Project Contract Mini-series Part Three

 

Written by Peter Waller – Special Counsel – QLS Accredited Specialist – Commercial Litigation

Improving the progress payments process is the aim of several changes to the Building Industry Fairness (Security of Payment) Act 2017 late last year. Contractors and owners/principals each have new rights and obligations to encourage payments. 

As part of these changes, we have created a three-part mini-series explaining four areas that cover these important changes. The four areas we will cover include the following:

  • Supporting Statements 
  • Failing To Pay 
  • Withholding Payment 
  • A Charge Over Property.  

In Part one of this series, we covered Supporting Statements and Failing To Pay and in Part two we explained Withholding Payments. This week, we are presenting our final article, part three, covering A Charge Over Property.

We hope you’ve enjoyed this mini-series and have found it useful and informative! Please continue reading below for the final article in our three-part series.

Charge Over A Property: For Head Contractors

If you are a head contractor and an adjudicated amount (as determined through the adjudication process) owing to you hasn’t been paid in full by the due date, you may be able to request registration of a charge over the property where the work took place (the relevant property).

The charge creates the right for you – if the debt is not paid – to apply to the court to sell the property to recover the debt. 

The charge can be requested by lodging the appropriate documents with the Titles Registry. The charge is valid for 24 months and then automatically expires – unless released earlier.

If after a charge over property has been registered and you’re still not paid, you can apply to the relevant court for an order to have the property sold. Proceeds from the property sale will be used:

  • to pay for the costs to sell the property
  • to recover your costs in seeking the court order for the sale
  • to pay any registered encumbrances over the property, that is, an outstanding mortgage as well as your charge over property (the unpaid adjudicated amount)
  • the balance to be paid to the registered owner.

 

Project Contract Mini-series Part Three

 

Charge Over A Property: For Property Owners

If you are the registered owner of the property for which a charge has been registered, you can respond by:

  • requesting a release of the charge because you have paid the adjudicated amount or the charge has expired
  • apply to the relevant court for the charge to be set aside.

If the claimant has not requested a release of the charge over your property, you can request the release if any of the following occurs:

  • the adjudicated amount has been paid
  • the adjudication decision for the adjudicated amount has been set aside
  • court proceedings for enforcement of the debt have been dismissed
  • the unpaid adjudicated amount has been paid into court as security
  • the charge over the relevant property has expired (24 months from initial registration or up to 48 months if a court has approved an extension).

 

Project Contract Mini-series Part Three

 

If you have paid the adjudicated amount or you are not the respondent for the adjudicated amount (or a related entity for the respondent), you may choose to challenge a charge registered over your property by taking the matter to court and having the charge set aside.

If you do not pay the claimant the adjudicated amount within 24 months, they can request an extension of the charge by applying to the relevant court. The extension can only be for up to an additional 24 months, after which time the charge will expire.

With the right legal advice, you can navigate these changes to get the result you need. To find out how we can help you, call our construction law expert Peter Waller on (07) 5539 9688 or email peter.waller@mba-lawyers.com.au