BIF Act security of payment for Queensland builders

What BIF is

The Building Industry Fairness (Security of Payment) Act 2017 (Qld) (the BIF Act) is Queensland's security of payment regime. It is the most aggressive SOPA in Australia, with mandatory project trust accounts for some contracts in addition to the standard payment-claim-and-schedule mechanism.

The BIF Act gives builders, subcontractors and suppliers a statutory right to be paid for work done under construction contracts, regardless of contract disputes about other matters.

When BIF applies

BIF applies broadly to construction contracts in Queensland. However, it does not apply to contracts where the homeowner is engaging the builder for residential building work on their own home (owner-occupier residential) and some other defined carve-outs.

For residential builders, BIF most often applies in the subcontract relationship. A residential builder engaging a subcontractor for the build creates a BIF-protected payment relationship between the builder and subcontractor, even though BIF does not protect the homeowner-builder relationship.

Payment claims and schedules

Under BIF Chapter 3, a person who has done work or supplied materials can serve a payment claim on the other party. The payment claim must comply with formal requirements (in writing, claimed amount, work description, identification of the contract).

The receiving party must respond with a payment schedule within 15 business days (or earlier if the contract requires). If no payment schedule is given, the full claimed amount becomes due.

If the parties disagree about the schedule, the claimant can apply for adjudication. An adjudicator decides the dispute under a tight statutory timeframe.

Project trust accounts

BIF Part 2 introduces mandatory project trust accounts for certain contracts. The Project Trust Account (PTA) framework applies to eligible contracts (state government and private-sector head contracts) above prescribed thresholds. All amounts paid for the project pass through the trust account.

The PTA is designed to protect subcontractors from upstream insolvency. Money entering the PTA for the project must be held in trust and disbursed in the correct order under the BIF Act trust rules.

The PTA threshold has been progressively lowered since the BIF Act commenced. The current scope catches an expanding share of commercial work but generally does not extend to residential owner-occupier contracts.

Adjudication

If a payment dispute cannot be resolved by payment claim and schedule, the claimant can apply for BIF adjudication. The adjudicator is appointed by an authorised nominating authority and decides the dispute.

Adjudication is statutory, fast and binding. The adjudicator has a tight statutory timeframe to issue a decision. The decision can be enforced as a judgment debt.

Adjudication does not finally determine the legal rights of the parties. Either side can pursue full litigation in court for final resolution, but the adjudication decision must be paid pending that final determination.

Practical implications for builders

For Queensland residential builders, three things matter.

In subcontract relationships, BIF protects the builder (or subcontractor) when downstream parties pay slowly or refuse to pay. The payment claim mechanism is a faster recovery route than litigation.

When receiving payment claims from subcontractors, respond with a payment schedule within the statutory timeframe. Failure to respond means the claimed amount becomes due.

For builders working on commercial or government projects above PTA thresholds, the trust account compliance regime is operationally significant. Failure to comply with PTA obligations is a serious offence.

Related entries

The QBCC framework for homeowner-builder residential contracts (where BIF does not apply) is in builder-licence-classes-qld and statutory-warranties-qbcc-qld. Progress payments under residential contracts are governed by Schedule 1B of the QBCC Act, not BIF. The NSW SOPA equivalent (Building and Construction Industry Security of Payment Act 1999) and the VIC equivalent (Building and Construction Industry Security of Payment Act 2002) are forthcoming entries.