The original attempt at protecting subcontractors' debts in Queensland was the Subcontractors Charges Act 1974. The intent of the Subcontractors' Charges Act 1974, (Queensland), was to provide a mechanism for subcontractors to secure payment for work done and materials supplied in the building and construction industry. This legislation aimed to protect subcontractors by allowing them to place a charge over money owed to the contractor by the principal (the person who engaged the contractor) to ensure they get paid for their services.
After the Building Construction Industry Payment Act (BCIPA) was introduced in 2004, the Subcontractors Charges Act continued to operate separately. A subcontractor was required to choose which act to access. As a general rule, the BCIPA adjudication, or court, processes were preferred, unless there was a real concern that the head contractor was about to enter administration or receivership.
With the advent of the Building Industry Fairness (Security of Payment) Act 2017 (the BiF Act), this odd arrangement was resolved by rolling Subcontractors' Charges into the BiF Act (Chapter 4).
A subcontractor can now lodge a subcontractor’s charge under Chapter 4 of the BIF Act and also apply for adjudication under Chapter 3. This may help a subcontractor protect its debt, where it is suspected that administration or receivership of the contractor is imminent.
However, a subcontractor's charge is still a relatively complex process, and the processes have different requirements and timelines, and the subcontractor must comply with these to avoid complications.
Certifying a Claim
The amount of the claim must be certified by a qualified person. The definition of a qualified person is broad and can include an architect, an engineer, a supervisor under the QBCC Act, or an expert agreed by the parties. A quantity surveyor is the only profession of the qualified group who is specifically qualified to value work in progress.
In the past, I found that certifying a subcontractor's claim was not taken seriously. Claimants and their advisors considered it a minor part of the process, that required a cursory glance at the amount claimed before signing off on the notice.
However, even though a certifier may be protected from litigation under the Act, certifying a claim is a serious responsibility. It can result in serious financial and reputational damage to the contractor. A claim can also result in a court application and order to cancel or modify the claim. If a court decides the claim is not reasonably, or correctly, made, the subcontractor can be liable for damages incurred by the builder.
These are my rules for certifying the amount of a subcontractor's charge:
1. Qualified Person:
The person certifying the amount must be appropriately qualified. This generally means they need to be a registered professional in a relevant field, such as a quantity surveyor, registered engineer, or other suitably qualified professionals with expertise in construction and contract management.
2. Certification Requirements:
- The certification must confirm that the amount claimed by the subcontractor is accurate and properly calculated based on the work performed or the materials supplied.
- The certifier needs to verify that the work has been completed to the required standard and in accordance with the contract terms.
- The certification should be based on an independent and objective assessment of the work and related costs. In some cases, it may require an inspection of the work claimed.
3. Documentation:
- The certifier should provide a detailed statement or report outlining the basis for the certified amount. This includes referencing any relevant contracts, purchase orders, delivery receipts, and other supporting documents.
- The certification must clearly state the total amount certified and provide a breakdown of the components of this amount, similar to the requirement for a payment claim.
4. Compliance with Legislation:
- The certification process must comply with the specific provisions of the BIF Act, ensuring that all statutory requirements are met. This includes adhering to timelines and procedural requirements as stipulated by the Act.
5. Professional Standards:
- The certifier must uphold professional standards of conduct and integrity, ensuring that their certification is based on accurate and truthful information.
By meeting these requirements, a qualified person can ensure that the certification of a subcontractor's charge is valid and enforceable under the BIF Act.
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