If you are affected  by situation similar to the events below call RECOUP Contractor Debt Recovery on 1300 732 687
or Start a Security Of Payment Act Claim Now here

ABC News Article 23 December 2018:

The construction industry is one of the backbones of the nation’s economy and, in recent years, residential building on the east coast has been a key driver of growth.

Key points:

  • Almost 1,700 construction businesses went bust last year, with big companies starting to fail
  • Subcontractors are caught in the middle of collapses due to outstanding debts
  • The Sydney and Melbourne property bust is set to make the situation worse

A booming housing industry and large infrastructure projects in Sydney and Melbourne have helped keep the economy ticking over as the west coast mining boom went bust.

But with prices now heading south and credit tightening, there are fears the pain felt in Western Australia is set to travel across the Nullarbor.

The construction industry in the west has been rocked by several large corporate collapses in recent years, causing a world of pain for smaller contractors further down the chain — who often do not get paid even if they have already completed the work.

Construction industry insolvencies on average cost subcontractors, employees and the tax office about $3 billion a year in unpaid debts, according to a 2015 Senate inquiry.

“Will we see more collapses? Yes, we will,” business commentator Tim Treadgold said.

“By mid-year, you’ll probably have a number of companies who thought they could survive wake up and realise they can’t.”

Major firms starting to fail

Across the country, almost 1,700 construction businesses went broke last financial year, with most in New South Wales and Victoria.

But it was the collapse of West Australian firm RCR Tomlinson, an engineering business of 120 years, which caught everyone’s attention.

What made this failure different to others was that most considered the company too big to fail, while the wide-ranging implications for 4,000 subcontractors and suppliers really hit home, suggesting broader systemic problems within the industry.

The collapse followed that of York Civil, an Adelaide-based firm which had several large projects across four states.

When the rainy day arrives

York Civil was one of six companies to have collapsed on Perth subcontractor Joe Tropiano over the past 18 months, costing him a total of $1.7 million.

“It’s like a minefield out there. You’re not sure who you’re working for,” Mr Tropiano said.

“You might have known these guys for 20 years and next thing you know they owe you all this money, and next thing you know they’ve closed their doors.

Mr Tropiano said his seven-figure debts had come from a range of contractors, ranging in size from a small operator to a big national company.

“Probably the last four months has been the hardest. Three of them have gone in the last three months and that has put strain on us, very much so,” he said.

Mr Tropiano is four years into a property downturn in Western Australia, a result of the mining bust, when population growth plummeted.

“I’ve never laid anyone off in 35 years … [but] my workforce has probably halved in the last 18 months,” he said.

“You always put a bit away for a rainy day and the last six or seven months it’s been bloody pouring.”

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The buck stops here

The main causes of insolvency in the construction industry last financial year were a lack of cash flow and poor management, according to corporate watchdog the Australian Securities and Investments Commission (ASIC).

The problem, many in the industry said, was a highly competitive industry with a toxic culture of underbidding on jobs just to win the work.

Then, when the project could not be delivered on budget, the subcontractor got squeezed, or even worse, sent to the wall.

Pitcher Partners Perth chairman Bryan Hughes works closely with subcontractors, helping struggling companies restructure when they are close to failure.

“There is a culture from large clients, large contractors of dictating terms and that flows through the industry to some extent, and that is a bit of a toxic culture,” he said.

“I have often reviewed subcontracts and they are so one-sided, it’s unconscionable. It’s wrong but they have been agreed to because that was it, those were the terms dictated.

“Ultimately, if it’s been too lean at the head contract level to the point they can’t make money and they go bust, then it flows to the poor subcontractor who ends up copping it.”

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Next year is not predicted to be any smoother.

Banks are under pressure for poor lending practices; house prices are plunging on the east coast; and businesses face an increasingly rocky economic environment abroad, with ongoing Brexit tensions and a trade war brewing between the United States and Australia’s largest trading partner, China.

“We’ve seen one big fall in RCR and you’d have to assume other companies are under similar pressures, caused by mismanagement basically — not getting their costs right, not getting their skill mix right and messing up contracts,” Mr Treadgold said.

“So next year could be a bad year for corporate failures.

“Those contracts were bought at a price which was too low and then they reach a point where they can’t complete the projects, and that causes a hell of problem for everyone involved.

“The company itself goes belly up and the subcontractors are the meat in the sandwich, they don’t get paid.

“I think you’re going to see developers struggle to sell the units or the property they’ve developed; you’re going to see heavy duty discounts just to shift assets off their books; you may well see companies selling things for less than they cost to build and that’s a one-way ticket to the poor house.”

Financial contagion spreads east

While the industry in the west has been in the doldrums since the mining investment boom ended in 2014, the pain is now spreading east as developers and buyers deal with tumbling property prices and a credit squeeze at the bank.

Recent major builder collapses:

  • RCR Tomlinson
  • York Civil
  • Cooper and Oxley
  • BCL
  • Diploma
  • BuiltonCorp
  • Ostwald Brothers

“That will lead to a more competitive environment for contractors trying to compete for work … and that can lead to more corporate failures as a consequence,” Mr Hughes said.

“It’s a sector that’s remarkably tenacious at holding on, but at some point if the cycle does turn as it seems to have turned over, there’s just not enough trade to carry on and someone will collapse.”

Red flags are already emerging.

National building approvals are down about 14 per cent this year, with predictions of a further fall of up to 30 per cent over the next two years — the sharpest percentage downturn since 2000-01.

“The decline will be a bit more severe in Melbourne and Sydney, so the markets that went up the most, we expect them to fall the most in the downturn,” BIS Oxford Economics senior economist Timothy Hibbert said.

“When you look at a market like Perth, it’s already taken a fairly big hit over the last few years, so there’s not too much more to fall. So we expect it to be one of those markets which recovers earlier than the others.

“We expect more projects to be put on the sideline, or delayed, or developers basically re-sell their land.”

The construction industry directly employs about 10 per cent of the nation’s workforce, as well as providing work for a range of other sectors like manufacturing, engineering and professional services.

So keeping the country building is of critical importance to the broader economy.

“Basically, it’s going to mean fewer jobs. The construction industry has quite a high multiplier for the greater economy, so the greater economy will feel it,” Mr Hibbert said.

“It will mean fewer dwelling construction starts which will mean fewer materials — concrete and bricks and all your finishing inputs — so that will flow through to all the various manufacturing sectors.”

Financial regulator the Australian Prudential Regulation Authority (APRA) has reacted to the state of play.

This week APRA lifted restrictions on interest-only residential lending from January 1 next year, in an attempt to stabilise Australia’s ailing housing market.

It followed a move the regulator made in April to remove a “speed limit” it had imposed on lenders since 2014, requiring them to keep investor credit growth below 10 per cent each year.

Gloomy view not shared by all

Melbourne builder Ross Palazzesi has weathered financial storms before.

His business, Metricon Homes, still has work booked for another year and he did not expect the slowdown to be felt for some time.

“Right here and now, we’re not feeling anything. We’re as busy as we’ve ever been and, in fact, I don’t think the market in Victoria has peaked yet in terms of building on site,” Mr Palazzesi said.

“So this slump, if it’s going to happen, is probably 18 months away.”

While Mr Palazzesi said he was starting to see forward orders come off, he remained positive about the state of the market.

“If this keeps going, certainly it will flow right through,” he said.

“Apart from housing and trades and et cetera, there’s all the ancillaries — washing machines, everything that goes into a house — so it will have a marked effect.

“But I wouldn’t be that pessimistic, because I think at the moment we’re having the correction we had to have.”

Subcontractors left to pick up the bill

While several reviews into the industry have recommended cascading statutory trust accounts to make sure a subcontractor gets paid if the company above them goes insolvent, no government has yet introduced legislation.

Three recent reviews conducted by building disputes specialist John Murray, barrister John Fiocco and small business ombudsman Kate Carnell all make dozens of recommendations including the introduction of statutory trust accounts.

But there is still little protection to make sure subcontractors get paid if a company above them goes insolvent.

“We’d like to see something in the industry that’s implemented through the statute of law that says, as a contractor, if you are collecting money by work that’s done by your subcontractors, you absolutely have to keep that money in trust and you can’t just spend it however you might like,” Australian Subcontractors Association board member Louise Stewart said.

“The current laws in place on the east coast have dealt with prompt payment and fair payment — what they’re not dealing with [is] protecting payments in the event of insolvency.

“Subcontractors below the entity that’s had the insolvency event often don’t get paid at all, even though they have already paid their employees, their employee entitlements and their tax.”

New South Wales and Queensland have recently bolstered legislative protections, but there is little consistency across states and territories.

Western Australia and the Northern Territory are currently behind the national standard, but the WA Government is considering a raft of measures which, if implemented, would give subcontractors the best protections in the country.

NSW is considering statutory trust accounts but has delayed any action ahead of its upcoming state election.

“Obviously those at the top of the supply chain quite like the situation at the moment,” Ms Stewart said.

“There’s no transparency, there’s no oversight in terms of how those funds are spent that actually belong to the subcontractors who have done the work.

“This is the right thing to do. It’s necessary for the future of the industry.”

Security Of Payments Act General Guidelines

  • There must be a contract / agreement / arrangement between the claimant and the respondent
  • Work and or related goods and services must have been carried out / provided
  • There must be an available reference date
  • A claim must be prepared in the approved format
  • A claim must be properly served
  • A respondent must serve a payment schedule within the time allowed
  • If no payment schedule served by the respondent, the claimant must serve a second notice within the time allowed
  • An adjudication must be prepared and lodged in the approved format and lodged within the time allowed

Security Of Payments Act Is A Fast Track To A Judgment

Until the debt owing to you is formalised as a “Judgment Debt” your client can just keep delaying payment for as long as it suits them.

But as soon as the money owing to you becomes a “Judgment Debt” you can lawfully force payment.

Security Of Payments Act Specialists

RECOUP Contractor Debt Recovery Are Your Best Option For Preparing & Running Security Of Payments Act Payment Claims & Adjudication Applications

We are Australia’s No #1 Security of Payments Act Specialist – GET STARTED HERE…
Now at over $100 million in recovered Contractor Payments – RECOUP Contractor Debt Recovery are trusted by more Industry Groups and Trade Associations throughout Australia than any other debt recovery company for expert Security Of Payments Act advice.

RECOUP are Security Of Payments Act Experts & Debt Recovery and Debt Collection Specialists for Building and Construction Contractors, and have over 35 years of hands on experience in the building & construction industry – this is invaluable.

RECOUP aims to keep all stakeholders; claimants, respondents, principals, project managers, lawyers, in each state up to date with changes and developments in each state’s legislation that impact claiming payments for building and construction work. RECOUP provides information and assistance regarding the following legislation:

New South Wales: “Building and Construction Industry Security of Payment Act 1999″ (Security of Payments)
Victoria: “Building and Construction Industry Security of Payment Act 2002″ (Security Of Payment Act)
Queensland: “Building and Construction Industry Payments Act 2004″ (BCIPA QLD)
Australian Capital Territory: “Building and Construction Industry (Security of Payment) Act 2009″
South Australia: “Building and Construction Industry Security of Payment Act 2009″ (Security Of Payment)
Tasmania: “Building and Construction Industry Security of Payment Act 2009 (No.86 of 2009)” Security Of Payments Act

Security Of Payments Act Workshop – Register Now

Security Of Payments Act Workshop

$99.00 per person  or  $299.00 per company (maximum of 6 persons per company)

According to QBCC statistics approximately 70% of adjudication applications lodged by claimants are being found to be invalid based on jurisdictional issues that are easily avoided with the right know how.

While as the QLD Payments Act is a short, cost effective and normally successful way to fast track a judgment against a debtor it does require a degree of technical understanding as to how the legislation is intended to operate.

Unscrupulous respondents are preying on this no end to evade their legal and moral obligations of paying their debts.

Knowing when and how to serve a payment claim under the QLD Payments Act is critical to success. And equally important is knowing then how to respond in turn to  the respondents response to the payment claim, and then how to follow through and prepare a solid adjudication application that will withstand the respondents attempts to defeat it or have it thrown out on jurisdictional grounds.

Most importantly it is critical to understand that in Queensland you only get one chance at serving a payment claim under the Payments Act as a result of case-law that says once the work is finished there is only one reference date that arises to give a claimant the right to serve a payment claim under the QLD Payments Act.

For assistance preparing payment claims, 2nd notices, and adjudication applications call us for a free consultation that just may mean you get all of your money when otherwise you would be left with very little other alternative than to write it off as a bad loss.

1300 RECOUP Debt Recovery Contact Us For Security Of Payment Act Know How

Give A New Life To Your Project And Contract Administration Processes And Reap The Results

In the coming months we will be featuring a series of articles that will speak into your world in a way that will bring new meaning to the dreaded words ‘paper work’, and revitalise not only your desire for, and commitment to, a competent and professional approach to your construction projects, but the very attitudes, processes and structures that you currently use to “get the job done”.

We will be calling this series: ‘Contract Administration 2016‘, and will consist of 8 installments jam packed with tips that, if implemented consistently, will boost your profitability significantly.

We all know that “getting the job done” should be enough to be deserving of payment in full, but it’s just not so.

In this ruthless industry of ours, to ensure you maintain your right and entitlement to be paid in full, and to avoid back charges and damages claims, you need to be at the top of your game when it comes to Project and Contract Administration.

For a moment let’s just focus on our mission here. What does revitalise mean, and why is that our strategy?

Revitalise means: “imbue (something) with new life and vitality.”

Let me go one step further. What does imbue mean? Imbue means: “inspire or permeate with (a feeling or quality).”

Get that? In the context of our work, revitalise means: ‘to be inspired to permeate (affect every last aspect) of the administration processes for our construction project, with new life and vitality, in a quality way.’

Why is revitalising our strategy? Revitalising is our strategy because we are not going to throw the baby out with the bathwater – rather, we are going to build on our current structures and processes and empower ourselves and our people, for the benefit of all stakeholders, not just ourselves, and or, our own company.

Key question: What will this mean for you?

Answer: Better project outcomes, a return on investment in multiple ways.

Note to self: Acknowledge that there will be time, effort and cost involved, but that it will be worthwhile. This, of course, is beside the point, because, put simply, it is the right thing to do anyway. But it is important to know that whatever it is you invest yourself into that you will be glad you did.

Are you sold on “why”?  Will it be truly worth it?  Yes it will.  Increased profitability and better relationships. That has to be worth it, because without both of those benefits we just wouldn’t bother at all, but with those benefits comes all the satisfaction you are looking for.

So.  How?  The crunch question.

Focus again: Our goal is to be paid every last cent we claim, which we have worked for, and to be asked back to do the next job because of your professional approach to your projects.  And we are open to revitalising our thinking and doing because we accept that there is always room for improvement.

We will begin with a careful analysis of your current situation, a questionnaire about your organisation, and a score sheet so that you can evaluate where you are at as an organisation. Then over the coming months as we address the attitudes, processes and structures required for each and every phase of a construction project, you will be able to fill the gaps in your existing processes and structures and take attitudes, and thinking, and doing, to new levels.

Remember, we are revitalising, we are building on and developing your existing skill-sets, processes and structures. All of the principles that we will cover will apply no matter how big or small your organisation is and no matter how small or large the projects are that you are involved in.

In our December Edition we will map out the phases of a typical construction project under the headings; Pre-Construction, Construction, and Post Construction and we will outline essential Project and Contract Administration requirements to help you with the Questionnaire and Score-sheet which will be included.

Until next time, remember, “Prevention is the best cure – Contract Admin counts”.

Are Directors and management at Townsend Group Pty Ltd untruthful, or incompetent, or both?

Mr Russ Hill (Director): “we are not in trouble – keep working” – 2 September 215

Ms Daila Jansons (Director): “we are most definitely not in trouble” –  3 September 2015

Mr David Christie: (General Manager): “we are paying you tomorrow” – 9 November 2015

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Case Study:

Shop owner engages roofer by phone to carry out roof repairs then later denies requesting works.

Outcome:

Week 1: RECOUP serves payment claim on shop owner for roofer.

Week 3: RECOUP serves 2nd Notice on shop owner.

Week 4: RECOUP applies for adjudication.

Week 7: RECOUP wins at adjudication for roofer.

Week 8: RECOUP enters judgment at local court and obtains bank garnishee order.

Week 9: RECOUP receives cheque direct from shop owner’s bank and pays roofer.

Get RECOUP Contractor Debt Recovery on the job for you today.

1300 RECOUP Debt Recovery Contact Us For Security Of Payment Act Know How

Alukat Facade Pty Ltd placed in liquidation on 16 September 2015

Our glass manufacturing industry has been decimated by the importation of cheap glass from China.

And now, Chinese companies are coming to Australia, setting up, sort of (but that’s another story), as building facade contractors and undercutting local companies like there is no tomorrow.

The problem is the conditions in our industry in our country are very different to China and these companies are failing and are dragging our local subcontractors down with them.

Alukat Facade is the second Alukat entity to go into liquidation within the space of a year.

And now, the word is that there is another Alukat entity newly incorporated so the business can rise again like the proverbial phoenix rising out of the ashes…..

And that is not to mention Alukat Queensland

Alukat Pty Ltd was the first of the Alukat entities to go into liquidation:

Name: ALUKAT PTY LIMITED
ACN: 136 343 989
ABN: 21 136 343 989 (External Link)
Registration date: 30/03/2009
Next review date: 30/03/2016
Status: External Administration
Type: Australian Proprietary Company, Limited By Shares
Locality of registered office: SYDNEY NSW 2000
Regulator: Australian Securities & Investments Commission

Alukat Facade Pty Ltd was the second of the Alukat entities to go into liquidation:

Name: ALUKAT FACADE PTY LTD
ACN: 165 302 250
ABN: 41 165 302 250 (External Link)
Registration date: 14/08/2013
Next review date: 14/08/2016
Status: External Administration
Type: Australian Proprietary Company, Limited By Shares
Locality of registered office: SYDNEY NSW 2000
Regulator: Australian Securities & Investments Commission

The details of Alukat Facade QLD Pty Ltd, still trading at this stage, are below:

Name: ALUKAT FACADE QLD PTY LTD
ACN: 601 431 529
ABN: 68 601 431 529 (External Link)
Registration date: 25/08/2014
Next review date: 25/08/2016
Status: Registered
Type: Australian Proprietary Company, Limited By Shares
Locality of registered office: SYDNEY NSW 2000
Regulator: Australian Securities & Investments Commission

The trading of the fourth Alukat entity will be posted here as soon as it is made known.

The Liquidator’s details for Alukat Facade Pty Ltd is below:

Liquidator Appointment

Construction Contracts

Contracts in the building & construction industry come in many and varied forms.

A construction contract can be a very simple oral agreement.

It could also be part written, and part oral. For example; you might email a quote to someone and they might pick up the phone and say go ahead.

Probably a safe minimum is a written quote and a written acceptance, be it sms text message or email or fax or hand delivered documents on letterheads / purchase orders, it’s good to have a written record of the agreement.

Organisations such as Master Builders Association (MBA) and Housing Industry Association (HIA) have basic contracts available for purchase at reasonable prices. These are a good basic agreement to use if there is nothing else available.

Larger projects will use quite substantial instruments of agreements such as AS4000, AS4902, AS2124 etc…

Government projects will use contracts such as the GC21.

Regardless of the form of the agreement made between two parties the law says that the agreed terms are binding. However it isn’t unusual for parties to recall the detail of the agreement differently resulting in a dispute. Hence the reason why a written record of the agreement is invaluable.

It is important to understand the key components of an agreement.

Who the parties to the contract are, correct and complete entity names inclusive of ABN’s and ACN’s if relevant. If an individual full name and identifier such as drivers licence is helpful.

Execution.

What the contract works / services are. Scope of works.

Type of contract, ie; fixed lump sum, schedule of rates, cost plus, etc…

Price, schedule of rates.

Commencement date and completion date.

Time for making claims.

Time for payment.

How to claim an extension of time in respect of the completion date when your work is delayed by others.

Liquidated damages.

How to claim a variation to the contract.

How to terminate the contract.

Completing the contract.

Retentions.