Key Takeaways
- The Subcontractors’ Charges Act 1974 (Qld) gives subcontractors a statutory charge over money owed to their principal contractor — protecting unpaid subcontractors even when the builder above them goes broke.
- A charge notice must be served on the person above your contractor in the contractual chain (the “owner”) within strict time limits — typically within 3 months of the debt becoming due.
- Once a charge is in place, the owner cannot pay the contractor above you without first satisfying the charge — effectively freezing funds owed to a failing builder.
- The BIF Act 2017 (Qld) security of payment regime and the Subcontractors’ Charges Act operate in parallel — you may be able to use both simultaneously to maximise recovery.
- Builder insolvency is the biggest risk — if your builder enters voluntary administration or liquidation before you serve a charge, the s 440B (VA) or s 471B (liquidation) moratorium may block enforcement. Act immediately on any sign of financial distress.
Queensland’s construction industry is experiencing its worst insolvency wave in decades. In 2025–2026, major builders including PBS Building, Open Projects Group, Form Structures, and others collapsed — leaving subcontractors and suppliers owed tens of millions of dollars. If you are a subcontractor, supplier, or labour hire company working beneath a principal contractor, the Subcontractors’ Charges Act 1974 (Qld) (SCA) is one of the most powerful — and most overlooked — tools available to protect your payment.
This guide explains how the Act works, how to use it before your contractor fails, and how it interacts with the BIF Act security of payment regime. This is general information only and is not legal advice. You should obtain professional advice specific to your circumstances.
What Is the Subcontractors’ Charges Act 1974 (Qld)?
The Subcontractors’ Charges Act 1974 (Qld) creates a statutory mechanism allowing subcontractors to place a charge on money payable higher up the contractual chain. The charge attaches to money owed by a “principal” (the person who engaged your contractor) to your contractor — effectively intercepting funds before they reach a contractor who may be about to default.
The Act defines “subcontractor” broadly: it covers anyone who carries out construction work, or who supplies goods or materials used in construction, under a subcontract with a contractor. If you are a sub-subcontractor (working beneath a subcontractor who was engaged by a head contractor), you can still use the Act by serving a charge notice up the chain.
Who Can Use It? Key Definitions
Under section 5 of the SCA, a “subcontractor” is a person who carries out, or who has agreed to carry out, construction work (or who supplies goods for use in construction) under a contract with a “contractor.” A “contractor” is anyone who has contracted with an “owner” to carry out, or procure the carrying out of, construction work.
An “owner” in the SCA sense means the person at the top of the relevant contractual tier — the person who owes money to your contractor. In a typical three-party chain (Owner → Head Contractor → Subcontractor), the SCA charge is served on the Owner. In a four-party chain (Developer → Head Contractor → Subcontractor → Sub-subcontractor), the Sub-subcontractor serves its notice on the Subcontractor as “owner” under the Act.
How Does the Charge Work?
The charge operates in three stages:
Stage 1: Service of Charge Notice
Under section 8 of the SCA, you serve a written charge notice on the “owner” (the tier above your contractor). The notice must specify:
- The amount of money claimed to be owing to you by your contractor;
- The nature of the work done or goods supplied;
- The particulars of the contract between you and your contractor; and
- A claim that a charge is created over the money payable by the owner to the contractor.
Once served, the notice creates a charge over all money then payable, or which becomes payable, by the owner to the contractor in relation to that construction work. The owner cannot pay the contractor (even money not yet due) without legal risk once a charge notice has been properly served.
Stage 2: The Owner’s Response and Interpleader Risk
Under section 12, once an owner receives a charge notice, the owner must not pay the contractor the charged amount without first giving you 5 days’ written notice of the intended payment. Failure to do so makes the owner personally liable to you for the amount paid away. This is a powerful deterrent — it puts the developer or top-tier contractor at risk of paying twice.
If the contractor disputes the charge, the owner can apply to court for an interpleader order — paying the disputed amount into court and letting the court resolve the competing claims (yours against your contractor’s). This protects the owner from being caught in the middle of a dispute they are not party to.
Stage 3: Enforcement by Proceedings
Under section 15 of the SCA, to enforce the charge you must commence court proceedings within 3 months of serving the charge notice. Failure to do so causes the charge to lapse. The proceedings are typically against both the contractor (your debtor) and the owner (the charged party). The court can order the owner to pay you the amount of the charge from money it owes to the contractor.
Time Limits — The Critical Deadlines
The SCA imposes strict time limits. Get these wrong and you lose your charge:
- Service of charge notice: The notice must be served before or within a reasonable time after the contract debt is due. Courts have interpreted “reasonable time” narrowly in the context of contractor insolvency — if you wait months after knowing your contractor is in financial distress, you may be too late.
- Commencement of proceedings: Section 15 — within 3 months of serving the charge notice, you must commence proceedings. If you do not, the charge lapses and the owner can pay the contractor without liability to you.
- Insolvency moratorium: If your contractor enters voluntary administration, section 440B of the Corporations Act 2001 (Cth) imposes an automatic stay on proceedings against the company and enforcement of most rights against company property. Court leave is required. Act before VA is appointed if at all possible.
How the SCA Interacts With the BIF Act Security of Payment Regime
Queensland’s Building Industry Fairness (Security of Payment) Act 2017 (Qld) (BIF Act) and the Subcontractors’ Charges Act 1974 run as parallel regimes. They are not mutually exclusive — a sophisticated subcontractor can use both simultaneously to maximise recovery:
- BIF Act: Serves a payment claim on your contractor → contractor fails to respond or responds inadequately → adjudication application → adjudication decision → enforce adjudication certificate as a court judgment. The BIF Act is fast (adjudication typically within 10 business days) but the judgment is against your contractor, not the tier above.
- SCA charge: Serves charge notice on the owner simultaneously → freezes funds above the contractor → court proceedings within 3 months → court order against the owner for payment from funds owed to the contractor.
Using both together — a BIF Act payment claim and an SCA charge notice served simultaneously — gives you a judgment against your contractor (BIF Act route) and a charge on money owed by the owner to your contractor (SCA route). If your contractor collapses, the SCA charge means you can recover from the owner rather than lodging as an unsecured creditor in a liquidation.
Builder Insolvency: Timing Is Everything
The most common scenario in 2025–2026 Queensland construction disputes is this: a head contractor or principal contractor shows signs of financial distress — delayed payments, sub-contractors complaining, rumours of ATO action — and then enters voluntary administration or liquidation. Subcontractors who wait to see what happens before acting often find their remedies severely limited:
- Once a VA is appointed, section 440B of the Corporations Act prevents you from enforcing a charge against the company’s property (which includes money it is owed) without court leave.
- Section 471B applies the same moratorium in liquidation.
- An SCA charge served before the VA or liquidation appointment may still be enforceable — but you will need to apply for leave to continue proceedings, and the administrator/liquidator will scrutinise the timing of the charge notice as a potential preference or related issue.
- An SCA charge served after the VA or liquidation appointment requires court leave before you can even serve it.
The message is clear: serve your charge notice at the first sign of financial distress — not after the administrator walks in the door.
Project Bank Accounts and Retention Money Trusts
Queensland’s BIF Act introduced project bank accounts (PBAs) for certain State-funded building contracts — a trust mechanism designed to protect subcontractor payments. PBAs hold three trust accounts: a general account, a retention account, and a disputed funds account. Funds held in a PBA trust are protected from insolvency of the head contractor — they are not available to a liquidator as general assets of the company.
If your contract is on a project subject to PBA requirements and those accounts have not been set up properly, or if retention money is not being held in trust as required, this is an independent breach of the BIF Act with serious consequences for the head contractor and a separate avenue of recovery for subcontractors.
A Practical 6-Step Guide for Queensland Subcontractors
- Identify the contractual chain above you. Who is your contractor? Who is above your contractor? That is your “owner” for SCA purposes. Obtain the head contract or principal contract if possible to understand the money flows.
- Serve your BIF Act payment claim. Serve a compliant payment claim on your contractor under section 68 of the BIF Act for all amounts currently owing. This starts the adjudication clock and documents your entitlement.
- Serve your SCA charge notice simultaneously. Do not wait for the BIF Act process to conclude. Serve the charge notice on the owner now. Every day of delay is a risk if your contractor is in financial distress.
- Lodge a caveat if real property is involved. If the project involves a lot of land owned by the owner and there is unpaid retention or final payment, consider whether the SCA charge gives rise to a caveatable interest over the property.
- Monitor your 3-month enforcement deadline. Diary the date 3 months from your charge notice service. You must commence proceedings before that date or the charge lapses.
- Act immediately on any insolvency signal. If your contractor misses payments, instructs you to stop work, or if there are market rumours, seek urgent legal advice. The window to serve a charge notice that will survive VA or liquidation moratorium may be days, not weeks.
What Happens If the Owner Refuses to Acknowledge the Charge?
If the owner pays the contractor in breach of your charge notice (i.e., after receiving notice but without giving you 5 days’ warning), the owner becomes personally liable to you for the amount paid away. This is a significant personal liability for a developer or property owner — it is not a defence that the owner did not realise the legal effect of the notice. The notice creates the charge by operation of statute.
If the owner disputes that any money is owing to the contractor (i.e., the contractor’s claim against the owner is itself disputed), the amount available to satisfy your charge may be reduced or nil. This is why using the SCA in combination with a BIF Act adjudication — which establishes the debt quickly — is so powerful: an adjudication decision creates a debt that is payable immediately, even if being challenged, and crystallises the contractor’s entitlement from the owner.
Frequently Asked Questions
Can I use the Subcontractors’ Charges Act if I am a sub-subcontractor?
Yes. The SCA applies through multiple tiers of the contractual chain. As a sub-subcontractor, you serve your charge notice on your subcontractor (who becomes the “owner” in relation to the SCA). The subcontractor then cannot pay your sub-sub-subcontractor without satisfying your charge. The Act is specifically designed for multi-tier construction arrangements.
What is the relationship between the SCA and the PPSA?
The SCA charge is a statutory charge created by Queensland legislation — it is not a security interest under the Personal Property Securities Act 2009 (Cth) (PPSA). You do not need to register it on the PPSR. However, if your contractor has granted a PPSA security interest to a secured creditor who has a general security agreement (GSA) over all present and after-acquired property, the priority between that PPSA security interest and your SCA charge may need to be resolved. Get legal advice on this if your contractor has a secured financier.
Does a charge notice prevent the owner from paying anyone?
No. The charge only applies to money payable by the owner to your contractor in relation to the relevant construction work. The owner can continue to pay other contractors and suppliers in the normal course. The charge does not freeze the owner’s entire funds — only the specific money stream flowing from the owner to your contractor for the charged work.
Can I use the SCA and BIF Act at the same time?
Yes — and you should. The two regimes are complementary. A BIF Act payment claim and adjudication gives you a fast, enforceable debt against your contractor. An SCA charge simultaneously freezes funds above your contractor, allowing recovery from the owner even if the contractor is insolvent. Using both maximises your recovery options and is the recommended approach when a contractor shows financial distress.
What happens to my SCA charge if my contractor enters voluntary administration?
If a charge notice was served before VA, the charge exists but section 440B of the Corporations Act imposes a moratorium on proceedings. You need court leave to continue or commence enforcement proceedings. The administrator will likely argue the charge should be stayed pending the creditors’ decision. If a DOCA is proposed, your charge entitlements will be subject to the DOCA binding effect if you vote to accept or are bound as an unsecured creditor. Get urgent legal advice as soon as VA is appointed.
This article is general information only and is not legal advice. The Subcontractors’ Charges Act 1974 (Qld) involves strict time limits and procedural requirements. You should obtain specific legal advice immediately if you are considering serving a charge notice or if your contractor is showing signs of financial distress.
Get Advice From Boss Lawyers
Boss Lawyers regularly acts for subcontractors, head contractors, developers, and financiers in Queensland construction payment disputes. Whether you need a charge notice drafted urgently, a BIF Act payment claim prepared, or advice on your position when a contractor fails — we act fast because timing is everything in construction insolvency. Call us on 1300 267 711 or use our contact form to speak with a lawyer today.
If you are a Queensland subcontractor facing a builder who has failed or is in financial difficulty, the construction lawyers Brisbane at Boss Lawyers can advise on your rights under the Subcontractors’ Charges Act 1974, BIF Act security of payment claims, and insolvency lawyers Brisbane who understand the time-critical steps when a builder collapses. Call 1300 267 711.
