To a good 2014!
Our first newsletter for the year reflects on some of the matters that we helped our clients to resolve in 2013 because we believe that with increased economic activity this year, clients will be prepared to chase moneys owed to them a little more vigorously to finance growth in 2014.
Some of last year’s successes
- Using the Subcontractors’ Charges Act 1974 (“SCA”) allowed one client to recoup about $100k of a $160k debt, after sharing some of the proceeds with another subcontractor. This is $100k more than it would have otherwise have received, as the contractor had been in liquidation for some time. The liquidator applied to the Supreme Court to have the charge cancelled, thinking that our client had not commenced legal proceedings within the 1 month required. It had also earlier complained that the charge was not properly made. We had commenced proceedings in time, so the liquidator’s application was dismissed, and it did not pursue its other allegation.
Lessons reinforcing our previous experience with the SCA
- You must have your charge carefully and accurately drafted to ensure that there are no successful challenges to it, and you must start your legal proceedings within a month (unless it is only a charge on retention money).
- If the contractor is in liquidation, you will need to seek leave of the Supreme Court to commence proceedings against the insolvent company
- Liquidators are competing with you for funds that you have charged using the SCA, as they are required to bring funds into the company. Once they realise that you (and other subcontractors) have priority over the money, you may find that they are not particularly cooperative
- You must be prepared to litigate to protect your charge
- For one client owed about $600k we issued the debtor with a s459E statutory demand under the Corporations Act 2001 based on a very carefully worded claim which provided sufficient information about the debt so as to prevent any challenges to the demand. There was no response to the demand so winding up proceedings were commenced, but happily the matter was resolved favourably for our client.
Lessons reinforced from our previous experience with the Corporations Act 2001
- The statutory demand must be carefully put together, and there must be no genuine dispute about the debt, so as to prevent any challenge to it
- The company is deemed to be insolvent if demand not satisfied, and winding up proceedings should follow quickly, carefully following the required steps
- If possible, negotiate a favourable outcome, whilst proceedings remain on foot
- Using the Building and Construction Industry Payments Act 2004 (“BCIPA”) to recover money remains a favourite for clients, but we have found that there are increasing number of steps being taken by respondents to slow down payment
Please call us on 3220 0299 if you are seeking to recover monies owed to you, and we can assist you with one of these procedures, to improve the bottom line for 2014. Happy New Year!