It is perhaps an inevitable result of the current global pandemic that employers, main contractors and subcontractors alike will be dusting down the guarantees they have been given, or provided to others, in respect of their ongoing projects. For those who have been given them they need to establish what security those guarantees actually provide and, perhaps as importantly, how quickly they will pay out.

However, for this to happen it will require the licensing regime to embrace new thinking.

For several years I have been advocating for unique thinking to apply in respect of how the licensing regime should address situations where contractors are experiencing financial distress or are insolvent.

There is no bigger fan of adjudication than me. While not perfect, I nevertheless believe that adjudication has changed the construction industry for the better since its inception in 2004.

The impact of the COVID-19 crisis and the health-related measures implemented by the government to contain the spread of this deadly virus will unfortunately result in the economy going into recession.

In an article in the Financial Review, the results of a survey of economists revealed that even taking into account all the government’s stimulus and job-saving measures, the Australian economy will be in recession until June 2021.

This week’s TGIF considers the circumstances in which a special purpose liquidator will be appointed to investigate claims the liquidator has already determined are ‘not viable’ in the decision in Williams & Kersten Pty Ltd v Walton Constructions (Qld) Pty Ltd (in liq), in the matter of Walton Constructions (Qld) Pty Ltd (in liq)

This week’s TGIF considers a refusal by the Federal Court to declare void or terminate a DOCA on the grounds of alleged prejudice & injustice or due to omissions in the administrator’s report to creditors.

Background

R Developments Pty Ltd (the Builder) operated a residential construction business and entered into a contract for the construction of a residential property in 2012.

The requirement for strict technical compliance with notice provisions has been extended beyond guarantees, particularly where there is some immediate and material consequence that flows from the notice being issued.

In New South Wales (NSW), unlike in Victoria, claimants in liquidation have been able to make claims under Security of Payments Acts (SOPA). This has been recently reaffirmed in the case of Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd (In Liquidation) [2019] NSWCA 11 (Seymour), where the court doubled-down on this position and further explained why the NSW position differs from the position taken by the Victorian Court of Appeal in the infamous Faade Treatment Engineering Pty Ltd (in liq) v Brookfield Multiplex Constructions Pty Ltd [2016] VSCA 247 (Faade).

A recent NSW Court of Appeal decision has re-enlivened the possibility of insolvent construction companies successfully recovering debts via the Security of Payment legislation. Insolvency practitioners appointed to construction companies should seek advice promptly following their appointment.

On 12 February 2019, the New South Wales Court of Appeal handed down its decision in Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd (in liquidation) [2019] NSWCA 11.

In December 2018, NSW building certifier Watson Oldco entered into voluntary administration. The AFR reports that administrators have attributed the move largely to the result of uninsured exposure to potential claims arising from buildings with combustible cladding. Although there were no known claims against Watson Oldco, it was reported that there was uninsured exposure which led to the decision to place the company into voluntary administration.