Subcontractors’ Charges and Security of Payment
While the money is still in the chain, you have leverage. Once it passes up, you have a debt.
Queensland gives unpaid subcontractors two statutory remedies that work on entirely different logic. Adjudication produces a fast decision on what is payable. A subcontractors’ charge attaches to money the party above your contractor still holds, and stops it moving. One gets you an enforceable amount. The other gets you a source of funds. On a project heading for trouble, the second is usually worth more.
Boyle Litigation acts for subcontractors, suppliers and trade contractors securing payment, and for principals, developers and head contractors served with a notice of claim of charge. Litigation is the only work we do.
Two remedies, one objective
| Forum | Adjudication | Subcontractor’charge |
|---|---|---|
| What it produces | A decision on the amount payable, enforceable as a judgment | A charge over money the higher party owes your contractor |
| Who it runs against | The party who owes you under your contract | The party above your contractor in the contracting chain |
| Main advantage | Speed, and an enforceable amount | It freezes actual funds before they move |
| Main limitation | A decision is only as good as the respondent’s solvency | Limited to money still payable, and not available for damages |
| Critical window | Business days at every stage | Generally three months to give notice, then one month to start proceedings |
| Best used when | The debt is clear and the respondent can pay | The contractor is slow, disputing, or financially exposed |
Critical window
The party who owes you under your contract
Subcontractor’charge
A charge over money the higher party owes your contractor
How a subcontractors’ charge works
- Confirm the work is subcontract work capable of supporting a charge, and identify the correct higher party in the chain.
- Establish the amount properly claimable, limited to money payable under the subcontract.
- Give the notice of claim of charge in the approved form, within the statutory window, to the higher party and to the contractor.
- Start a proceeding to enforce the charge within one month after the notice is given.
- Prove the debt and obtain judgment, with the retained money available to satisfy it.
The deadline that ends most charges is the second one.
Giving the notice freezes the money. It does not preserve the claim. If a proceeding to enforce the charge is not started within one month after the notice is given, the charge is extinguished and the funds are released. Valid charges are lost this way on amounts far greater than the cost of the whole exercise.
Timing
For money other than retention, notice must generally be given within three months after the subcontract work is completed. For retention, the window generally runs from the date the retention becomes payable. Both are affected by the terms of the subcontract and by what actually happened on site, which is why the completion date is often the first thing in dispute.
- Do not wait for practical completion of the project. The window runs from your work, not the head contract.
- The records that fix your completion date matter more than correspondence about the debt.
- If the window has closed, adjudication or a court claim may still be available. The charge is not the only path, and it is not always the best one.
What a charge can and cannot secure
- It can secure money payable for work done under the subcontract, including retention in the appropriate window
- It cannot be used to claim damages, delay costs, or losses that sit outside the contractual entitlement to payment
- It cannot exceed the money payable up the chain, so the value of the remedy depends on what is left in the contract above you
- Overstating a charge is not a costless tactic. A claim made without reasonable cause can expose the claimant to liability, and in some circumstances to penalty
We assess the maximum defensible amount before the notice goes out. An accurate charge that will survive challenge is worth considerably more than an inflated one that invites an application to set it aside.
Security of payment: the documents decide the outcome
Most payment disputes are decided by paperwork created before the dispute existed. The payment claim, the payment schedule, and the records connecting the claimed amount to the work carry more weight than any argument made afterwards.
Payment claims
- Whether the document is a valid payment claim at all, which determines every right that follows
- Identifying the work and the amount with enough particularity to survive challenge
- Claiming variations in a way that engages the contractual mechanism rather than assuming it
- Ensuring the claim is given within the permitted window, in the permitted way, and to the correct party
Payment schedules
- Scheduling an amount less than the claim, with reasons that will hold up in an adjudication
- The consequences of failing to schedule at all, which are severe and largely unrecoverable
- Set-off, back charges and liquidated damages: what can properly be applied, and how it must be substantiated
Retention and trust obligations
Queensland’s project trust and retention trust framework changes where money sits on a project and who has recourse to it. Where trust obligations apply, they affect recovery strategy and the questions worth asking early, including whether amounts have been withheld or dealt with in breach of them. We advise on the practical consequences for your claim and on the obligations currently applying to your project.
Served with a notice of claim of charge
If you are a principal, developer or head contractor and a notice has been served, your obligations begin immediately. Paying the contractor in the ordinary course can expose you to the amount claimed. Equally, an invalid or overstated notice should not be treated as though it were effective, and paying it out is not a neutral choice either.
- Immediate advice on what must be retained and what may still be paid
- Assessment of whether the notice is valid, timely, and in the approved form
- Response where the charge is overstated or the claimant is not entitled to make it
- Managing competing charges where the money available up the chain is insufficient
- Protecting programme and project delivery while the dispute is resolved
A notice has landed and the progress claim is due.
This is the point at which principals create liability for themselves. Call before the payment run.
For insolvency practitioners
When a contractor fails mid-project, charges, payment claims and adjudication decisions in various states of completion sit across the file, and the value in them decays quickly. We assess what survives, what can still be enforced, and what is worth funding, and we report in a form you can put to creditors.
- Live and lapsed charges: what remains enforceable, against whom, and on what timeline
- Adjudication decisions obtained but never enforced
- Claims by and against the company under construction contracts, including retention and security held
- Prospects and funding advice delivered on a timeline that fits your reporting obligations
Why Boyle Litigation
- Live and lapsed charges: what remains enforceable, against whom, and on what timeline
- Adjudication decisions obtained but never enforced
- Claims by and against the company under construction contracts, including retention and security held
- Prospects and funding advice delivered on a timeline that fits your reporting obligations
Frequently asked questions
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What is a subcontractors’ charge?
A subcontractors’ charge is a statutory remedy under Chapter 4 of the Building Industry Fairness (Security of Payment) Act 2017 (Qld). It allows an unpaid subcontractor to claim a charge over money that is or becomes payable by a higher party, such as a principal or head contractor, to the subcontractor’s own contractor. Once notice is given, that money must be retained rather than paid on, which means the funds are still available when judgment is obtained.
When do I have to give a notice of claim of charge?
For money other than retention, notice must generally be given within three months after the subcontract work is completed. For retention, the period generally runs from the date the retention becomes payable. The subcontract terms and the facts on site both affect when that clock started, so the completion date is often contested. Advice should be taken as soon as payment is in doubt, not once the window is closing.
What happens after I give the notice?
The higher party must retain the amount claimed and must not pay it to the contractor. The subcontractor must then start a proceeding to enforce the charge within one month after the notice is given. If that step is missed, the charge is extinguished and the money is released. Giving the notice is the beginning of the process, not the end of it.
Can I claim delay costs or damages under a subcontractors’ charge?
No. A charge secures money payable for the work done under the subcontract. Claims for damages, including delay and disruption costs, are not secured by a charge and must be pursued separately, usually through court proceedings or arbitration. Including damages in a charge can render the whole notice vulnerable, which is why the claimable amount should be assessed before the notice is given.
Should I use a subcontractors’ charge or adjudication?
It depends on where the money is and how solvent the party owing it is. Adjudication is faster and produces an enforceable amount, which suits a clear debt owed by a party who can pay. A charge is the stronger remedy where the contractor is disputing, slow, or financially exposed, because it attaches to funds still held above them rather than relying on their capacity to pay. Where the contracting chain and the timing allow, both can be used.
Can I run a charge and an adjudication at the same time?
In appropriate cases, yes, and the sequencing matters. The two remedies have different windows, different targets, and different evidentiary requirements, and one can undermine the other if the claimed amounts and the reasons given are inconsistent. This is a strategy decision that should be made once, at the start, with both pathways mapped.
What should I do if I am served with a notice of claim of charge?
Stop the payment and get advice before the next payment run. Once a notice is given, the money claimed must be retained, and paying the contractor in the ordinary course can leave you exposed to the amount claimed. At the same time, an invalid, out of time, or overstated notice should not simply be honoured. Both questions, what to retain and whether the notice is effective, need to be answered quickly.
Does a charge help if the contractor goes into liquidation?
It can, and that is often the point of using it. A charge given and enforced in time attaches to money held above the contractor, so the funds do not simply fall into the pool available to the contractor’s general creditors. Timing relative to any appointment matters, and so does whether the enforcement proceeding was started within the required period. Where an appointment is imminent, this is a matter of days rather than weeks.