Are you a building contractor who hasn't been paid?

It happens, doesn’t it!?

“TOO often” - is what you are probably saying - especially if you have a current unpaid invoice, outstanding stage or payment.

AND

“TOO easy” - for the other party to basically say the work is defective or raise a dispute or just not pay.

I get it.

But what to do!?

You have pretty much have 3 options.

AND choosing 1 depends on what has happened…

1. Do Nothing. Otherwise known as “forgetaboutit’ It looks like this… or this eventually for small debts where the time and money spent is not worth it.

BUT if it is a meaningful debt it is worth taking action and you need to demonstrate a reputation in the industry that if you don’t get paid there are repercussions…

2. Haggle. Also known as negotiate. Chase…etc.

Often this falls on deaf ears hence the need for action.

After engaging a lawyer, the process of negotiation will still arise, it can be a viable option but in my experience when another party will not pay, YOU need to take action first and promptly.

3. Sue (basically enter a legal process)

For building debts there are three realistic options:

A. PAYMENT CLAIM AND ADJUDICATION

Great option, can be a complicated process for small contractors but is worthwhile engaging with.

Cons: It isn’t amazingly quick, but it can be cheaper and simpler than litigation but you may need to go to court anyway to have an adjudication registered as a judgment debt. There are various issues including excluded amounts, this is going to improve with the new legislation (keep an eye out). But you still you need to understand how to submit a proper payment claim and follow a process.

Pros: Viable to avoid court and genuinely get paid. It will improve with new legislation (keep an eye out for our further advice).

B. STATUTORY DEMAND

Summary: a great tool but not for all situations.

Need: A corporation (not individual) who has not paid.

Don’t want: A genuine dispute over the debt, as this will not assist.

Conclusion: In my experience, this can be a useful tool but many debts are disputed for some arguably valid reason and suits certain circumstances.

C. COMMENCE LEGAL PROCEEDINGS AT COURT OR VCAT

Summary: You can commence proceedings at VCAT if you have a domestic building dispute (ie builder against owner where a major domestic building contract exists) or Court in the absence of this, eg. a contractor pursuing debt in various circumstances.

Why do I like this option? It is flexible. It’s downside is entering into a potentially costly process but for the same reason suing, as an action speaks volumes. It says I mean business and at Magistrates Court of Victoria you can be on for mediation at minimal cost very quick. You need a lawyer who knows the process, how to keep the statement of claim to the point and control recovery costs.

Bad debts. Have a plan.

This article is a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Tagged as:

• building disputes
• litigation
• building law