Recovering Outstanding Payments In The Construction Industry: A Guide For Builders & Sub-Contractors
As a builder or subcontractor in the construction industry, you understand the importance of timely payments for the sustainability of your business. However, there are times when payments are delayed or withheld, leaving you in a financial bind. If you find yourself in such a predicament, it’s crucial to know your options for recovering the money owed to you.
Axia Litigation Lawyers, with a deep understanding of the construction sector’s legal framework, presents a concise guide on the measures you can take to address non-payment issues.
Let’s explore your options, assuming you’ve already dismissed the notion of waiting idly for payment.
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Option 1 – Letter Of Demand
This is a foundational step in the formal debt recovery process. It serves as a clear message to the debtor that a client is serious about recovering the debt. It is also a cost effective step. The key reasons a letter of demand should be considered at the earliest stage possible are:
- 1
Notification of dispute and providing a clear statement of what is owed or what action is required from the other party;
- 2
It is a cost-effective attempt to resolve a dispute;
- 3
A clearly worded letter of demand will provide clarity and can help prevent misunderstandings about the nature of the claim;
- 4
There may be deadlines that need to be met and the letter can articulate the importance of any such deadlines;
- 5
In some disputes, a letter of demand may be a legal prerequisite before commencing legal proceedings.
For the above reasons, a letter of demand should not be rushed, but prepared taking into account all facts & circumstances of the debt and the relationship between the parties. For example, is there a written agreement in place and what does it allow for? Security, interest, claiming of legal costs.
Option 2 – Monies Owed Complaint
A Monies Owed Complaint (MoC) is a straightforward procedure initiated by lodging a complaint against a QBCC licensee who has failed to pay you the due amount. Before proceeding with an MoC, ensure:
- 1
The amount owed is undisputed.
- 2
The QBCC is not currently investigating the MoC if the dispute is under adjudication, court, or tribunal review.
For a detailed understanding how to lodge a complaint against a QBCC licensee who has failed to pay, visit the QBCC’s website.
View this short animation created by QBBC explaining MoCs:
Option 3 – Adjudication Application
Adjudication offers a swift resolution to payment disputes arising from construction work or related goods and services. Known legally as a ‘Payment Claim’, your invoice triggers an obligation for the recipient to respond with a ‘Payment Schedule’.
You can apply for adjudication if:
- 1
You have not received a Payment Schedule and payment is overdue.
- 2
You dispute the Payment Schedule received, and payment is still overdue.
An adjudicator will determine the outcome of the Payment Claim, with their decision being enforceable in court. Adjudication has strict deadlines, so legal advice is recommended.
Option 4 – Subcontractor’s Charge
A Subcontractor’s Charge can secure the amount owed to you by creating a ‘charge’ over the funds the contractor is due from a principal or head contractor. This elevates your claim to a ‘secured creditor’ status, giving it priority over other debts if the contractor faces liquidation.
Failure to resolve the payment issue requires you to initiate legal proceedings within one month of the Notice of Claim.
For a more detailed understanding of a subcontractors charge visit the QBCC’s website.
Additionally watch this short explainer video provided by the QBCC about subcontractors charge.
Option 5 – Creditor’s Statutory Demand
A Creditor’s Statutory Demand is a formal demand for payment used against companies. It’s imperative that no legitimate dispute exists regarding the debt’s existence or amount. The company has 21 days to act upon receiving the demand, failing which it may face liquidation proceedings.
Due to the technical nature of Statutory Demands, expert legal advice is highly recommended.
Option 6 – Legal Proceedings
As a last resort, you may commence legal proceedings to recover the debt. The venue for these proceedings, whether a tribunal or court, depends on the specifics of your case. Legal proceedings are complex and should be navigated with the assistance of a litigation and dispute resolution expert.
Summary
When faced with non-payment, time is of the essence. Understanding and selecting the most appropriate recovery option is key to securing your payment swiftly and efficiently. For professional guidance and to ensure every move you make is strategic and effective, reach out to the specialists at Axia Litigation Lawyers.