Security of Payment
Project Bank Accounts
A Project Bank Account (PBA) is a set of three trust accounts where funds are held in trust for head contractors and subcontractors until payments are due, as part of a building project. The three accounts secure progress payments, disputed funds and retention money, until they are paid to a subcontractor.
Phase One of PBAs will begin on State Government funded projects valued between $1 million and $10 million (including GST), from 1 March 2018. PBAs will need to be established by head contractors for each project. They will be required to open three trust accounts, a general account, a retention account and one for any amount of money subject to a dispute.
Subject to a review of Phase One, PBAs will be required on all building projects with a contract value of more than $1 million (including GST), in 2019.
PBAs will not apply to engineering and infrastructure projects including bridges, roads and ports, unless ‘building work’ makes up 50% or more of the contract value.
For more information on the responsibilities of each party to a PBA, the Department of Housing and Public Works has prepared a series of guidelines and summary guidelines, which are available here.
Project Bank Account Forms
Project Bank Account Complaint Form
If you have a complaint about the management of a project bank account, you can contact the QBCC using the Project Bank Account Complaint Form. A complaint could be about anything to do with a project bank account, including:
- an issue with the opening or closing of a project bank account,
- an incorrect transfer of money to or from a project bank account, or a discrepancy in the payment instruction,
- a written notice or approved form not received in relation to a project bank account,
- any other areas where a party may wish to advise the QBCC of PBA complaints.
S49 Notice of Project Bank Account before Entering Subcontract Form
Before entering into a subcontract, the head contractor must give the subcontractor the project bank account information using the S49 Notice of Project Bank Account before Entering Subcontract Form. If the head contractor entered into a subcontract for the building contract before the day (the start date), a project bank account is required for the contract, the head contractor must give the subcontractor the information within 10 business days after the start date. This form is not required to be sent to QBCC.
S50 Principal to be Given Information about Subcontracts Form
After opening a project bank account, the head contractor must give the principal a S50 Principal to be Given Information about Subcontracts Form within five business days of entering into a subcontract for the building contract.
During the subcontract, if there is a change to the subcontractor information, the head contractor must advise the principal of the updated/changed information using the S50 Principal to be Given Information about Subcontracts Form. This form is not required to be sent to QBCC.
S21 Notice of Related Entities Form
If a project bank account is established for a project, and the head contractor subcontracts to someone who is a related entity, additional steps are required.
In this situation, the head contractor and the subcontractor who is a related entity, are both required to establish project bank accounts for the project.
If a head contractor enters into a subcontract with a related entity, they must notify the principal contractor and the QBCC within five business days after entering into the subcontract.
The principal contractor is then also required to notify the QBCC within five business days after they’ve become aware of the relationship.
The form for the principal and head contractors to use is the S21 Notice of Related Entities Form. This form must be sent to the QBCC.
For a full definition of a related entity please refer to Section 19 of the Building Industry Fairness (Security of Payment) Act 2017.
Examples of related entities may include:
- a family member, e.g. brother, sister, nephew, niece, parent, grandparent and it also includes spouse/partners and their family members,
- a majority shareholder, director or secretary of the corporation (company),
- a related body corporate of the corporation,
- an individual who has an interest of 50% or more in the corporation.
If the principal contractor suspects that a related entity exists between the head contractor and a subcontractor, and they haven’t been advised, then they can lodge a Project Bank Account Complaint Form which the QBCC can use to start investigations.
S54 Notice of Principal Replacing Head Contractor as Trustee
If the head contractor is terminated for contractor default, or the head contractor enters into insolvency, the principal may step into the role of trustee. The principal is required to complete the S54 - Notice of Principal Replacing Head Contractor as Trustee, this form notifies the head contractor that the principal will replace the head contractor as trustee of the project bank account.
Upon receipt of the notification the head contractor must:
- Give the principal the information required to act as trustee. This includes details of the relevant financial institution and bank account details and contact information for each subcontractor beneficiary, including current or outstanding payment claims and copies of payment schedule issued.
- Advise the relevant financial institution that the principal will act as trustee.
The head contractor remains liable for any act or omission concerning the PBA and must continue to comply with its obligations under the Act. As the acting trustee over the project bank account the principal may, via payment instruction, make payments to the subcontractor beneficiaries or head contractor as a beneficiary that are required to be made under the Act.
S42 Power to Delegate Form
The head contractor may employ or engage an agent to do any act relating to the project bank account on behalf of the head contractor. A head contractor may also, using the approved S42 Power to Delegate Form, delegate to a person who is a resident in the state, any powers of the contractor in relation to a PBA (other than the power to delegate). The delegation takes effect if the person accepts the delegation, and during the periods stated in the S42 form.
A copy of the form must be provided to the principal and the subcontractor. The approved form must state which powers of the contractor are to be delegated, including any exemptions, and the period/duration of the delegation. This form is not required to be sent to QBCC.