

The major changes include:

  1. Project Bank Accounts will be renamed ‘Statutory Trusts’.
  2. Instead of 3 Project Bank Accounts, there will be two types of Statutory Trusts, one will be a Project Trust Account which will have to be established for each eligible contract.  If a Head Contractor holds cash retentions then they will also have to establish a separate Retention Trust Account.
  3. A disputed funds account will no longer be required.  Rather, the Head Contractor will have to give a supporting statement with their payment claims stating that all of their Subcontractors have been paid.  A penalty of up to $13,345 can be imposed for making a false or misleading statement.
  4. Project Trust and Retention Trust accounts will have to be audited by an independent auditor.
  5. Executive officers of corporations will be able to be held personally liable for an offence by the corporation (certain provisions of the Act only) if that officer did not take all reasonable steps to ensure the corporation did not engage in the conduct constituting the offence.
  6. Head Contractors will be able to lodge a payment withholding request with a financier if the principal fails to pay an adjudication amount and will be able to register a charge over the land that the building work was carried out on if the land is owned by the principal or a related entity of the principal.
  7. Principals will no longer have any oversite over the Statutory Trust accounts.  The QBCC will take over this roll with additional audit powers. The QBCC will also be able to ‘freeze’ a Statutory Trust by giving notice to the financial institution
  8. Increased regulation of certifiers, including introduction of a demerit point system, the requirement for additional inspections and clarification that a certifier’s primary duty is to act in the public interest.
  9. Increased penalties for non-compliance with the Minimum Financial Requirement framework
  10. Introduction of offences for Architects and Engineers who fail to comply with audits and investigations.


Timeframes
The changes to the project bank account and security of payment regime are set to commence ‘by proclamation’. This means that the Government will announce the commencement date at some time in the future.  It gives the Government flexibility to adopt a ‘wait and see’ approach to the industry’s economic recovery post COVID-19. 

In the Second Reading Speech the Minister for Housing & Public Works, Mick de Brenni, outlined the following intended timeframe – but this could change in the future:

  • “from 1 March 2021 eligible Queensland government building and construction contracts valued between $1 million and $10 million will require a trust account”.
  • “From 1 July 2021, state government and hospital and health services’ building contracts worth $1 million or more will require a trust account.
  • From 1 January 2022, trust accounts will be extended further to all private sector building and construction contracts worth $10 million or more. This and the next phase will also include statutory authorities, local government and government owned corporations.
  • From 1 July 2022, trust accounts will apply to all building contracts worth $3 million or more.
  • Finally, from 1 January 2023 trust accounts will apply to all eligible building contracts, be they government or private, of $1 million or more.”

Once again, the Queensland Building & Construction Industry is in a position where it will need to adapt to new regulations and implement additional administrative practices to avoid the risk of prosecution and penalties.

We will provide further detail about the amendments as the likely commencement dates approach.  If you would like to discuss these changes please contact our Construction Law Team.

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