It has been held that automatic set off under s 553C of the Corporations Act 2001 (Cth) precludes companies in liquidation from taking advantage of the summary progress payment regime under the Building and Construction Industry Security of Payment Act 2002 (Vic).
Façade Treatment Engineering Pty Ltd v Brookfield Multiplex Constructions Pty Ltd [2016] VSCA 247
Welcome to this issue of Herbert Smith Freehills' Australian Construction Dispute Resolution Newsletter.
This newsletter updates you on legal developments relevant to your industry by featuring Australian court decisions and legislative developments of particular interest.
In this issue, we look at:
Two recent decisions have determined the applicability of security for payment legislation to insolvent contractors. One decided that the legislation does not apply to contractors in liquidation. The other decided that the legislation can be used by bankrupt contractors. At first glance, the decisions seem to be at odds, but on closer analysis the two decisions are not inconsistent.
In brief
What’s insolvency got to do with it….
Times are tough in the Queensland construction industry.
In recent times we have seen the demise of names such as Glezeil, Carmichael Builders, SX Projects, TRAC Construction, Gary Deane Constructions and JM Kelly (Project Builders) Pty Ltd.
Insolvency affects all industries, but, given the hierarchical nature of construction contracts, when a construction company is unable to pay its bills, it can cause devastating results both up and down the contractual line:
WHO SHOULD READ THIS
- Industry participants in the construction sector.
THINGS YOU NEED TO KNOW
- The deadline for comments on the Improving Bankruptcy and Insolvency Laws Proposals Paper is 27 May 2016.
WHAT YOU NEED TO DO
In December 2015, the Department of Housing and Public Works Queensland released a discussion paper seeking feedback on the issue of security of payment in the building and construction industry. The paper seeks feedback from the widest possible cross section of the building and construction industry on the following identified issues:
Key Points:
A Senate Economics References Committee has recommended that the Commonwealth enact uniform national security of payment legislation, albeit with a target of around 2018 for implementation.
Security of payment (SOP) reform discussion papers were released by the Queensland and New South Wales Governments in the run up to Christmas. That timing happened to coincide with the publication by the Senate Economics References Committee of its report "'I just want to be paid': Insolvency in the Australian Construction Industry".
Have the tough times in the construction industry changed? It would appear not despite an uptick in the New South Wales economy. “I just want to be paid” is the title of the report just released by the Senate Economics References Committee.[1]