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ARTICLE · 24 JULY 2016

Project bank accounts to protect subcontractors

Corrs Chambers Westgarth
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QLD is contemplating introducing "project bank accounts" to help ensure payments from principals flow down to subcontractors.

AustraliaReal Estate and Construction
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KEYWORDS: PROJECT BANK ACCOUNTS; SECURITY OF PAYMENT

KEY TAKEAWAY

Queensland is contemplating introducing "project bank accounts" to help ensure payments from principals flow down to subcontractors. Project bank accounts have been used in New South Wales, the Northern Territory, Victoria and Western Australia, typically on government projects.

These arrangements can be beneficial for subcontractors, but the surrounding legislation may give rise to some unexpected issues. If not properly prepared, a principal may inadvertently find itself a respondent to a claim from a subcontractor under security of payment legislation.

Overview

In December 2015, the Queensland government issued a Security of Payment discussion paper seeking industry feedback on ways to improve security of payment for subcontractors. One of the proposals flagged for consideration is the use of project bank accounts (PBAs).

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