Subcontractors – secure your payments!
The recent liquidation of Tagara Builders, leaving subcontractors reportedly owed tens of thousands of dollars by the insolvent company, emphasises the need for subcontractors to secure payment for their services as promptly as possible.
One way for subcontractors to do so is use the adjudication regime established under the Building and Construction Industry Security of Payment Act 2009 (SA). The Act was introduced to make it simpler and less expensive for subcontractors to obtain progress payments for construction work. It provides for a cost effective and fast track adjudication regime, to ensure that subcontractors obtain progress payments promptly to keep their cash flow going. It also allows for subcontractors to suspend work if not paid in certain circumstances, despite what is said in their contracts.
Our firm has a particularly detailed understanding of the regime, having acted for the successful claimant in a series of cases involving Adelaide Interior Linings Pty Ltd v Romaldi Constructions Pty Ltd (at the time of the proceedings being issued, this was the first piece of litigation in the State involving this legislation).
In this matter, the claimant was not paid a progress claim when due and therefore, obtained promptly an adjudication determination under the Act for the sum owing on the progress claim. Ordinarily the builder should then have made prompt payment of the progress claim (within 5 days of the determination) or otherwise, the claimant could have obtained an adjudication certificate under the Act and filed that as a judgment. However, instead of paying and before the claimant could obtain a judgment, the builder sought to circumvent the legislative intent of the Act and applied for injunction to restrain the claimant from obtaining an adjudication certificate.
The District Court granted the injunction but on appeal to the Supreme Court, Justice Anderson discharged the injunction, including on the basis that the builder had sought to circumvent the policy of the legislation by seeking the injunction.
The builder appealed to the Full Court of the Supreme Court but was unsuccessful.
If you need advice relating to a building dispute or if you are a subcontractor and have any concerns about not being paid promptly, please contact Ted Guthrie or any other member of our Litigation & dispute resolution team to discuss your rights under the Building and Construction Industry Security of Payment Act 2009 (SA) on 8231 1110.