QBCC's landmark prosecution puts developers on alert for Project Trust Account compliance failures

In a significant first-of-its-kind, a Queensland developer has been fined $150,000 after the Queensland Building and Construction Commission (QBCC) found it to be in breach of the Project Trust Account Regime under the Building Industry Fairness (Security of Payment) Act 2017 (Qld).

The developer was found to have paid money under a head contract into an account other than the prescribed project trust account. This is the first time a developer has been prosecuted by the QBCC under this regime, demonstrating a significant shift in how the industry is expected to adhere to payment security frameworks.

Implication for industry

The Project Trust Account Regime is non-negotiable

The QBCC's enforcement action serves as a reminder that compliance with the Project Trust Account Regime is not optional. The regime mandates any funds owed under a head contract must be deposited into a prescribed trust account. In this instance, the developer failed to do this on at least 12 occasions between June 2022 and March 2023.

The QBCC has made it clear that the QBCC's enforcement approach is "risk-based" and is focused on holding parties "accountable for non-compliance where serious risks are identified".

While head contractors are (arguably disproportionately) liable for the majority of statutory obligations, developers also have a critical obligation of ensuring that payments made to head contractors are directed into the designated trust account. When developers fail to do this, exposure to severe financial penalties arise, as demonstrated by this recent prosecution.

Slow rollout of the Project Trust Account regime should not be taken lightly

While the full implementation of the Project Trust Account Regime continues to be delayed, developers and contractors should not assume that they can afford to ignore it. Notwithstanding the consistent roll out delays, the QBCC has shown it is actively enforcing the Project Trust Account Regime now, and developers should anticipate widespread compliance checks in the future.

Conclusion

The QBCC's recent prosecution of a Queensland developer demonstrates that non-compliance with the Project Trust Account Regime is being closely monitored and enforced. By taking the necessary steps to understand and implement the required compliance measures, developers can safeguard their operations from the risk of fines and legal action.

The willingness of the QBCC to enforce may also give contractors avenues of complaint to ensure developers remain compliant.

For more information or assistance, please contact our Construction and Infrastructure team.

Authors

Andrew Kelly | Partner | +61 7 3338 7550 | akelly@tglaw.com.au

Thomas McKillop | Special Counsel | +61 7 3338 7530 | tmckillop@tglaw.com.au

Renee Newcomb | Paralegal

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