This article was written by Peter Merity in March 2023 and may be relevant to you
INSOLVENCY PRACTITIONERS MAY NOW USE THE SECURITY OF PAYMENTS LEGISLATION TO RECOVER BUILDING AND CONSTRUCTION DEBTS
As a result of a recent Supreme Court decision, insolvency practitioners may now use the Building and Construction Industry Security of Payment Act to pursue claims on behalf of their insolvent companies and will not be exposed to costs orders when doing so.
As you are no doubt aware, Section 32B of the Act says that the benefits of the Act are not available to a company in actual liquidation. In a firmly worded judgment however Justice Ball of the NSW Supreme Court, in Kennedy Civil Contracting Pty Ltd (Administrators Appointed) v Richard Crookes Construction Pty Ltd; in the matter of Kennedy Civil Contracting Pty Ltd [2023] NSWSC 99 has said that it is quite appropriate for an insolvency practitioner to put the subject company into administration, as opposed to liquidation, and lodge a payment claim for the purpose of taking advantage of the procedures provided by the Act.
Now, wherever there is a recoverable debt, you can put the company into administration and serve a payment claim and proceed to an adjudication for just the legal costs of the practitioners acting for you and the costs of the adjudicator deciding the matter.
Quick
The whole adjudication process normally takes only 25 business days from the date of service of the payment claim until the adjudicator issues an award. That award can be registered in a Court as a judgment. The award can then be enforced using the ordinary Court enforcement processes.
No Exposure to Costs Orders
As the adjudicator does not have the power to award costs, the administrator is not at risk of receiving a cost order against him or her if the adjudication is unsuccessful. The only payment the administrator has to make are the adjudicator’s fees which may also be required to be reimbursed by the debtor if the adjudication is successful.
