Administrators’ bid exposes gap in BIF Act

Administrators fearing non-payment for services have sparked an examination of the trustee provisions in the Building Industry Fairness (Security of Payments) Act 2017 (Qld).

The Brisbane Supreme Court was asked to decide an application from the administrators of PBS Building (Qld) Pty Ltd, for directions, and in delivering her judgment last Monday, Justice Brown said the case raised important questions for external administrators of a building company where money was held in trust accounts required under the BIF Act.

The administrators submitted it was likely PBS had insufficient non-trust assets to meet their remuneration, costs and expenses, and sought a determination as to whether they were entitled to be paid from the trust accounts, or whether the BIF Act prevented such payment until all subcontractors had been paid.

In her 41-page decision, Justice Brown concluded there did not seem to be any decision that could be appropriately given without further evidence and submissions.

PBS entered into two home-building contracts in 2022, one for a Sunshine Coast project ($16.4 million) project in April, and the other for a Hervey Bay project ($41.1 million) in August.

The company opened project trusts accounts and a retention trust account as required under the BIF Act. After payments were made into the trusts, PBS had external administrators appointed in March 2023, and subsequently went into liquidation six months later.


The administrators said if the court determined the BIF Act precluded their payment out of the trusts, or at least until the obligations to subcontractors had been paid, then they might elect not to administer the trusts given the lack of funds available to carry out such work.

The Queensland Building and Construction Commission (QBCC) was joined to the matter by consent as an interested party because it has oversight of project trusts and retention trusts under the BIF Act.

“While the QBCC did not take a directly adversarial position on all aspects of the originating application as amended, it has sought to apprise the court of all matters that may assist the court to properly construe the BIF Act and determine the relevant issues raised by the originating application,” Justice Brown said.

“It does not support the construction proposed by the applicants. As such, it acts to a certain extent as a proper contradictor to the relief sought by the applicants.”

The administrators contended that, in the event the court construed the Act as preventing their payment from the trust funds, then those provisions would be in conflict with the Corporations Act 2001 (Cth) and the Insolvency Practice Schedule (Corporations).

In such an event, the applicant contended that, under Section 109 of the Constitution, the Corporations Act should prevail to the extent of any inconsistency.


Justice Brown said a question arose as to whether the matter should be able to proceed at all, since all subcontractor beneficiaries might not have been served, and the administrators could not decide whether or not to continue work while the funds remained subject to subcontractor beneficiaries.

 “While some 111 subcontractors have been served, who are potential beneficiaries of the funds in the trust accounts, the applicants indicated that they have not been able to carry out the task required to clarify whether all the potential subcontractors who may have claims have been served,” she said.

“The alternative course which the applicants submit is available to them under the BIF Act, is that the applicants are entitled to deduct their remuneration and costs for administering the trust accounts from the funds in the trust accounts before disbursing the remaining funds to individual beneficiaries.

“If that is not the case, the applicants consider they will be unable to justify the incurring of any costs in carrying out the trust administration tasks, and would not be obliged to do so given s 545 of the Corporations Act.

“In that event, the funds are likely to remain in the accounts until PBS (Qld) is de-registered, in which case the funds will be paid to ASIC and arguably never paid to the subcontractor beneficiaries.”

Justice Brown said the court could appoint a receiver to administer the trust accounts, but this would add more costs to the external administration of PBS.


“While there appears to be insufficient funds held by PBS (Qld) outside of that held in the trust accounts, the true financial position of PBS (Qld) does not appear to be known,” she said.

“The liquidator is not obliged to continue to carry out work for which they may not be remunerated and, in that event that they do not proceed, it may fall on QBCC or the subcontractor beneficiaries themselves to apply to the court for a receiver to be appointed.

“It would be premature for the court to make such an order until the position in relation to the applicants has been clarified. It may be that subcontractor beneficiaries apply for the liquidator to incur the expense of administering the trust accounts under s 545 of the Corporations Act, which would be conditioned on the payment of the liquidators’ expenses.”

She concluded that in the circumstances, it was not appropriate for the court to make directions, and refused the application. She ordered the parties to request to relist the matter within seven days if they sought any direction from the court in light of the reasons.

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