The subcontractors’ charges provisions in Chapter 4 of the Building Industry Fairness (Security of Payment) Act 2017 (Act) provide a powerful tool for subcontractors looking to secure payment. Subject to the requirements of the Act, subcontractors who are unsecured creditors are elevated to secured creditor status by completing forms 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 the 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. Suppliers, wet hire companies and manufacturers, depending on the nature 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, however subcontractors’ charges can also be used outside of that scenario to secure payment.
