The impact of COVID19 on cashflow across all industries has been staggering. In the construction industry, which relies so heavily on cashflow to keep the industry afloat, the legislation in place to facilitate cashflow should see a resurgence in use in the coming months. Whether you are a principal, contractor or subcontractor it is important to remind yourself of the mechanisms available and how to get the most out of the legislation when it applies to you. In this edition of Construction In Focus, we discuss the security of payment regimes in place Australia-wide to promote cashflow and how they might apply to you.

1. Paul Muscat Craig Tanzer Lachlan Bongers Aaron Williams BJ Doyle Tayla Kamura *Disclaimer: the information in this update is intended
as a guide only. Professional advice should be sought
before applying the information to particular
circumstances. MinterEllison does not accept liability
for any errors contained herein.
PARTNER SENIOR ASSOCIATE ASSOCIATE SENIOR PARALEGAL GRADUATE LAW CLERK
T: +61 7 5553 9485 T: +61 7 5553 9481 T: +61 7 5553 9535 T: +61 7 5553 9546 T: +61 7 5553 9544 T: +61 7 5553 9400
paul.muscat@minterellison.com craig.tanzer@minterellison.com lachlan.bongers@minterellison.com aaron.williams@minterellison.com bj.doyle@minterellison.com tayla.kamura@minterellison.com
Construction in Focus
17 April 2020
Security of Payment in the construction industry may be more relevant now than ever
As Australia ramps up restrictions on people movement
to facilitate social distancing and stem the spread of
COVID19, the immediate future of the construction
industry is uncertain. Decisions made over the coming
six months may dictate the survival of the nation’s third
largest employing industry, which employs nearly 10% of
the working population. Those decisions will occur at
every level, from government incentives to sole trader
cost cutting.
In an industry where cashflow is the lifeblood, security of
payment legislation may now be more relevant than
ever. When all businesses in the industry are under
strain, it may not be possible to trade on trust alone to
ensure survival.
In this article, we remind both contractors and principals
of the legislation in place to facilitate cashflow in an
industry that relies so heavily on it, and of what to do to
get the most out of the legislation.
Adjudication
In every jurisdiction in Australia, contractors have
recourse to rapid adjudication for payment disputes to
receive a binding decision about what is payable in
respect of a payment claim within roughly 6-12 weeks.
When most construction disputes litigated through the
Courts take some years to finalise, receiving a binding
decision through adjudication within a handful of weeks
after making a claim is an essential tool for contractors
whose existence relies upon cashflow.
In most jurisdictions, payment claims must state that
they are made under the relevant security of payment
legislation operational in that State or Territory, which
acts as a trigger to respondents to ensure they prepare a
payment schedule. In Queensland, there is currently no
requirement to endorse a payment claim as having been
made under the Building Industry Fairness (Security of
Payment) Act 2017, which means respondents must
treat all claims as if they may end up in adjudication.
Also in most jurisdictions, the respondent is prevented
from raising before the adjudicator any reason for non-
payment of the payment claim which was not raised in a
properly given payment schedule. It is therefore
imperative that proper consideration is given to how to
appropriately respond to payment claims at the time the
claim is received.
In Northern Territory and Western Australia, a
respondent is permitted to claim payment from the
claimant through adjudication, and a claimant may be
ordered to pay a respondent in adjudication.
In all other jurisdictions an adjudicator cannot order that
a claimant pay a respondent any amount, but can order
that the respondent owes the claimant nothing.
The nuances of the legislation in each jurisdiction
highlight the importance of seeking advice early in the
process, whether you are making or defending a claim.
Subcontractors’ Charges
In Queensland, subcontractors have the ability to lodge
a charge over payments owed further up the contractual
chain. For example, a tertiary subcontractor can lodge a
charge over money owed by the primary subcontractor
to the secondary subcontractor, or by the head
contractor to the primary subcontractor, or by the
principal to the head contractor.
The recipient of a subcontractor’s charge must retain
money payable to satisfy the charge, and can pay the
amount owed into Court for the benefit of subcontractors
to absolve itself from liability.
Capped-fee service offerings
To provide cost certainty to our clients (principals and
contractors) who find themselves dealing with security of
payment legislation in the coming months, we have a
number of capped-fee service offerings set out below.

2. 1 Capped fees exclude GST and disbursements. Capped fees have been developed based on our extensive experience with security of payment matters, however it is not possible to predict every possible eventuality
from a security of payment matter. As such, there may be work required which necessarily falls outside of the ambit of the steps commonly involved in these matters (set out above). If that occurs, we will inform you
and either determine a suitable capped fee for that work or charge it at our hourly rates.
Adjudication – For Claimants
Service Capped-fee1
Payment
claims
Review payment claim, provide
advice on whether the claim
complies with the relevant
security of payment legislation
$1,000
AdjudicationApplications
For a claimed amount up to
$25,000 (ex GST)
$5,000
For a claimed amount between
$25,000 and $50,000 (ex GST)
$6,250
For a claimed amount between
$50,000 and $75,000 (ex GST)
$7,500
For a claimed
amount over
$75,000 (ex
GST)
10% of the GST
exclusive
claimed amount
Enforce
Obtain adjudication certificate
and register as a judgment in
Court
$2,750
Adjudication – For Respondents
Service Capped-fee1
Payment
schedules
Review payment claim, provide
advice on whether the claim
complies with the relevant
security of payment legislation
and provide advice on
arguments for inclusion in the
payment schedule
$2,500
AdjudicationResponses
For responding to an
adjudication application with a
claimed amount up to $25,000
(ex GST)
$5,000
For responding to an
adjudication application with a
claimed amount between
$25,000 and $50,000 (ex GST)
$6,250
For responding to an
adjudication application with a
claimed amount between
$50,000 and $75,000 (ex GST)
$7,500
For responding to an
adjudication application with a
claimed amount over $75,000
(ex GST)
10% of the GST
exclusive
claimed amount
Judicial
review
Provide advice on grounds of
review of the adjudicator’s
decision in the Supreme Court
$5,000
Subcontractors’ Charges
Service Capped-fee1
Lodgingandenforcingsubcontractors
charge
(forsubcontractors)
Lodging subcontractors’
charge (taking instructions,
preparing a Notice of Claim
of Charge and a Notice to
Contractor)
$1,250
Advising on prospects of
success in proceedings and
likely return (if required)
$2,000
Commencing proceedings to
enforce subcontractors’
charge (taking instructions,
preparing, filing and serving
claim)
$2,750
Defendingsubcontractorscharge
(forheadcontractors)
Contractor’s notice (taking
instructions, preparing and
issuing the notice)
$750
Advising on prospects of
defending proceedings (if
required)
$2,000
Defending proceedings to
enforce the charge (taking
instructions, preparing, filing
and serving defence to Court
proceedings
$2,750