A developer has been fined $150,000 for non-compliance with the Project Trust Account (PTA) provisions in the Building Industry Fairness (Security of Payment) Act 2017 (the Act) after prosecution proceedings were issued by the QBCC.
This is the first successful prosecution in Queensland in relation to PTA offences under the BIF Act.
In summary:
Under the BIF Act, if a Project Trust Account is required for a head contract, all payments made by a Principal to a head contractor (for a trust project) must be paid into that Project Trust Account. The only exceptions to this rule are:
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- If the amount was due to be paid before the trust was established;
- The amount is paid into court;
- The amount is to be withheld because of a payment withholding request you have received;
- The amount is paid directly to a person in connection with a subcontractor’s charge; or
- If you have a reasonable excuse for failing to deposit the amount into the accounts.
The Act also requires that where a Principal is withholding retentions in the form of cash from payments made to the head contractor (for a trust project), they are required to establish and open a retention trust account for those withheld amounts in accordance with Part 3 of the Act. The only exceptions to this requirement are:
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- The contracting party is the State, the Commonwealth, a state authority, a local government or another entity prescribed by regulation; or
- The contract price for the contract is at least the minimum contract price.
It is an offence to deposit or transfer funds into an account other than a prescribed Project Trust Account or Retention Trust Account, or to withdraw funds from those accounts except for limited purposes specified in the Act.
The developer wrongfully transferred funds owed under a head contract to an account other than a Project Trust Account.
This occurred on twelve separate occasions between June 2022 and March 2023.
The matter was heard on April 11 in Maroochydore Magistrates Court, where the developer was fined $150,000 as a penalty.
QBCC Interim CEO and Commissioner Skye Bowie stated that this prosecution was a “strong outcome” that “reflects the QBCC’s risk-based enforcement approach and its role in ensuring all persons subject to the Act’s requirements are held accountable for non-compliance”.
This statement indicates that prosecutions of this type, and the high penalties for offending, are here to stay. It also emphasises a commitment to robust enforcement of Security of Payment legislation.
Given the indefinite pause on the rollout of phase 3 of the Queensland Government’s Project Trust Accounts framework, which would require a PTA for private-sector construction projects valued at $3 million or more if more than 50% of the contract price is for ‘project trust work’ and at least one subcontractor is engaged, contractors and developers have a chance to familiarise themselves with the strict PTA requirements before the scope of eligible projects widens.
The key takeaway? Get your Project Trust Account right, or face the consequences.
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