WHAT TO DO IF YOUR BODY CORPORATE RECEIVES A PAYMENT CLAIM

Payment Claims and Pitfalls: What Bodies Corporate Must Know

Bodies corporate in Queensland are often involved in building projects, from minor repairs to major upgrades. With construction comes the risk of payment disputes, especially with contractors issuing payment claims under the Building Industry Fairness (Security of Payment) Act 2017. These claims carry strict legal deadlines and can have serious financial consequences if not handled correctly. What may look like a routine invoice may actually be a ‘payment claim’ under the Act, which starts strict response timeframes and consequences if you don’t respond. This article explains what payment claims are, why they matter, and how bodies corporate can respond effectively, highlighting lessons from the recent case of Baguley Build v Olcon.

A payment claim is a formal request for payment under Queensland’s building laws (the Building Industry Fairness (Security of Payment) Act 2017). A payment claim:

• Can look just like an invoice,
• Identifies the work done (or goods supplied),
• States the amount of money claimed, and
• Requests payment by a due date.

For example, if a concreter finishes part of a repair, they might issue a payment claim for that portion of the work, even if the project is still ongoing.

Why the Body Corporate Can’t Ignore a Payment Claim

Once a payment claim arrives, the body corporate (through its manager or committee) must respond quickly. The law requires you to respond within the time stated in your contract, but it can never be more than 15 business days from receiving the claim. If your contract is silent, you have 15 business days.

If you do nothing, the full amount claimed becomes payable, even if you believe the work is defective or incomplete.

This is why these claims can catch committees by surprise. What looks like “just another invoice” is actually a legal document that requires a special type of response.

The Payment Schedule: Your Only Chance to Dispute

If the committee disagrees with the amount claimed, you must issue a payment schedule. This is not simply writing back “we disagree” or “we’ve paid enough already”.

A valid payment schedule must:

• Identify the payment claim it responds to,
• State how much (if any) the body corporate will pay, and
• Give detailed reasons for withholding payment.

This is the critical part: your reasons must all be in the payment schedule. If you leave something out, you will not be able to raise it later in an adjudication.

Case Example: Baguley Build v Olcon

In the 2025 case of Baguley Build v Olcon, a subcontractor issued a payment claim for about $137,000. The builder (in a position similar to a body corporate) responded with a payment schedule for $0, saying only: “Our reasons haven’t changed.”

When the dispute went to adjudication, the builder tried to argue that there were multiple problems with the work (defects, inefficiency, lack of documentation). But because those reasons weren’t clearly set out in the payment schedule, the adjudicator refused to consider them. The adjudicator ordered full payment to the subcontractor, and the Supreme Court upheld that decision.

If you don’t spell out your objections in the payment schedule, you may lose the right to rely on them later — even if they are genuine and serious.

Common Mistakes by Bodies Corporate

From our experience, the most frequent missteps committees make when receiving payment claims are:

• Delaying action: Waiting until the next committee meeting — by then, the deadline has passed.
• Being vague: Saying “the work is defective” without explaining exactly what is wrong.
• Relying on past correspondence: Assuming earlier emails or complaints will “carry over.”. They won’t.
• Assuming they can add reasons later: The law specifically prevents this.

Practical Steps

Here’s what to do if a payment claim lands in your inbox:

1. Act immediately — note the date received and calculate the response deadline.
2. Gather information — check whether the claimed work was completed and if there are any concerns (defects, delays, overcharging).
3. Draft a payment schedule — clearly state how much will be paid and why any part is being withheld.
4. Be specific — link each reason to the claim.
5. Seek legal advice early — we can help you prepare a payment schedule that is legally sound and preserves all your grounds for withholding payment.

Why Advice Matters: Avoiding Costly Mistakes

Payment claims are highly technical, and the consequences of getting them wrong can be severe. Committees and body corporate managers may feel confident pointing to defects or incomplete work, but if those reasons are not set out in the right way, they may be disregarded entirely.

This is where legal advice becomes essential. A lawyer experienced in construction and strata law can help you assess the claim, identify any legitimate grounds for withholding payment and ensure those reasons are articulated correctly and completely. Getting advice early can mean the difference between a successful dispute and being forced to pay thousands for work you believe was substandard.

Summary

Bodies corporate in Queensland must respond swiftly and precisely to payment claims under the Building Industry Fairness (Security of Payment) Act 2017. The Baguley Build case shows how easy it is to lose simply by not setting out reasons clearly at the right time. For body corporate committees and managers, the key message is simple: act quickly, be specific and seek legal advice to best protect their rights and minimise risk.

Written by Peter Waller, Special Counsel at Grace Lawyers.