Commercial Litigation

How to Avoid and Manage Building Disputes in Queensland

01/01/2020 By // by Wayne Davis

Building disputes can arise in a number of different ways between a number of different parties.

A building dispute can be between a building owner and a building contractor; between 2 or more building contractors; or homeowner, contractor and a third party.

By using building and construction lawyers, a building dispute can be avoided or effectively managed.

Qld construction law can be complicated. This article provides general information on avoiding disputes, and effectively managing building disputes.

Building disputes can be managed effectively if they are dealt with quickly. Contact our building dispute lawyers in Brisbane and the Sunshine Coast

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What is a Building Dispute?

A building dispute can arise in a number of different circumstances, these can include:

Defective building work;
Delayed building work or abandonment of work;
Breaches of building contracts;
Unclear or confusing ambiguous contractual language;
Variations that have not been agreed, nor put in writing;
Disagreements as to payment claims and schedules;
Debt recovery and non-payment of money;
Significant differences in contract price;
Negligence claims for bad quality of workmanship against a builder; and
Non-completion of building work.

We will briefly discuss these types of building disputes in more detail below

Defective Building Work

Defective building work is usually separated into two (2) groups:

Structural defects; and
Non-structural defects.

A structural defect can be identified to the QBCC within six (6) years and six (6) months from the date of completion of the work.

A non-structural defect can be identified to the QBCC within 12 months from the date of completion of the work.

Typical Types Defective Building Work

A list of typical defective building work in Queensland can include:

Slab and footing failures and category 3 and 4 cracks in concrete;
Incorrect dimensions of bedrooms, dining rooms, lounge and living rooms, family rooms, studies, halls, entries and stairways;
Incorrect dimensions of garages, carports, verandas, decks, patios etc;
Voids, holes, or category 2 level cracks in masonry walls;
Any visible stains, mortar smears and damage caused by cleaning;
Any visible staining, folds, splits, dents, open joints between panels, cracking and other distortions in wall cladding;
Any visible staining, folds, splits, dents, open joints between panels, cracking and other distortions in roof cladding;
Any visible irregularities or undulations in roof tiles;
Cracks in external rendered surfaces;
Visible cracks or open joints in external finishes applied to lightweight substrate or if they allow the ingress of water;
Category 3 and 4 cracks in internal rendered surfaces on masonry substrate;
Visible Cracks in mouldings and/or other architectural features and joints greater than 1mm;
Defects and cracking in plasterboard sheeting, other sheeting and cornices;
Visible gaps between mouldings or between mouldings and other fixtures over 1mm;
Visible cracking, displacement, pitting or similar blemishes in natural stone, marble or similar materials;
Visible blemishes such as paint runs, paint sags, wrinkling, dust, bare or starved painted areas, colour variations, surface cracks, irregular and coarse brush marks, sanding marks, blistering, uniformity of gloss level and other irregularities;
Visible holes and any other unfilled depressions in painted or stained timber;
Visible cracks in shower recess and components and cracks in shower bases, screens and glass;
Splits in timber decking that extend to the end or side edge of the timber;
Departures from the documented set out for concrete pools;
Damages to appliances and fittings supplied as part of the building contract; and/or
Visible scratches, fractures, chips or other blemishes on glazing and mirrors.

The above are only defects in certain circumstances, and small or minor defects may not be defects under contract or the QBCC.

There could be other types of defects in building work. For more defects, view the QCBB Standards and Tolerance Guide

Delayed Building Work

A builder has an obligation to bring the work to practical completion on the date for practical completion.

A building and construction contract will usually include a clause which says something along the lines of “the builder will not unreasonably fail to perform the work diligently, or unreasonably delay or fail to maintain reasonable progress of the Works” – or something like this.

Obviously, this does not include delay because of storms / heavy rains, floods, bush fires, etc. or things outside of the control of the builder.

The non-breaching party must issue a notice to remedy breach for the delay.

But, if the builder does not remedy the breach by bringing the building works to completion on the date of practical completion without a reasonable explanation, then they may be in breach of the building contract and may allow the non-breaching party to terminate and sue for damages.

A party may terminate for delay if the following criteria are met:

The building works are seriously incomplete at the time the notice to remedy breach is served; and
There did not exist any circumstances which would have prevented the builder from having completed the works on time.

Breaches of Building Contracts

A breach of contract occurs when a party to a contract does not perform their obligations under the contract.

Not all breaches of contract give rise to the right to terminate the contract and so care should be taken, and advice should be sought before attempting to terminate a contract.

However, all breaches allow for the innocent party to claim damages (if damages have been incurred).

There will usually be a clause in the building contract which will provide a framework for breaches and substantial breaches of the building contract.

There could be any number of breaches that could occur under a building contract, and it is vital to get qualified legal advice.

Unclear or Confusing Ambiguous Contractual Language

Entering into a building contract which has unclear or confusing ambiguous contractual language could lead to an expensive building dispute.

For example, if a party believes that something is included in the price, or not included in the price, a badly worded clause could lead to a building dispute which could cost both time and money.

If a definition, clause, phrase, specific term, or word is vague, ambiguous, or unclear then this could cause serious problems.

This includes residential or commercial building contracts between homeowners, builders, contractors, subcontractors, or third parties.

We would always recommend getting legal advice before entering into any building contract.

Variations that have not been Agreed, nor put in Writing

It is essential that all variation to building contracts be properly documents in writing.

Section 40 of Schedule 1B of the Queensland Building and Construction Commission Act says:

The building contractor must give the building owner a copy of the variation in writing

Further, Section 41 of Schedule 1B defines what needs to be included in the written variation notice.

The document evidencing the variation complies with the formal requirements if it—
(a) is readily legible; and
(b) describes the variation; and
(c) states the date of the request for the variation; and
(d) if the variation will result in a delay affecting the subject work—states the building contractor’s reasonable estimate for the period of delay; and
(e) states the change to the contract price because of the variation, or the method for calculating the change to the contract price because of the variation; and
(f) if the variation results in an increase in the contract price—states when the increase is to be paid; and
(g) if the variation results in a decrease in the contract price—states when the decrease is to be accounted for.

However, in some cases the Queensland Civil and Administrative Tribunal may allow a variation that was not in writing if

There are exceptional circumstances; or
The building contractor would suffer unreasonable hardship; and
It would not be unfair to the building owner for the building contractor to recover an amount.

The contractor can also vary the contract without getting it in writing if the variation is required to be carried out urgently; and it is not reasonably practicable to produce a copy of the variation in writing.

Variations are a constant source of building disputes and it is vitally important that the variation process be carries out every time.

The above relate to domestic or residential building contracts only. The QBCC does not require commercial building contract variations to be in writing. However, it is just good practice to make sure that all variations to a building contract are documented in writing.

Disagreements as to Payment Claims and Schedules

A payment claim is a claim made under the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (“BIFA”).

Very strict time limits apply to the different stages of BIFA. Ensure that you do not miss out on a claim by contacting our building and construction lawyers today.

If the parties disagree about the amount of the payment claim, there is a relatively straightforward and structured process allowing a party to seek / dispute payment for the goods and/or services provided.

This will include issuing a payment claim, a payment schedule, the correct notice, and then proceeding to either Court or a seeking a determination from an adjudicator.

Read more here – Making a Payment Claim – BIFA (QLD)

Debt Recovery and Non-Payment of Money

Debt disputes are very common in the building and construction industry.

They can arise in any number of ways and for any number of reasons. Perhaps there is a dispute as to the quality of the work, or the inclusions / exclusions in the contract. Or, perhaps they arise because of an insolvent party.

Commonly, these debt disputes arise because of a difference in the contract price where the parties did not vary the price correctly (if at all), or the varying party trying to recoup unforeseen expenses.

Whatever the reason, building disputes in relation to debt can be resolved by:

Issuing a BIFA payment claim;
Issuing a BIFA subcontractor’s charge;
Issuing a creditor’s statutory demand; or
Commencing legal action for breach of contract.

As litigators, one of our main jobs is to avoid litigation and going to Court. If possible, we would almost always recommend informal or alternative dispute resolution before going to Court.

Read – Building and Construction Debt Recovery

Negligence Claims for Bad Quality of Workmanship Against a Builder

A builder owes a duty of care to a homeowner / landowner / contractor to construct and/or supervise the building works to the standard of a reasonably competent builder.

A homeowner / landowner / contractor will rely on the skill and expertise of the builder as a licensed builder registered with the Queensland Building and Construction Commission.

A builder will breach their duty of care the homeowner / landowner / contractor if they fail to ensure that the building works at the property were carried out in a proper and workmanlike manner.

The other party can sue in negligence for damages sustained because of the breach.

How to Avoid a Building Dispute in Queensland

Building a house, or any kind of building and development project, is a big commitment and can incur significant costs.

It is vitally important that you spend some time and money at the beginning, to avoid any stressful building disputes along the way.

There a number of things that a party to a building contract can do to attempt to avoid a building dispute. These include things like:

Seek legal advice before entering into the contract;
Do some due diligence on the builder / other party;
Keeping good lines of communication open;
Ensure that the contracts (and all variations) are in writing;
Take notes and photographs & keep a diary;
Ensure the parties have realistic expectations;
Seek help from a professional early before the disagreement escalates; and
Properly review all of the facts of the disagreement.

We will explain these in more detail below.

Seek Legal Advice before Entering into the Building Contract

We would always advise that you seek written advice from a qualified lawyer before entering into a building contract.

The lawyer will ensure that the building contract is compliant and will identify any risks and liabilities.

If you know about the risks and liabilities beforehand, then you can choose to either not enter into the contract, or it will not be a surprise if the event happens.

The building and construction lawyer will also do some due diligence on the builder / other party.

Do some Due Diligence on the Builder / Other Party

It is very important that you do some due diligence on your builder / contractor. Don’t rely on what a bloke down the pubs says.

Do a QBCC license search for the builder and the building company.

Obtain an ASIC current extract to see all of the company information and who the directors are.

Do an ASIC directors search to see if the director has been a director of now insolvent companies or has been disqualified.

Check the ASIC Insolvency Notices website to see if there have been any insolvency forms filed on the company.

Conduct a search of the State Court records or Federal Court records to see if the company and/or builder / director has been involved in any litigation.

Read reviews online, do some serious searches online to find any relevant information.

Ask for references and actually take the time to follow up with those references.

It is not enough to simply do the above, you must be able to correctly interpret what the information gathered. It might not be relevant that the company has had 10 Court proceedings, for example. They could have been dismissed. It may not be relevant that a winding up application was once filed, it may have simply been a missed statutory demand, for example.

It is important that you get advice from a building disputes lawyer before engaging with a builder / contractor. A little due diligence at the beginning may stop a lot of problems down the line.

Keeping Good Lines of Communication Open

One of the key elements to avoiding building disputes is to have clear communication between the contracting parties.

Make sure that you have regular site meetings so that the parties are always on the same page.

Have a good relationship with the other party so that you can talk through any issues that may arise. This will help you work through most of the disagreements.

Also, be prepared to compromise. Things happen, nothing is ever 100% perfect. Be prepared for a little give and take between the parties.

Ensure that the Building Contracts (and all Variations) are in Writing

As above, the parties to a building contract or subcontract must ensure that firstly, the contract itself is in writing, and secondly, that any and all variations to the building contract are in writing.

It is common for parties to a building contract to informally agree to a variation on site. A conversation can occur on site about something that needs to be changed or varied.

This conversation must be followed up in writing and have all of the elements required for an enforceable variation.

Also, you should get legal advice from a building disputes lawyer for advice on:

Any and all plans and drawings contained in the contract;
Details of all payment claims and schedules, are whether they are compliant;
The review process, any milestones, and the signing off process;
The sum payable under the contract, the progress payments dates, times etc; and
Any mechanism for dispute resolution prior to going to Court.

Take Notes and Photographs & Keep a Diary

Keep a diary and take detailed notes and photographs in relation to the progress, who was on site and for how long, and all conversation you have with the other party.

Follow everything that was discussed up by email to ensure that you have a paper trail.

Keeping proper records can help avoid costly building disputes.

If there is a potential dispute in the future about something that was or was not done or said, then the extrinsic documents that you can provide can help avoid a building dispute.

Ensure the Parties have Realistic Expectations

It is important that parties to the building contract do not have unrealistic expectations.

Builders, homeowners, contractors, and subcontractors should ensure that they understand about the building process, timeframes, and potential risks and liabilities, so that the expectations are managed.

Managing expectations will assist in avoiding building disputes.

Get a Building Disputes Lawyer Involved Early

It is important to seek help from a building disputes lawyer early before the disagreement escalates and becomes something that needs to be litigated.

It is important that the parties (but preferably their lawyers) properly review all of the facts of the disagreement to know exactly what the disagreement is.

As mentioned above, a litigation lawyer should attempt to advise their clients to avoid litigation where possible, and the costs and time involved with litigation.

A building disputes lawyer should attempt to get the parties to resolve this dispute informally where possible, rather than commencing legal action in the Courts.

But what is informal building dispute resolution?

Resolving Building Disputes Informally

Trying to resolve a dispute informally by negotiation, by informal agreement, by expert determination, or mediation is a good way to resolve building disputes.

Resolving building disputes informally takes the least amount of time and costs the least. It is usually in everyone’s best interest to attempt to informally resolve these building disputes.

Also, it is a good idea to try to resolve commercial disputes commercially, with the parties maintaining a commercial relationship.

Resolving Building Disputes by Negotiation

Lawyers will usually try to negotiate with the other party to seek a resolution to the building dispute.

This may involve several letters to the other party or the other party’s lawyers, seeking clarification to disputed facts, or seeking evidence to support the claims made.

A lawyer will then advise on the client’s prospects in litigation and advise on a reasonable compromise to resolve the dispute.

A lawyer will then send Calderbank letters of offer to get a without prejudice settlement negotiations started.

If the matter can not me resolved by negotiation, then the parties may want to consider settling the dispute by mediation.

Resolving Building Disputes by Mediation

A mediator is a third-party, usually a barrister, who will guide the parties to the building dispute through a structured process in an attempt to reach a resolution.

The end result of a mediation is for the parties to sign a legally enforceable contract or deed of settlement, which will outline the steps required by each party to finalise the building dispute.

Attending a mediation can save considerable time, legal fees and court costs.

If an agreement can be reached by negotiation or mediation, then this agreement should be documented in a deed or contract.

Seek an Expert Determination of the Dispute

Expert determination is a process in which the parties in dispute agree to have their dispute determined by an independent third-party, or expert.

In most cases the expert is a person with technical experience, such as an engineer, or a construction expert

Parties to disputed building contracts will sometimes include a clause requiring the parties in dispute to refer dispute to an expert for determination rather than going to Court.

Alternatively, the parties in dispute may agree to enter into a stand-alone expert determination agreement to save the expense and time of going to Court.

The determination is binding on the parties.

Making a Contract or Deed of Settlement

If the negotiated agreement includes consideration, then the agreement can be documented in a formal contract.

If there is no consideration, then the agreement must be documented in a formal deed of settlement.

If the building dispute cannot be resolved informally then the parties may need to resort to formal resolution of the building dispute.

Resolving Building Disputes Formally

If the parties need to formally resolve the building dispute, they can do a number of things, namely:

Make a complaint to the QBCC;
Seek an adjudication of the dispute;
File proceedings in Court or QCAT.

We will explain these in more detail below.

Make a Complaint to the QBCC

The Queensland Building and Construction Commission (“the QBCC”) is the first place that a party to a building dispute should go.

The QBCC can resolve the following disputes:

Complaints relating to building design;
Complaints relating to pre-purchase and termite inspections;
Complaints in relation to building certifiers;
Complaints in relation to defective work;
Complaints in relation to non-completed work; and
Complaints in relation to unlicensed contractors.

If your building dispute relates to the above, then the QBCC can assist with the dispute.

Seek an Adjudication of Building Disputes

If the dispute relates to an unpaid progress payment, then the parties may opt to have the debt dispute adjudicated.

A BIFA adjudication is a fast and cost-effective way of resolving building and building disputes without resorting to the Court or QCAT.

Once a decision has been made, the adjudicator will issue an adjudication certificate which can be registered in the Court and enforced as if it were a decision of that Court.

Very strict time limits apply to BIFA claims, so it is vital that you act now to protect your rights.

Read more about making payment claims – How to Make a BIFA Payment Claim

Read more about making adjudication applications – How to Make an Adjudication Application

Commencing Proceedings in QCAT

The QCAT Building Disputes department has jurisdiction to hear building disputes.

The jurisdiction is conferred by section 77 of the QBCC Act says:

(1) A person involved in a building dispute may apply, as provided under the QCAT Act, to the tribunal to have the tribunal decide the dispute.
(2) However, the person may not apply to the tribunal unless the person has complied with a process established by the commission to attempt to resolve the dispute.

So, to enable QCAT to hear the dispute, the Applicant must have been referred by the QBCC after applying for their dispute resolution process.

Domestic Building Dispute is defined as a dispute arising:

1. Between a building owner and a building contractor;
2. Between 2 or more building contractors;
3. In negligence, nuisance or trespass; or
4. Between a building owner or a building contractor and any 1 or more of the following:
a. an architect;
b. an engineer;
c. a surveyor;
d. a quantity surveyor;
e. an electrician or an electrical contractor;
f. a supplier or manufacturer of materials used in the tribunal work.

Once QCAT makes a decision, and it is not appealed, then the QCAT decision can be registered in the Court and enforced as if it were a judgment of that Court.

Alternatively, the parties might just file proceedings in the Court.

Commencing Proceedings in Court

Alternatively, the parties can commence legal action in the Court with jurisdiction.

A proceeding is usually commenced by claim and statement of claim.

The objective of the Court process is to have the Court decide the building dispute and give a judgment.

Avoid and Manage Building Disputes in Queensland

This article provides information in relation to avoiding and managing building disputes in Queensland.

If you follow this information (if it related to your building dispute) then you would have done everything you can to avoid or manage the dispute.

However, some people are just unreasonable and will not act reasonably however reasonably you act.

However, there are a few tips and warning signs that you should be aware of.

Tips to Avoid Building Disputes

Below are a number of tips that any party to a building dispute can follow, to decrease the risk of a dispute arising. They are:

Do not send angry or nasty emails and do not be angry or aggressive in person or on the telephone;
Document all variations in writing;
Ensure that builders reach their milestones when they are supposed to;
Ensure that the building is completed at the practical completion stage;
Ensure that you know all of the facts – do the math again, review the contract again;
Ensure that you make prompt payments in accordance with the schedule;
Get legal advice as soon as possible;
Give serious consideration to compromise, it will likely cost less in the long run;
Record everything – keep detailed notes of everything that happens on site;
Review all of the work and only provide sign-off if you are 100% sure of the phase completion; and
Stay focussed, calm, and remember that this is a commercial agreement, it’s not personal.

There are also a number of warning signs to look out for too.

Warning Signs of Potential Building Disputes

If you have doubts about the other party to a building dispute, then there are a few warning signs to consider. The warning signs include:

A number of changes to major subcontractors;
An excessive amount of quality issues;
Badly worded scope of work / inclusions / exclusions;
Constant key milestone dates are being missed;
Constant requests to change the sequence of work;
Disputes resolution clauses that do not read well and are badly thought out;
Late delivery of building materials & building equipment;
Payment claims not in accordance with progress;
Subcontractors contacting the homeowner requesting payment not been paid;
The builder or contractor going slow on site, or not attending the site;
The builder requesting payment in advance before doing the work;
The contract being substantially followed;
The contract not being administered correctly;
The contractor or homeowner constantly missing payment dates; and
Unrealistic and undeliverable schedule of work.

Building disputes can be managed effectively if they are dealt with quickly. Contact our building dispute lawyers in Brisbane and the Sunshine Coast

REQUEST A FREE CASE EVALUATION

OR CALL: 1300 545 133 FOR A FREE PHONE CONSULTATION

Wayne Davis

Wayne Davis, LLB, GDLP – Commercial litigation solicitor and legal practice director at Stonegate Legal Pty Ltd. Stonegate Legal focus on commercial litigation, debt disputes, the enforcement of money orders, and insolvency. Committee member of the Sunshine Coast Law Association. Committee member and volunteer lawyer with the Sunshine Coast Community Legal Service.

stonegatelegal.com.au/

How to Draft an Adjudication Response in Queensland

13/11/2019 By // by Wayne Davis

If you want to know how to draft and serve an adjudication response, then this article will provide you with useful information.

If you have been served with an adjudication application in Queensland, then you need to file and serve an adjudication response.

A respondent will need to do the following:

Identify the eligibility to give an adjudication response;
Immediately confirm the critical dates for submitting the response;
Understand how and where to submit the adjudication response;
Confirm if there are any jurisdictional issues which will need to be considered;
Understand if the payment claim includes items not allowed to be claimed;
Understand what is and is not allowed to be included in the adjudication response.
Prepare detailed submissions and evidence to support the payment schedule; and
Understand how to serve the adjudication response before time runs out.

If the respondent does not act within the required time, then the adjudicator may decide in favour of the claimant.

The claimant may then register the adjudication certificate and enforce the decision as if it were a judgment of the Court.

It is vital that you act quickly to draft and serve an adjudication response. To ensure that you give yourself the best chance, you should contact a lawyer immediately

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Eligibility to give an Adjudication Response

A condition precedent for eligibility to respond to an adjudication application if the giving of a payment schedule after being given a payment claim.

Section 82(2) of the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (“BIFA”) says:

… The respondent must not give an adjudication response if the respondent failed to give the claimant a payment schedule as required under section 76.

If a respondent did not give a payment schedule in answer to the payment claim, then a respondent will not be entitled to give an adjudication response.

What is an Adjudication Response?

Section 82(1) of BIFA says:

After being given notice of an adjudicator’s acceptance of an adjudication application under section 81, the respondent may give the adjudicator a response to the adjudication application (the “adjudication response”).

So, an adjudication response is a response to the adjudication application.

There are a number of things to consider when drafting and serving an adjudication response, namely:

Identify the critical dates; and
Know how to give the adjudication response;
Consider what can be included in the response and what cannot;
Consider any jurisdictional issues;
Prepare submissions;
Collate all of the evidence required; and
Submit and serve the adjudication response in the correct time.

These issues will be explained in more detail below.

Identify the Critical Dates

There are strict timeframes in which to file an adjudication response.

The adjudication response must be given to the adjudicator the later of 10 business days after receiving the application; or 7 business days after receiving the adjudicators acceptance.

For a complex claim, 15 business days or 12 business days respectively.

Section 83 of BIFA says:

(1) If responding to a standard payment claim, the respondent must give the adjudicator the adjudication response within the later of the following periods to end—
(a) 10 business days after receiving a copy of the adjudication application;
(b) 7 business days after receiving notice of the adjudicator’s acceptance of the adjudication application.
(2) If responding to a complex payment claim, the respondent must give the adjudicator the adjudication response within the later of the following to end—
(a) 15 business days after receiving a copy of the adjudication application;
(b) 12 business days after receiving notice of the adjudicator’s acceptance of the adjudication application.

What does it mean to “Receive” the Documents?

The time starts running from the date of “receiving” the above documents. But what does “receiving” mean in this context?

In CMF Projects Pty Ltd v Masic Pty Ltd & Ors [2014] QSC 209 Daubney J said at [25]:

… there is a distinction in BCIPA (now BIFA) between the notions of “service” and “receipt” of documents. The word “receive” … has been considered on numerous occasions … That subsection relevantly provides that an adjudication application must be made “within 10 business days after the claimant receives the payment schedule”. It seems now to be clear enough on the authorities that the word “receive” connotes that, whilst the document in question need not come to the attention of a particular person within the relevant office, it nevertheless does actually need to have arrived at, and thereby been received’, at the recipient’s registered office, or place of business, and be there during normal office hours.

So, the time for the adjudication response starts running from the time that the above documents arrived at the recipient’s registered office, or place of business, and be there during normal office hours.

Care should be taken when assessing the time the document was delivered and the time it was received.

For example, it could have been delivered yesterday afternoon, but only retrieved from the post box today.

The Form of the Adjudication Response

Section 82(3) of BIFA says:

The adjudication response—
(a) must be in writing; and
(b) must identify the adjudication application to which it relates; and
(c) may include the submissions relevant to the response the respondent chooses to include.

However, the respondent is restricted to only include reasons that were included in the payment schedule.

Failure to articulate reasons in the schedule may mean that the respondent will be unable to include them in the adjudication response.

Section 82(4) of BIFA says:

However, the adjudication response must not include any reasons (“new reasons”) for withholding payment that were not included in the payment schedule when given to the claimant.

What are “new reasons”?

In John Holland Pty Ltd v Walz Marine Services Pty Ltd & Ors [2011] QSC 39 Margaret Wilson J said at [27]:

… the issues to be decided by the adjudicator are defined in the payment claim and the payment schedule. The respondent must state its reasons for wholly or partially withholding payment in the payment schedule. While the parties may make submissions in support of their respective positions in the adjudication application and the adjudication response respectively, the respondent cannot use the adjudication response as a vehicle to advance reasons for withholding payment which it failed to include in its payment schedule.

There are a number of cases on this point and it has been enforced reasonably strictly to prevent unfairness.

In Wiggins Island Coal Export Terminal Pty Ltd v Monadelphous Engineering Pty Ltd & Ors [2015] QSC 307 Philip McMurdo J said at [55]:

The evident intent of [the section] is to prevent the unfairness to a claimant which could follow from a respondent being allowed to contest its alleged liability for a reason which it had not advanced ahead of the adjudication application.

However, an adjudication response can do more than simply mirror the payment schedule.

In Tqm v Dasein [2004] NSWSC 1216 McDougall J said at [30]:

… it would be open to a respondent to argue, either in greater detail or with perhaps more supporting evidence, reasons that had been advanced. If it were intended that an adjudication response should do no more than mirror, word for word, a payment schedule, then there is little point to the ability … for a respondent to lodge an adjudication response.

So, an adjudication cannot raise new issues, but can elaborate, provide greater detail, and provide supporting evidence to support the reasons contained in the payment schedule.

What can be Included in the Response

The adjudication response can include the following (amongst others):

An expert report supporting the respondent’s payment schedule;
Particulars and evidence (statutory declarations) in support of the submissions;
Particulars and evidence in relation to why the payment (or part of the payment) was withheld, (including offsetting claims);
Particulars and evidence identifying any non-contractual matters raised in the payment claim that should not be taken into account by the adjudicator; and
Particulars and evidence bringing attention to any jurisdictional issues.

An adjudication response can include information in relation to jurisdictional issues not contained in the payment schedule.

Jurisdictional Issues for Adjudication Response

The adjudication response can ask the adjudicator to consider the statutory requirements of BIFA, the payment claim and the adjudication application, namely:

Identify the reference date to which the payment claim applies;
Identify if the claim relates to an applicable construction contract;
Identify if the payment claim is valid;
Correct identification of the construction work and/or related goods or services; and
Have all of the time limits been correctly complied with.

If any of the above can be answered in the negative, then the adjudicator may not have jurisdiction to decide the claim.

Once all of the arguments and any jurisdictional issues have been identified; the respondent has prepared their Adjudication Response Submissions and collated all of their evidence, it is time to submit the adjudication response.

How to give the Adjudication Response

An adjudication response in Queensland must be submitted to the adjudicator within the timeframe above, and a copy of the response given to the claimant within two (2) business days.

The adjudicator is appointed by the Registrar and will have provided a copy of the adjudicator’s acceptance of the adjudication application, including contact details.

Once the adjudication response is given to the adjudicator, the response must be given to the claimant within two (2) business days.

Section 83(6) of BIFA says:

If the respondent gives the adjudicator an adjudication response under this section, the respondent must give a copy of the response to the claimant not more than 2 business days after giving the response to the adjudicator.

Service of the Adjudication Response

Section 102(1) of BIFA says:

A notice or other document that, under this chapter, is authorised or required to be given to a person may be given to the person in the way, if any, provided under the relevant construction contract.

Service is not limited to provisions of the construction contract however, section 39(1) of the Acts Interpretation Act 1954 (CTH) also applies to service of an adjudication response, which says:

If an Act requires or permits a document to be served on a person, the document may be served—
(a) on an individual—
(i) by delivering it to the person personally; or
(ii) by leaving it at, or by sending it by post, telex, facsimile or similar facility to, the address of the place of residence or business of the person last known to the person serving the document; or
(b) on a body corporate – by leaving it at, or sending it by post, telex, facsimile or similar facility to, the head office, a registered office or a principal office of the body corporate.

The expression “similar facility” has been held to mean email. In Penfold Projects Pty Ltd v Securcorp Limited [2011] QDC 77 Irwin DCJ said at [232]:

In my view in context, “or similar facility” is wide enough to extend to email. As such I consider s 103(2) of the BCIPA envisages email service of notices

So, the same principles would apply as in CMF Projects Pty Ltd v Masic Pty Ltd & Ors [2014] QSC 209 in that the adjudication response should be given to the claimant at the claimants registered office, or place of business, or place of residence, and be there during normal office hours.

A Respondent might also consider personal service and facsimile or email too, if the files are not too large.

Once served, the adjudicator can do a number of things.

Adjudication Procedures

Once the adjudication response is given to the adjudicator and served on the claimant, the adjudication can do a number of things, namely:

Ask for further written submissions;
Call for a conference between the parties; and
Carry out an inspection of any matter to which the claim relates.

If the adjudicator does not do any of the above, or request an extension of time, then they will need to decide.

The Adjudication Decision

The adjudicator must decide:

Whether they have jurisdiction and whether the application is frivolous or vexatious;
The amount of the progress payment, if any, to be paid by the respondent to the claimant;
The date on which any amount became or becomes payable;
The rate of interest payable on any amount; and
The fee and the percentage that each party is required to pay.

Further, the adjudicator’s decision must:

Be in writing; and
Include the reasons for the decision.

The adjudicator must decide the above within a strict timeframe.

Time Limits for Making the Adjudication Decision

The adjudicator must decide the adjudication in either 10 business days, or 15 business days for a complex claim.

Section 85(1) of BIFA says:

(1) Subject to section 86, an adjudicator must decide an adjudication application no later than—
(a) for a standard payment claim—10 business days after the response date; or
(b) for a complex payment claim—15 business days after the response date.

The “response date” is the day on which the adjudicator receives the response; or (if no response is given) the last day on which the respondent could give the adjudicator an adjudication response.

Section 86 of BIFA says that the adjudicator can request an extension of time for deciding adjudication application.

However, the claimant and the respondent must agree in writing.

Upon payment of fees, the adjudicator will provide a copy of the decision and reasons to the Registrar, the claimant and the respondent.

What Happens Next?

If everything goes right, then the adjudicator will decide that the amount payable is the amount contained in the payment schedule.

A good building and construction debt recovery lawyer will give you the best chance to defend an adjudication application and defeat an unfair payment claim.

Wage Theft – Underpayment of Wages

07/11/2019 By // by Wayne Davis

Wage theft is the non-payment of your legal entitlements by your employer, including award rates, penalty rates, wages, and overtime.

If your employer has stolen your wages then you may have a claim in the Federal Court, Federal Circuit Court, the District Court, or the Magistrates Court.

You can seek an order from your employer and also any person involved in the contravention.

There are processes that should be followed in different situations, and include negotiation, reporting to the Fair Work Ombudsman, mediation, conciliation, and filing a claim in Court.

This article will explain the requirements and the process of making a claim for wage theft below.

If you have not been paid your legal entitlements by your employer, including award rates, penalty rates, wages, and overtime – then you might have a wage theft claim against the employer

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What is Wage Theft?

The term wage theft can take a number of different forms, including:

Not being paid the correct hourly rates;
Illegal cash-back contracts;
Being paid cash-in-hand or off-the-books;
Non-agreed deductions from wages;
Unpaid overtime and penalty rates;
Illegal phoenixing;
Sham contracting arrangements; and
Non-payment superannuation.

We will detail these in more detail below.

Not Being Paid the Correct Hourly Rates

Probably the most common form of wage theft is not being paid the correct hourly rates.

For the most part, minimum hourly rates are prescribed by the relevant modern award. If you are not being paid the correct amount, then your employer is stealing your wages and you will have a claim.

Modern awards include all the information you need to understand your entitlements including information in relation to:

Types of employment and termination of employment;
Classifications and minimum wage rates;
Hours of work and related matters;
Leave and public holidays; and
Industry specific provisions.

The modern award defines the type of work classification and the minimum pay amount in relation to that classification.

Another common form of wage theft is an employer paying an employee at a level 2 rate, when the employee is doing level 4 work. If your employer is doing this then they are stealing your wages and you may have a claim.

Click to go to the list of Modern Awards here

Another way that an employer can steal an employee’s wages is by paying cash-in-hand.

Being Paid Cash-in-hand or Off-the-books

Although a seemingly good prospect, getting paid cash-in-hand or off-the-books can also result in wage theft.

Being paid cash-in-hand or off-the-books may mean that your employer is not paying superannuation, leave entitlements, and other entitlements, etc.

Also, because the non-payment of tax seems enticing, the employer may also pay you less than the minimum wage.

It is possible to be paid in cash, that’s not the problem, but the employer must still pay all of your entitlements and provide you with a payslip.

Being paid cash-in-hand or off-the-books can result in wage theft and you may have a claim.

Unpaid Overtime

Your Modern Award will provide for the amount of hours a full-time employee has to work per week and overtime rate of pay for hours worked outside of ordinary time.

These rates of pay are usually around 150% to 200% – aka time-and-a-half to double-time.

If your employer has not paid any overtime rates, then this is wage theft and you may have a claim.

Unpaid Penalty Rates

Also, your Modern Award will provide for the penalty rate that the employee is entitled for working on the weekend or on a public holiday.

These rates are usually between 125% to 250% – aka time-and-a-quarter to double-time-and-a-half.

If your employer has not paid any penalty rates, then this is wage theft and you may have a claim.

Find your penalty rate amount in your Modern Award here.

Illegal Cash-Back Schemes

In some instances, an employer may make an employee give back a percentage of their wages. This is sometimes known as a “Cash-back scheme”.

If this happens, then that money is treated like back-pay and can be claimed from the employer.

If your employer is making an employee pay “cash-back” then this is wage theft and the employee may have a claim.

Non-Agreed Deductions from Wages

An employer and an employee can agree that certain deductions can be made from the employee’s wages. An employer can only deduct money if:

The employee agrees in writing; and
It’s principally for the benefit of the employee; and
It’s allowed by a law, a court order, the Fair Work Commission, a modern award, or registered agreement.

Any deductions that are not agreed or are not for the benefit of the employee are wage theft and the employee may have a claim.

Illegal Phoenixing

Phoenixing is a term used to describe the act of transferring business assets to another company, continuing to trade in the new company, and leaving debts and liabilities in the old company – including employee wages and entitlements.

Usually, the old company will go into liquidation with a very slim chance of getting any money.

If your employer does this then this is wage theft and the employee may have a claim.

An employee may be entitled to the Governments Fair Entitlements Guarantee (“FEG”).

Click to learn more about the FEG here.

Sham Contracting Arrangements

A sham contract is when an employer tries to disguise an employment relationship with a contractor relationship, and incorrectly classifies an employee as an independent contractor.

An employer may try to pay an employee as a contractor so that the employee will lose their entitlements, including superannuation and leave entitlements.

Whether someone is an employee, or a contractor depends on a number of different complex factors and is usually determined by the Court.

However, if an employee is a party to a sham contract then this may be wage theft and the employee may have a claim.

Non-payment of Superannuation

Unfortunately, another common form of theft (albeit, not wages per se) is the non-payment of superannuation.

Most employment relationships require the employer to contribute a minimum of 9.5% of your wages into a superannuation account.

Every dollar that goes into superannuation now will be worth a lot more by retirement age, so it is very important that an employer pays this entitlement.

If your employer has not paid, or underpaid, your superannuation then the employee may have a claim.

Can I Make a Claim for Wage Theft?

If you fit into any of the categories above, then it is likely that you will be able to make a claim against your employer for unpaid wages and entitlements.

Obviously, each claim is different and will depend on the particular work, the Modern Award, and the employment contract.

Making a Claim for Wage Theft

The starting point for any claim for wage theft is section 45 of the Fair Work Act 2009 (CTH) (“FWA”).

Section 45 of the FWA says:

A person must not contravene a term of a modern award

A modern award sets out the minimum employment terms and conditions.

These minimum employment terms and conditions include:

Wages and pay;
Employment allowances;
Staff breaks – duration and time;
The hours of work;
Any overtime payable; and
Any penalty rates payable.

Note: Section 45 of the FWA is a civil remedy provision.

Section 539 of the FWA outlines the Civil remedy provision, the person, the Courts, and the maximum penalty.

The table in subsection (2) of this section says that a breach of section 45 of the FWA applies to an employee and an employer (amongst others).

It also defines the Courts which have jurisdiction as the Federal Court; the Federal Circuit Court; and an eligible State or Territory court.

The Wage Theft Process

The process for making a wage theft claim for unpaid entitlements is:

Work out exactly what the employee is owed;
Try to negotiate with the employer to reach a settlement;
Report the employer to the Fair Work Ombudsman (“FWO”);
Commence legal action in the Court with jurisdiction;
Sometimes the Court will order mediation or conciliation;
Obtain a judgment against the employer;
Enforce the judgment.

This is an over-simplification of the process, but this is essentially what an employee will need to do.

We will explain the process in more detail below.

Work out Exactly what the Employee is Owed

It is important to work out exactly how much money the employee is owed.

Correctly calculate the exact amount (or as reasonably close as possible). This will include:

The minimum rate of pay calculated at the correct level;
Any allowances allowable;
Any leave loading that has accrued;
Any leave payments that have not been paid;
Any overtime that has not been paid;
Payment of the correct penalty rates;
Any additional tax and superannuation; and
Any entitlements in the award, employment contract or other agreement.

Once the employee has a figure calculated, it is best practice to approach the employer, or engage a solicitor to approach the employer, to attempt to reach a settlement.

Negotiate with the Employer to Reach a Settlement

Most good lawyers will attempt to resolve wage theft claims without going to Court. Going to Court can be stressful and costly for both parties, so there is a real incentive to try to reach an agreement by negotiation.

Litigation lawyers are skilful negotiators, and it is well worth engaging a litigation lawyer to negotiate on your behalf. Reaching a settlement will involve a compromise by both parties.

Read our article here about Settling Litigation Early.

If the employer is being unreasonable and refusing to settle, then the employee can refer the matter to the Fair Work Ombudsman (“FWO”).

Report this Employer to the Fair Work Ombudsman

The Fair Work Ombudsman is there to provide help and assistance in relation to:

Wage theft – disputes relating to pay, penalty rates, any loadings and allowances;
Ending employment – giving notice, employees final pay and redundancy packages;
Leave entitlements including annual leave, sick leave, maternity leave and parental leave;
Any sham contracting arrangements; and
Anything covered by an award, enterprise agreement or other registered agreement.

The FWO will then attempt to resolve the dispute with the employer by negotiation in an attempt to reach a settlement.

If no settlement can be reached informally, then the FWO can refer the matter to a mediation.

A mediation is usually a telephone conference where the employee and the employer work with a skilled mediator to help the parties in dispute to come to a reasonable agreement to resolve the wage theft dispute.

This mediation can last up to two (2) hours.

If the parties agree on a resolution, then that agreement can be documented by way of a formal agreement.

The mediator may assist by drafting a deed of settlement outlining the terms of the agreement, time for compliance, and anything else of concern.

If the matter does not settle at the mediation, then the employee must take legal action to recover the unpaid wages.

Commence Legal Action in the Court with Jurisdiction

Legal action for wage theft can be broken down into two (2) separate parts, namely:

Claims under $20,000.00; and
Claims over $20,000.00.

Small Claims Under $20,000.00

A claim under $20,000 is called a small claim.

Section 548 of the Fair Work Act 2009 (CTH) (“FWA”) confers jurisdiction on the Magistrates Court or the Federal Circuit Court if it relates to an amount that an employer was required to pay to, or on behalf of, an employee; and it is for an amount of $20,000 or less.

There are advantages and disadvantages in commencing action in this small claims jurisdiction.

Basically, he court is not bound by any rules of evidence and procedure and may act in an informal manner; and without regard to legal forms and technicalities. This makes the process easier.

However, a party to small claims proceedings may be represented in the proceedings by a lawyer only with the leave of the court. This means that if leave is not given, then the employee may have to appear on their own.

In Queensland this small claim in commenced in the Magistrates Court by way of Employment Claim.

Queensland Industrial Relations Commission (QIRC) for a compulsory conciliation hearing in the first instance.

Once claim is filed, the Court will refer the matter to the Queensland Industrial Relations Commission (“QIRC”) for a compulsory conciliation hearing. If the matter does not resolve by way of conciliation, then the proceeding will progress.

In the Federal Circuit Court a small claim is commenced by way of Form 5 – Small claim under the Fair Work Act 2009.

We strongly advise seeking legal advice before filing the small claim.

However, just because the amount is less than $20,000.00 that allows an employee to proceed as a small claim, but it does not compel an employee to. An employee can commence as if it were a claim over $20,000.00.

Claims Over $20,000.00

Claims over $20,000.00 can be commenced in the Federal Court, the Federal Circuit Court, or an eligible State or Territory court.

Section 543(1) of the FWA says:

The Federal Court or the Federal Circuit Court may make any order the court considers appropriate if the court is satisfied that a person has contravened, or proposes to contravene, a civil remedy provision.

Section 543(2) of the FWA says:

Without limiting subsection (1), orders the Federal Court or Federal Circuit Court may make include the following:
(a) an order granting an injunction, or interim injunction, to prevent, stop or remedy the effects of a contravention;
(b) an order awarding compensation for loss that a person has suffered because of the contravention;
(c) an order for reinstatement of a person.

Section 545(3) of the FWA says:

An eligible State or Territory court may order an employer to pay an amount to, or on behalf of, an employee of the employer if the court is satisfied that:
(a) the employer was required to pay the amount under the FWA or a fair work instrument; and
(b) the employer has contravened a civil remedy provision by failing to pay the amount.

Remember section 45 of the FWA is a civil remedy provision.

Therefore, the Federal Court, and the Federal Circuit Court have jurisdiction to make an order awarding compensation for loss that an employee has suffered because of the contravention of section 45 of the FWA, or the contravene of a term of a modern award.

Further, eligible Queensland State Courts also have jurisdiction to hear claims for wage theft and can make an order the employer to pay an amount to the employee for unpaid wages.

But what is an eligible State or Territory court?

Eligible State Courts for Wage Theft Claims

Section 12 of the FWA defines “eligible State or Territory court” to mean one of the following courts:

(a) a District, County or Local Court;
(b) a Magistrates Court;

So, for a proceeding for unpaid wages, the matter can be commenced as a general claim in the Magistrates Court and the District Court.

Jurisdiction of the State Courts

The State Courts have a monetary jurisdiction in the following amounts:

The Magistrates Court – up to $150,000.00;
The District Court – from $150,000.00 to $750,000.00.

It would not be usual for an employee to be owed more than $750,000.00 in stolen wages.

Is the Business Owner Liable for the Debts?

Yes. The director of the company or the any person involved in the contravention can be personally liable for the contravention.

Section 550(1) of the FWA says:

A person who is involved in a contravention of a civil remedy provision is taken to have contravened that provision.

It then goes on to define what being “involved in a contravention” means. Section 550(2) says:

A person is involved in a contravention of a civil remedy provision if, and only if, the person:
(a) has aided, abetted, counselled or procured the contravention; or
(b) has induced the contravention, whether by threats or promises or otherwise; or
(c) has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or
(d) has conspired with others to effect the contravention.

In Fair Work Ombudsman v Quincolli Pty Ltd & Anor [2011] FMCA 139 Driver FM said:

The authorities show that in order for a person to have accessorial liability under … 550 of the Fair Work Act, he or she must be a knowing participant or in other words:
a. must have knowledge of the essential facts constituting the contravention;
b. must be knowingly concerned in the contravention;
c. must be an intentional participant in the contravention based on actual not constructive knowledge of the essential facts constituting the contravention – although constructive knowledge may be sufficient under s.728(2)(c) in cases of wilful blindness; and
d. need not know that the matters in question constituted a contravention.

So, if these things can be proven, then the employee may obtain judgment against the person (or people) involved in the contravention.

Once an employee commences legal action in the Courts against the company, the business, and against a person involved in the contravention, the objective is to obtain from the Court a judgment or enforceable money order against them.

Once you are given judgment, and the debtors still do not pay, you can enforce that order over the property of the enforcement debtors.

Enforce the Wage Theft Judgment

This website has a lot of information of enforcement.

If you have judgment on a company, then you can:

Enforce with an enforcement warrant; or
Serve a statutory demand.

If you have a judgment against a person, then you can:

Enforce with an enforcement warrant; or
Serve a bankruptcy notice.

Read the articles below in relation to enforcement of money orders.

Moving Forward – Wage Theft

Employees have a right to claim their wages for up to 6 years after the amount became due and payable. This is the limitation period and it cannot be extended.

If you have a claim for wage theft, or unpaid entitlements then contact us today.

If you have not been paid your legal entitlements by your employer, including award rates, penalty rates, wages, and overtime – then you might have a wage theft claim against the employer

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Wayne Davis

stonegatelegal.com.au/

Legal Proceedings for Debt Recovery

03/11/2019 By // by Wayne Davis

Legal proceedings for debt recovery include:

Trying to resolve the debt dispute without litigation;
Starting legal proceedings for debt recovery;
Obtaining a judgment or enforceable money order; and
Enforcing that judgment over the property of the debtor.

However, debt recovery action in Court or QCAT should be a last resort. Legal proceedings for debt recovery can be costly and time consuming.

But in a lot of cases when the debtor is being unreasonable then a creditor may have no option but to commence debt recovery action.

This article will explain the option available in debt recovery matters, alternative dispute resolution options, options for legal proceedings for debt recovery, enforcement options, and attempt to explain debt recovery law and debt recovery legislation available in Queensland.

If you need to start legal proceedings for debt recovery then it is important to get it right and you should contact a lawyer

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The Debt

The first thing to consider when thinking about legal action for debt recovery is the debt.

When commencing legal action for debt recovery, different rules and jurisdictions apply to different amounts of debt, which allow for different types of debt recovery action.

Jurisdiction

In Queensland, the jurisdiction of QCAT and the Courts are:

Debts up to $25,000 – QCAT Minor Civil Disputes;
Debts up to $150,000 – Magistrates Court;
Debts from $150,000 to $750,000 – District Court; and
Debts over $750,000 – Supreme Court.

Each of the above have both advantages and disadvantages, so it is important to speak to your lawyer before commencing legal action for debt recovery.

Legislation

Different industries have different pieces debt recovery legislation used for the recovery of debts and can be treated differently, for example:

Building and construction debts – The Building Industry Fairness (Security of Payment) Act 2017 (QLD) can be used to issue payment claims and subcontractors’ charges.
Body Corporate debts – The Body Corporate and Community Management Act 1997 (QLD) can be used along with whichever module your scheme falls under, to recover unpaid body corporate levies.
Company Debts – The Corporations Act 2001 (CTH) can be used to recover debts from a company by issuing creditor’s statutory demands and winding up the company in insolvency.

Plus, there is other industry-specific legislation, so it important to ensure that you fully understand your rights and liabilities under debt recovery law in relation to debt recovery in certain industries.

The Contract

Next, the contract has some important factors to consider when thinking about legal proceedings for debt recovery. Different contract clauses can make it easier to recover your debt, and also can help you to recover more costs and outlays.

Some good contract clauses include:

Charging clauses or other security;
Personal guarantees from directors;
PPSA charging clauses; and
Default terms clauses.

I will explain these in more detail below.

Charging Clauses or other Security

A charging clause in the contract requires the debtor to give security for the debt with an equitable interest in real property or land elevating the creditor to the status of a secured creditor.

A charge over property is essentially a guarantee that in the event of a default, the creditor’s equitable interest in the debtor’s real property is realised and the debtor can take steps to satisfy the debt as equitable mortgagee.

This charge is a charge over company property (if any) but can also be a charge over the director’s personal property.

Personal Guarantees from Directors

A personal guarantee from a director of the debtor company means that in the event of a default by the company, the director will be personally liable to pay the debt.

This clause is a must if you are offering credit to a corporate client for a number of reasons.

First, it means that if the company trades as a $2 shell and have no assets to satisfy your debt, then a creditor can attack the director’s personal assets.

You can also charge property with the Personal Property Securities Act 2009 (Cth) (“PPSA”)

PPSA Charging Clauses

The PPSA allows a creditor to charge (secure) the debt over the personal property of the debtor. This is distinct from real property or land as mentioned above.

A secured creditor, secured with a charge over the personal property is allowed to seize collateral, by any method permitted by law, if the debtor is in default under the security agreement.

Typically, a car finance company will charge the car. Then upon default of the finance agreement they are able to take possession of the vehicle.

Some challenges can arise from a PPSA charge, so it important to get your contract drafted correctly.

Default Terms Clauses

Lastly, some carefully drafted contract terms will allow you to recover more in costs and interest from the debtor. Some good terms to consider are:

Costs – Usually the costs of legal proceedings are scale costs and don’t cover the actual legal costs of debt recovery action. However, carefully drafted clauses allowing for legal costs can allow a creditor to recover more costs in relation to debt recovery and collection.
Interest – The legislative allowance for interest in Queensland is 4% above the cash rate at the Reserve Bank of Australia. So, if the cash rate is 1.25% then you are only able to claim 5.25% interest. An interest clause will allow you to recover more in interest in the event of a default.
Liquidated Damages – in some instances you will be able to claim liquidated damages, meaning a daily fixed amount (say $50) for every day that the debtor is in default. Care must be taken to ensure that this amount is a genuine pre-estimate od damages, and not a penalty for default.

If you need new or updated contract terms then contact us.

Once you have given thought to the parties, the debt, and the contract, you are now in a better position to commence legal proceedings for debt recovery.

Start Legal Proceedings for Debt Recovery

A typical debt recovery scenario should look something like this:

Send a letter of demand;
Try alternative dispute resolution;
Debt recovery action in Court or QCAT;
Enforcement of the judgment or money order.

We will explain this process in more detail below.

Letter of demand

In a lot of instances, a debt dispute can be resolved by a well-worded letter of demand.

A letter of demand should clearly identify the debt, outline the debtor’s obligation to pay, and clearly set-out the creditor’s rights according to debt recovery law.

Once a debtor realises that a lawyer is involved, and that they may have to pay thousands of extra dollars in legal costs and interest, then it may incentivise them to pay.

Read about letters of demand here – Letter of Demand

If a letter of demand doesn’t work, then another non-legal option would be to attempt alternative dispute resolution.

Alternative Dispute Resolution (ADR)

There are a number of different alternative dispute resolution methods, including:

Negotiation with the debtor;
Attending a mediation with the debtor;
Attend an expert arbitration with the debtor;
Determination by an expert;
BIFA adjudication; and/or
Conciliation

Each of the above can apply in different circumstances and may not be suitable for all debts.

We will explain in more detail below.

Negotiation

Although it sounds counter-intuitive, good litigation solicitors do all we can to not litigate unless we absolutely have to.

The first skill in ADR is trying to negotiate with the debtor or the debtor’s solicitor, in an attempt to reach a resolution without having to legal proceedings for debt recovery.

As with any negotiation we need to have leverage. A good negotiator has ways of successfully getting leverage to increase the chances of a swift and just resolution to debt disputes.

Contact our lawyers to help and assist with negotiation payment of a debt.

If the negotiations break down, then the parties could agree to attend a mediation.

Mediation

A mediator is a third-party, usually a barrister, who guides the parties through a structured process in an attempt for the parties to reach a resolution.

The end result of a mediation is for the parties to sign a legally enforceable deed of settlement, which will outline the steps required by each party to finalise the dispute.

The deed will also include clauses upon breach by either party and will likely foreshadow debt recovery action upon default.

Attending a mediation can save considerable time, legal fees and court costs.

Arbitration

Arbitration is a type of ADR outside of the courts which allows the parties to obtain a legally binding decision.

Arbitration is only available in certain circumstances and in certain types of matter and is not available to all debt recovery or commercial disputes. Further, the parties will have to agree to arbitration and agree to be bound by the decision.

Section 1 of the Commercial Arbitration Act 2013 (QLD) defines the types of disputes to include:

Relationships of a commercial nature include, but are not limited to, the following transactions – any trade transaction for the supply or exchange of goods or services; distribution agreement; commercial representation or agency; factoring; leasing; construction of works; consulting; engineering; licensing; investment; financing; banking; insurance; exploitation agreement or concession; joint venture and other forms of industrial or business cooperation; carriage of goods or passengers by air, sea, rail or road.

During the arbitration, the parties present their arguments and evidence to an independent arbitrator who essentially acts as a judge and creates a binding determination, called an award.

Expert Determination

Similar to arbitration, expert determination is a process in which the parties in dispute agree to have their dispute determined by an independent third-party, or expert.

In most cases the expert is a person with technical experience, such as an engineer, construction expert, or accountant, etc.

Parties to disputed commercial contracts will sometimes include a clause requiring the parties in dispute to refer dispute to an expert for determination rather than going to Court.

Alternatively, the parties in dispute may agree to enter into a stand-alone expert determination agreement to save the expense and time of going to Court.

Again, the determination is binding on the parties.

BIFA Adjudication

If a dispute arises under the Building Industry Fairness (Security of Payment) Act 2017 (QLD) (“BIFA”) then BIFA has the option of having the building and construction dispute determined by an adjudicator.

A BIFA adjudication is a fast and cost-effective way of resolving building and construction disputes without resorting to the Court.

Once a decision has been made, the adjudicator will issue an adjudication certificate which can be registered in the Court and enforced as if it were a decision of that Court.

Time Limits

Very strict time limits apply to BIFA claims, so it is vital that you act now to protect your rights.

Read more about making payment claims – How to Make a BIFA Payment Claim

Read more about making adjudication applications – How to Make an Adjudication Application

Conciliation

Debt recovery claims for unpaid wages and entitlements may require the parties to attend a conciliation.

This process helps the parties in dispute to identify the salient issues and assists with identifying the terms of settlement in an attempt to reach a resolution.

The terms of the agreement are then recorded in a legally enforceable deed of settlement.

The conciliator does not act as a judge for the parties.

Get Help with Dispute Resolution

If you need help and assistance with any of the alternative dispute resolution processes above, then please get in touch with our solicitors.

Useful link to the Queensland Law Society – https://www.qls.com.au/For_the_community/Alternative_Dispute_Resolution

If the matter fails to resolve by way of ADR, then a creditor may have not any choice but to take legal action to recover the debt.

Legal Proceedings for Debt Recovery

The most common ways to start legal proceedings for debt recovery are:

Commence debt recovery action in QCAT;
Commence debt recovery action in the Court with jurisdiction;
Serve the debtor company with a statutory demand.

We will explain these and the QCAT procedures & Court procedures in more detail below.

Commence Debt Recovery Action in QCAT

The Queensland Civil and Administrative Tribunal (“QCAT”) is essentially Queensland’s “small claims Court”.

QCAT is a no-costs jurisdiction, so you will not be able to claim your legal costs, save for a few legislated items except in exceptional circumstances, but this is at the discretion of the tribunal.

The pros of commencing proceedings in QCAT are:

It is a lot less expensive than commencing in the Court;
The process can be a lot quicker than the Court;
QCAT is designed for self-represented people.

The cons of commencing proceedings in QCAT are:

The minor debt jurisdiction is mostly a no costs jurisdiction. This means that you will not be able to recover your costs save for a few designated items;
Legal representatives do not have an automatic right of appearance. This means that if you want us to appear at a QCAT hearing, you will need the leave of the tribunal, which is not always given.

QCAT has strict requirements in relation to what types of cases they hear, so I would need more information from you to be able to advise you if QCAT has jurisdiction.

QCAT Procedures

If a creditor is owed a debt of $25,000 or less, then they can apply to QCAT for minor civil dispute resolution.

Debt recovery action is started in QCAT by making an application for minor civil dispute.

After the application is served on the debtor, they have 28 days to file a response to a minor civil dispute.

If they don’t file a response, then the creditor can obtain a decision in default.

The QCAT member might also order that the matter proceed by way of mediation. If the matter does not settle at the mediation, then the legal proceedings for debt recovery in QCAT will proceed to a hearing.

If you want to claim costs, or you require a more judicial process, then you can commence legal action in the Court with jurisdiction.

Commence Debt Recovery Action in the Court

We can commence legal action in the Court with jurisdiction.

An action for debt recovery is commenced by claim and statement of claim. The cause of action will usually be a breach of contract (amongst others).

Once a claim and statement of claim is filed and served on the debtor, they have 28 days to file and serve a defence.

If they do nothing, then we can make an application to the Court to get default judgment, which is a Court order ordering the defendant (debtor) to pay the claimed amount, being the outstanding fees, costs and interest at a rate of 4% above the RBA Cash Rate, from when the debt was due and payable.

Court Procedures

If the debtor does file a defence (and counterclaim – if any), then we will need to draft and serve a reply to the defence and an answer to the counterclaim (if needed).

Based upon the strength of the respective cases and evidence, the matter will likely resolve by negotiation, or by one party getting summary judgment.

It is unusual for a debt recovery matter to proceed all the way to a trial.

However, if both parties object to any resolution in the proceeding, then ultimately the matter will go to a trial for a Magistrate or Judge to decide.

If you have a debt owed by a company, then you might be able to serve a creditor’s statutory demand for payment.

Serve the Debtor Company with a Statutory Demand

If an insolvent debtor company has assets, then a creditor can serve that company with a statutory demand for payment.

Failure to comply with a statutory demand allows a creditor to commence proceedings to wind up the debtor company.

All assets, bank accounts etc. are frozen and realised to satisfy the debts owed to the creditors.

The liquidator is also able to void certain transactions, or in some cases make the director(s) personally liable for the debt.

If the debtor company does not respond, then it is presumed to be insolvent and a creditor can take steps to wind it up in insolvency.

Once served, the debtor company will have 21 days to do any of the following:

Pay the amount claimed;
Secure or compound for the debt;
Request that the demand be withdrawn; or
Make an application to the Court setting aside the demand.

If they pay, or reasonably secure or compound (enter into an arrangement to pay) for the debt, then the demand is extinguished.

If the debtor company has grounds to set the demand aside, then before making the application, they may simply request that the demand be withdrawn.

If they ask that a creditor withdraw the demand, and a creditor does not, then a creditor may be liable to pay the costs of the application to set the demand aside if they are successful.

Read our complete guide to statutory demands – Guide to Statutory Demands

Setting Aside the Statutory Demand

A debtor company has four (4) main grounds for setting aside the statutory demand, they are:

There is a genuine dispute as to the existence or amount of the debt; and/or
They have a genuine offsetting claim; and/or
There is a defect in the demand which is likely to cause substantial injustice; and/or
Some other reason.

The bar for setting aside a statutory demand is quite low.

All that a debtor needs to do is prove to that any of the above exist, and the demand will likely be set aside.

If the demand is set aside, then the Court may order that you pay the debtor company’s costs of the application.

Read our complete guide to setting aside a statutory demand – Guide to Setting Aside a Statutory Demand

In a lot of cases it is better to get a judgment or enforceable money order in the Court or QCAT first, and then use a statutory demand to enforce that judgment or money order.

Enforcement of the Judgment or Money Order

The end result of legal proceedings for debt recovery is to obtain a legally enforceable judgment or money order from the Court.

If the judgment debtor still refuses to pay the judgment debt, then a judgment creditor will need to enforce the judgment over the property of the judgment debtor.

There are a few different enforcement options, namely:

Enforce the judgment debt in the Court; or
Enforce the judgment debt with insolvency.

We will explain these in more detail below.

Enforcing the Judgment in the Court

The options for enforcing the Judgment in the Court are:

Summon the judgment debtor to an enforcement hearing to attempt to extract information regarding their financial position; and/or
Apply to the Court for the issue of one of the various types of enforcement warrant.

Summon the Debtor to an Enforcement Hearing

This enforcement option is strictly an information gathering exercise.

If the judgment debtor provides documents showing any assets they own, the equity in those assets, and details of any debts owed to them, this method of enforcement has achieved its purpose, being gathering information to use to request an enforcement warrant.

This can include bank statements, mortgage payout figures, etc.

The first step is to give the judgment debtor a written notice requiring them to complete a sworn statement of financial position. They have fourteen (14) days from receiving the notice to complete and return it.

If the creditor is not satisfied with the contents of the completed statement of financial position, or the debtor does not return one at all, a creditor can then apply to the Court for an enforcement hearing summons order.

An enforcement hearing summons order is a Court order requiring a debtor to complete a statement of financial position (if they have not done so), produce substantial documents regarding their financial position, and appear in Court for the purpose of being cross examined about their financial position. However, in our experience, debtors rarely voluntarily reveal to the Court what assets they own that can be seized.

If a debtor is served with an enforcement hearing summons order at least fourteen (14) days before the date set for the enforcement hearing, but does not attend the hearing, the Court may issue a warrant for their arrest.

You do not need to summon the debtor to an enforcement hearing if you have details which are sufficient to issue an enforcement warrant.

Read our article on Enforcement Hearings and Statement of Financial Position

Either way, once you have the information, you can ask the Court to issue an enforcement warrant.

Issuing an Enforcement Warrant

There are a number of different types of enforcement warrants that can be issued by the Magistrate Court to enforce the Judgment, they are:

Enforcement warrant for seizure and sale of property;
Enforcement warrant for redirection of earnings;
Enforcement warrant for redirection of debt;
Enforcement warrant for regular redirections from financial institutions;
An order for payment by instalments.

We will explain these in more detail below.

Enforcement Warrant for Seizure and Sale of Property

To issue a warrant for seizure and sale of property, the Court will need evidence showing what property is owned by this debtor and the equity in that property.

We can conduct a title search, but we will likely need a payout figure from the mortgagor.

Read our article on Enforcement Warrant for Seizure and Sale of Property

Enforcement Warrant for Redirection of Earnings

To issue a warrant for redirection of earnings the Court will need to be provided with evidence of

Whether the enforcement debtor is employed, and the enforcement debtor’s employer has been identified;
Whether the enforcement debtor has sufficient means of satisfying the order after deducting, the necessary living expenses of the enforcement debtor and the enforcement debtor’s dependants; and
Any other known liabilities of the enforcement debtor.

We can usually ask for payslips etc at the enforcement hearing.

Read our article on Enforcement Warrant for Redirection of Earnings

Enforcement Warrant for Redirection of Debt

A warrant for redirection of debts allows the creditor to enforce an enforceable money order over any debts owed to the judgment debtor by a third person.

When the Court issues the UCPR enforcement warrant for redirection of debts, it then needs to be served on the third person who owes the debt to the judgment debtor.

Enforcement Warrant for Regular Redirections from Financial Institutions

A warrant for regular redirection from financial institutions is a warrant directed toward a third person (the financial institution) for a redirection of a regular deposit paid by a fourth person.

Regular payments to the judgment debtor under a retainer for example.

Read our article on Enforcement Warrant for Redirection of Debt

An Order for Payment by Instalments

An order for payment by instalments is just that, and order that the debtor pays in instalments.

The breach of this order means that the judgment debtor has breached a court order.

If the court enforcement option is not likely to yield and positive results, then we can apply that the judgment debtor be made bankrupt or wound up in insolvency.

Enforce the Judgment Debt with Insolvency

There are a couple of different ways to enforce a judgment debt with insolvency, they are:

If the judgment debtor is a person – bankruptcy; or
If the judgment debtor is a company – winding up application.

We will explain the process of each in more detail below.

Bankruptcy

An application for a bankruptcy notice will cost a fee of $470.00 with AFSA and $33.55 for a bankruptcy search.

The requirements for a bankruptcy notice are:

There must be a judgment or final order of $5,000 or more, the execution of which has not been stayed.

Much like a statutory demand, if the judgment debtor does not comply with the bankruptcy notice within 21 days then they will have committed an act of bankruptcy, allowing a judgment creditor to present a creditor’s petition to the Federal Circuit Court.

Once bankrupt, all of the debtor’s property (excluding exempt property) vests in the bankruptcy trustee and can be sold to create a fund to pay the bankrupts creditors.

Winding Up Application

As mentioned above, failure to comply with the requirements of a statutory demand raises the legal presumption that the company is insolvent.

This legal presumption shifts the onus of proof on the debtor company to prove that they are not insolvent.

With this legal presumption of insolvency assisting, within three (3) months after non-compliance with the statutory demand, the judgment creditor can apply to the Court for an order that the debtor company be wound up in insolvency.

Winding-up Proceedings

The winding-up process is an originating application in the Federal or Supreme Court. The judgment creditor will need to file an application, affidavit of service of the statutory demand, and a further supporting affidavit:

Containing details of the failure of the company to comply with the Statutory Demand;
Stating whether and, if so, to what extent the debt, or each of the debts, to which the Statutory Demand relates is still due and payable at the date when the affidavit is made; and
Annexing a copy of the ASIC search of the company.

Once filed and sealed with the Court’s seal, the documents will need to be served on the debtor company.

Other steps to be taken include (amongst others):

Notification to ASIC of the winding-up application;
Obtaining consent of a Liquidator;
Publishing a notice of the ASIC Insolvency Notices website.

Once served, the debtor company can attempt to defend the winding-up action.

Liquidator

The role of the liquidator is to attempt to realise the company’s assets, and if possible, make a payment to the creditors.

The liquidator also has claw-back powers for voidable transactions. These include:

Transfer to defeat/defraud creditors;
Uncommercial transactions;
Unfair loans to a company;
Unfair preferences;
Unreasonable director-related transactions.

This may include any payments to associated companies/businesses.

If the liquidator finds any of these transactions, they will attempt to void that transaction and realise the asset or cash for the benefit of the creditors.

Once the order is made and the liquidator is appointed, the process can take 12 to 18 months to wind-up the company and organise its affairs.

The liquidator will report to the judgment creditor (and all creditors) at the start of the liquidation, at about three (3) months, and whenever they deem it necessary to do so.

Legal Proceedings for Debt Recovery Process

That’s basically it. The process is simply:

Try to resolve the dispute without litigation;
Start legal proceedings for debt recovery;
Obtain a judgment or enforceable money order; and
Enforce that judgment over the property of the debtor.

We would always strongly recommend that you use a debt recovery litigation lawyer who understands debt recovery law and debt recovery legislation to recover your debts.

Debt Recovery FAQ

Below are a number of frequently asked questions in relation to legal proceedings for debt recovery and debt recovery action.

Who is Liable for Joint Debts?

In most cases both parties in joint debts are jointly and severally liable. This means they jointly owe the debt, and they both individually owe the entire debt.

This means that a creditor can choose to enforce the debt over one or both of the debtors.

Am I Liable for my Partner’s Debts?

No, not usually. The only way that a person may be liable is if they have signed a joint loan agreement or a personal guarantee.

However, if you are using the item over which the money is owed, a car for example, then a secured creditor may repossess the item.

How do I find out if a Money Order has been Made Against Me?

The following Courts have an online search facility:

Federal and Federal Circuit Court – https://www.comcourts.gov.au/public/esearch
District and Supreme Courts – http://apps.courts.qld.gov.au/esearching/

If you think an order has been made against you in the Magistrates Court, then give them a call and they will tell you what has happened on that Court file.

What do I do if a Money Order has been Made Against Me?

Depending on what you want to do, you can attempt to pay the debt, or negotiate a repayment plan, or if you want to dispute the debt, then attempt to set aside the default judgment.

Care must be taken that the judgment creditor doesn’t start enforcement proceedings.

How do I Negotiate a Payment Arrangement?

We would always advise getting a solicitor to negotiate on your behalf.

Ultimately you need leverage. The more leverage you have in a negotiation, the better the outcome you will likely receive.

Do I need Legal Advice?

Yes. We would always advise that both creditors and debtors take legal advice before starting legal proceedings for debt recovery.

A solicitor may be able to save you money and protect your rights and interests.

If you need to start legal proceedings for debt recovery then it is important to get it right and you should contact a lawyer

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Wayne Davis

stonegatelegal.com.au/

Making a Payment Claim – BIFA (QLD)

24/02/2019 By // by Wayne Davis

A payment claim process using the old BCIPA – Building & Construction Industry Payments Act 2004 (Qld) has been repealed and replaced with Building Industry Fairness (Security of Payment) Act 2017 (Qld) (“BIFA”).

The provisions of the repealed legislation have been amended and incorporated into BIFA.

Progress Payments and Payment Claims from the previous BCIPA – Building & Construction Industry Payments Act 2004 (Qld) are dealt with in Chapter 3 of BIFA.

This article will deal with making a payment claim under BIFA in more detail below.

Very strict time limits apply to the different stages of BIFA. Ensure that you do not miss out on a claim by contacting our building and construction lawyers today.

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Call 1300 545 133 and speak to our debt recovery lawyers

Making a BIFA Payment Claim

If you are eligible, then making a claim using BIFA is a relatively straightforward and structured process allowing you to seek payment for the goods and/or services you have provided.

Very strict time limits apply to the different stages of BIFA. Ensure that you do not miss out on a claim by contacting our building and construction lawyers today.

Eligible Person under BIFA

BIFA relates to payments under a construction contract.

Construction contract (whether written or oral, or partly written and partly oral) is defined as:

“construction contract” means a contract, agreement or other arrangement under which 1 party undertakes to carry out construction work for, or to supply related goods and services to, another party.

Construction Work is defined at section 65 of BIFA and are quite extensive, but includes:

the construction, alteration, repair, restoration, maintenance, extension, demolition or dismantling of buildings or structures, whether permanent or not, forming, or to form, part of land … of any works forming, or to form, part of land, including walls, roadworks, powerlines, telecommunication apparatus, aircraft runways, docks and harbours, railways, inland waterways, pipelines, reservoirs, water mains, wells, sewers, industrial plant and installations for land drainage or coast protection …

In BIFA Construction Work does not include:

the drilling for, or extraction of, oil or natural gas; the extraction, whether by underground or surface working, of minerals, including tunnelling or boring, or constructing underground works, for that purpose.

Related Goods and Services are defined at section 66 of BIFA and include the following goods:

materials and components to form part of any building, structure or work arising from construction work … plant or materials (whether supplied by sale, hire or otherwise) for use in connection with the carrying out of construction work;

And also include the following services:

the provision of labour … architectural, design, surveying or quantity surveying services … building, engineering, interior or exterior decoration or landscape advisory services … soil testing services … and goods and services, relating to construction work, of a kind prescribed by regulation.

The few that are included in this article are just a small sample of the actual types of construction works and related goods & services. You should follow the links to read them all.

There are also a number of construction contracts that BIFA does not apply to which are referenced under sections 61(2) to 61(4) of BIFA.

If you have an eligible construction contract for work defined as construction work, or the provision of related goods and services, then you might have a right to a progress payment.

Right to a BIFA Progress Payment

If you contract contains a payment provision which is not a void payment provision, you are entitled to a progress payment on the day on which the payment becomes payable under the provision.

Section 70 of BIFA says:

From each reference date under a construction contract, a person is entitled to a progress payment if the person has carried out construction work, or supplied related goods and services, under the contract.

A Reference Date under BIFA is defined at section 67 and says:

A “reference date” for a construction contract, means … a date stated in, or worked out under, the contract as the date on which a claim for a progress payment may be made for construction work carried out, or related goods and services supplied, under the contract

Alternatively, if you contract does not contain a reference date then the reference date is the last day of the month in which the construction work was first carried out, or the related goods and services were first supplied, under the contract … and the last day of each later month.

If you have an eligible construction contract for work defined as construction work, or the provision of related goods and services, and you have a right to a progress payment, then you may be able to make a BIFA payment claim.

BIFA Payment Claim

If you tick all of the boxes above, then you may be able to make a payment claim.

Section 68 of BIFA says that a payment claim:

Identifies the construction work or related goods and services; and
States the amount (the claimed amount) of the progress payment that the claimant claims; and
Requests payment of the claimed amount; and
Includes the other information prescribed by regulation.

Section 68 of BIFA also says that a written document bearing the word ‘invoice’ is taken to be a request for payment.

There are strict requirements in BIFA for the issuing and serving of payment claim. Contact our solicitors today to get legal assistance with issuing a payment claim.

Time Requirements for Payment Claims

Section 75 of BIFA defines the time requirements for making a payment claim.

If the payment claim is not related to a final payment, then the claim must be served the later of:

The time allowed for in the construction contract; or
Six (6) months after the work to which the claim relates was last carried out; or
The related goods and services to which the claim relates were last supplied.

If the payment claim is related to a final payment, then the claim must be served the later of

The time allowed for in the construction contract; or
Twenty-eight (28) days after the end of the last defects liability period; or
Six (6) months after the completion of the works; or
Six (6) months after the complete supply of related goods and services to be supplied under the construction contract.

Summary of Eligibility

In summary to the above a party:

Who has a written or oral construction contract;
Who has provided construction work or related goods and services;
Who has given an eligible payment claim (an invoice) to the other party; and
Who has complied with the time requirements of BIFA.

Than that that party is entitled to the protections offered under the new BIFA legislation.

After the party has validly served a BIFA payment claim, the respondent will then have to give a BIFA payment schedule.

Very strict time limits apply to the different stages of BIFA. Ensure that you do not miss out on a claim by contacting our building and construction lawyers today.

Payment Schedules after Payment Claim

Once you have validly served the BIFA payment claim section 76 of BIFA says:

A respondent must respond to the payment claim by giving the claimant a payment schedule within whichever of the following periods ends first … the period, if any, within which the respondent must give the payment schedule under the relevant construction contract … or 15 business days after the payment claim is given to the respondent.

Consequences for not Giving a Payment Schedule

Section 77 of BIFA says:

If a respondent given a payment claim does not respond to the claim by giving the claimant a payment schedule as required under section 76 … the respondent is liable to pay the amount claimed under the payment claim to the claimant on the due date for the progress payment to which the payment claim relates.

If the debtor does not pay the amount in the payment claim by the due date then you can recover that amount as a debt in the Court with jurisdiction; or make an adjudication application.

Very strict time limits apply to the different stages of BIFA. Ensure that you do not miss out on a claim by contacting our building and construction lawyers today.

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Consequences for Non-payment of Payment Schedule

Section 78 of BIFA says:

If a respondent given a payment claim for a progress payment does not pay the amount owed to the claimant in full on or before the due date for the progress payment … The claimant may either … recover the unpaid portion of the amount owed from the respondent, as a debt owing to the claimant, in a court of competent jurisdiction … or apply for adjudication of the payment claim.

Section 78 of BIFA defines Amount Owed to mean:

“amount owed” to a claimant for a payment claim, means:
(a) if the respondent did not respond to the payment claim with a payment schedule as required under section 76 —the amount claimed under the payment claim; or
(b) if the respondent did respond to the payment claim with a payment schedule as required to do so under section 76 —the amount proposed to be paid under the payment schedule.

Notice before Commencing Court Proceedings

If you intend to recover the amount mentioned above as a debt in the Court with jurisdiction, then:

Before proceeding you need to give the debtor a notice under section 99 of BIFA; and
The five (5) business days for the debtor to serve the payment schedule, as stated in the notice, has ended.

Section 99 of BIFA says that the notice must be given to the debtor within 20 business days immediately following the due date for the progress payment; and it must be in the approved form.

The approved form for this notice is the Form S99 – Warning Notice – Notice Of Intention To Start Legal Proceedings.

If you correctly serve this notice, and the 5 business days have elapsed, you are then able to recover the amount of the payment claim as a debt in the Court with jurisdiction.

The benefit of commencing legal action in the Court with jurisdiction is that the respondent debtor is statute-barred from raising a defence or bring any counterclaim.

Section 100(3) of BIFA says in relation to proceedings to recover the unpaid amount as debt:

The respondent is not, in those proceedings, entitled (a) to bring any counterclaim against the claimant; or (b) to raise any defence in relation to matters arising under the construction contract.

Valid Service under BIFA

Section 102 of BIFA says that a notice or other document under this chapter can be served pursuant to a term or terms in the construction contract; or pursuant to section 39 of the Acts Interpretation Act 1954 (QLD) which says:

If an Act requires or permits a document to be served on a person, the document may be served—
On an individual—by delivering it to the person personally; or by leaving it at, or by sending it by post, telex, facsimile or similar facility to, the address of the place of residence or business of the person last known to the person serving the document; or
On a body corporate—by leaving it at, or sending it by post, telex, facsimile or similar facility to, the head office, a registered office or a principal office of the body corporate.

If the claimant does not want to commence legal action to recover the debt in the Court, then the claimant can apply for an adjudication application.

What is a BIFA Adjudication?

If you did not want to recover the amount of the payment claim as a debt in the Court with jurisdiction then you could apply to get the matter resolved by adjudication.

An adjudication is a process whereby a professional trained in BIFA dispute resolution assesses the payment schedule and the payment claim and makes a determination in an attempt to resolve this dispute.

A BIFA Adjudication Application

Section 79 of BIFA says that an adjudication application:

Must be in the approved form; and
Must be made in the correct time-frame; and
Must identify the payment claim and the payment schedule to which it relates; and
Must be accompanied by the fee prescribed by regulation for the application; and
May contain the submissions relevant to the application the claimant chooses to include.

A list of BIFA adjudicators can be found here.

Once an adjudication application has been accepted by an adjudicator, the other party must provide the adjudicator with an adjudication response.

The adjudication response must be given within the time required by section 83 of BIFA.

The adjudicator must then decide the matter within the time required by section 85 of BIFA.

Read our great article on Making an Adjudication Application in Queensland

Adjudication Certificate

Once the adjudicator has made the decision, then they must pursuant to section 91 of BIFA provide the claimant with an adjudication certificate.

The adjudication certification certificate must include:

The name of the claimant;
The name of the respondent who is liable to pay the adjudicated amount;
The adjudicated amount;
The date on which payment of the adjudicated amount was required to be paid to the claimant;
The rate of interest payable on the adjudicated amount;
The fees, identified in the decision, that the respondent is to pay;
That the certificate is made under this Act.

The adjudication certificate can then be registered in the Court with competent jurisdiction and enforced as a money order of that Court.

Enforcement of an Adjudication Certificate

Section 93 of BIFA says:

An adjudication certificate may be filed as a judgment for a debt, and may be enforced, in a court of competent jurisdiction.

The adjudication certificate must be accompanied by an affidavit of the claimant stating that the whole or a part of the adjudicated amount has not been paid to the claimant at the time the certificate is filed.

Rule 793 of the Uniform Civil Procedure Rules 1999 (QLD) says:

“enforceable money order” of a court, means (a) a money order of the court; or (b) a money order of another court or tribunal filed or registered under an Act in the court for enforcement.

Because section 93 of BIFA allows for the adjudication certificate to be registered and enforced, in a court of competent jurisdiction, then rule 793 applies and the decision becomes an enforceable money order.

Conclusion

The new Building Industry Fairness (Security of Payment) Act 2017 (Qld) includes some good amendments to assist the payment of monies the subject to building and construction disputes.

Very strict time limits apply to the different stages of BIFA. Ensure that you do not miss out on a claim by contacting our building and construction lawyers today.

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Wayne Davis

stonegatelegal.com.au/

Commercial Litigation

Building disputes can be managed effectively if they are dealt with quickly. Contact our building dispute lawyers in Brisbane and the Sunshine Coast

What is a Building Dispute?

Defective Building Work

Typical Types Defective Building Work

Delayed Building Work

Breaches of Building Contracts

Unclear or Confusing Ambiguous Contractual Language

Variations that have not been Agreed, nor put in Writing

Disagreements as to Payment Claims and Schedules

Debt Recovery and Non-Payment of Money

Negligence Claims for Bad Quality of Workmanship Against a Builder

How to Avoid a Building Dispute in Queensland

Seek Legal Advice before Entering into the Building Contract

Do some Due Diligence on the Builder / Other Party

Keeping Good Lines of Communication Open

Ensure that the Building Contracts (and all Variations) are in Writing

Take Notes and Photographs & Keep a Diary

Ensure the Parties have Realistic Expectations

Get a Building Disputes Lawyer Involved Early

Resolving Building Disputes Informally

Resolving Building Disputes by Negotiation

Resolving Building Disputes by Mediation

Seek an Expert Determination of the Dispute

Making a Contract or Deed of Settlement

Resolving Building Disputes Formally

Make a Complaint to the QBCC

Seek an Adjudication of Building Disputes

Commencing Proceedings in QCAT

Commencing Proceedings in Court

Avoid and Manage Building Disputes in Queensland

Tips to Avoid Building Disputes

Warning Signs of Potential Building Disputes

Building disputes can be managed effectively if they are dealt with quickly. Contact our building dispute lawyers in Brisbane and the Sunshine Coast

Eligibility to give an Adjudication Response

What is an Adjudication Response?

Identify the Critical Dates

What does it mean to “Receive” the Documents?

The Form of the Adjudication Response

What are “new reasons”?

What can be Included in the Response

Jurisdictional Issues for Adjudication Response

How to give the Adjudication Response

Service of the Adjudication Response

Adjudication Procedures

The Adjudication Decision

Time Limits for Making the Adjudication Decision

What Happens Next?

Further Reading

What is Wage Theft?

Not Being Paid the Correct Hourly Rates

Being Paid Cash-in-hand or Off-the-books

Unpaid Overtime

Unpaid Penalty Rates

Illegal Cash-Back Schemes

Non-Agreed Deductions from Wages

Illegal Phoenixing

Sham Contracting Arrangements

Non-payment of Superannuation

Can I Make a Claim for Wage Theft?

Making a Claim for Wage Theft

The Wage Theft Process

Work out Exactly what the Employee is Owed

Negotiate with the Employer to Reach a Settlement

Report this Employer to the Fair Work Ombudsman

Commence Legal Action in the Court with Jurisdiction

Small Claims Under $20,000.00

Claims Over $20,000.00

Eligible State Courts for Wage Theft Claims

Jurisdiction of the State Courts

Is the Business Owner Liable for the Debts?

Enforce the Wage Theft Judgment

Moving Forward – Wage Theft

The Debt

Jurisdiction

Legislation

The Contract

Charging Clauses or other Security

Personal Guarantees from Directors

PPSA Charging Clauses