The Shocking Mistakes Sending Construction Contractors to Court

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Note: All views expressed in this podcast are Former Mayor Penny Taylors and do not represent the views of Subiaco Council itself.

 

Subiaco is a city suburb centred on the hustle and bustle of small boutiques and high end shopping, stylish cafe’s, wine bars and gastropubs. But beneath the hustle and bustle and liveliness of Subiaco is a huge amount of debilitations threatening the city’s liveliness. 

In this episode, I’m continuing my chat with the Former Mayor of Subiaco Penny Taylor. In part one, Penny revealed a massive amount of dysfunction in Subiaco Council. If you are yet to listen to part one, make sure you go back to listen that episode first. In part two, we will be diving deeper into the dysfunction. We talk about the impacts on Penny herself, and also on the community as a whole in Subiaco along with the potential solutions to change things for the better going forwards. 

 

In the ep you’ll find out about:

  1. Local Governments lack of code of conduct 
  2. The changes being made for Subiaco’s future
  3. The false dichotomy in Subiaco
  4. Why Subiaco Counsellors don’t take the blame for the current dysfunction

And more…

 

Discussion Points:

00:00 Introduction 

02:04 The false dichotomy in Subiaco

02:30 Business becoming marginal in Subiaco

06:43 The motion of no confidence meeting

13:41 Post football plan

19:15 Obstacles to getting things done

20:14 The impact of dysfunction to Subiaco itself 

15:53 The impact to Penny the Mayor

28:06 The impact to Penny the person

32:47 The obstacle and impacts on the people of Subi

34:57 Advice to the people of Subiaco/incoming Mayor 

 

About The Guest

Penny Taylor is the former Mayor to The City of Subiaco. Penny completed her studies as geologist at Sydney University before moving to the Pilbara to work in the mining industry. Throughout Penny’s career in mining she worked across project management and following mining she, together with her husband started a family business servicing the resources industry. Following this, Penny then moved to Perth to start a family. 

Penny’s move to government started when she worked as a counsellor at the town of Port Hedland and ran for the seat of Nedlands in the 2017 State Election. It was this experience in Port Hedland that promoted Penny to run for Mayor of Subiaco in 2017, a role which she held until 2021. 

Aside from Government, Penny is also involved in a number of organisations including the Juvenile Diabetes Research Foundation, UWA Little Athletics and Rosalie Primary School to name a few. 

Resources:

Click to watch on YouTube

Listen to the audio podcast here

Want a midweek date with a solemn face and black robes? Then as history tells us, you’ll need to follow these steps. If not – avoid, avoid, avoid.

Step 1: Fail to provide a reference date for a progress payment claim

We all want to be paid what we’re owed. But in the game of contracts, determining exactly what we’re owed is never as simple as it should be. 

In 2014, a contractor was working on an apartment complex. As per the relevant SOP Act, it had been submitting claims for progress payments on the eighth day of each month to cover work done up until the seventh. All well and good so far. 

But then, one month, the client gave the contractor notice that the remaining work would be taken away from the contractor. This was accepted by the contractor and the contract was terminated – on the 27th of the month. 

So the contractor submitted one last claim for work done up until the 27th, but didn’t put a reference date – after all, it wasn’t the eighth of the month, so the regular system couldn’t possibly apply here, right?

No deal, said the client. 

The case ended up at the High Court. Even though there wasn’t a reference date that could have applied to this situation, the High Court decided that:

  • The payment claim did not have a reference date, and so wasn’t valid; and,
  • There was nothing in the contract suggesting that the contractor could claim payment once the contract had been terminated, so future dates weren’t claimable.

So all the contractor got for its trouble was a whole lot of time and money down the drain. 

Avoid this by: not expecting a loophole – even if it seems fair. Instead, channel your inner Chicken Little and predict as many ways that things could go belly-up as you can. Not fun, but useful.

Next, get your contracts team to check that you’re not leaving yourself susceptible to loss if any of these scenarios should actually happen. 

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Step 2: Rely on a ‘pay when paid’ clause when getting a subby on board

A contractor engaged a subcontractor to perform part of an apartment construction project. 

As per the subcontract, the subby needed to provide security to the value of 5% of the subcontract sum. This wouldn’t be repaid in full until “365 days after date of CFO” – a year after the Certificate of Occupancy had been awarded to the contractor, along with any other required approvals as defined separately in the contractor’s contract. 

“When we get paid, we’ll pay you,” might make sense in theory. But in the eyes of the law (specifically the Building and Construction Industry Security of Payment Act 2009 (SA)), these so-called ‘pay when paid’ clauses are meaningless.

The subby made a payment claim in February, 2016 that was paid by the contractor – but not in full. The contractor had retained the 5%. The subby wasn’t happy.

The dispute went to Adjudication, then court, and continued to escalate. When it finally landed at the High Court, it was found that yes, that clause amounted to a ‘pay when paid’ provision, and yes, the subby deserved to be paid in full. 

For the contractor it was a long and expensive journey that could have been completely avoided, if it hadn’t been for one single mistake. 

Avoid this by:

Getting your contracts team to specifically ensure that there aren’t any provisions in the contract that could be interpreted as ‘pay when paid’ clauses. If push comes to shove, they just won’t hold up in court. 

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Step 3: Rush into Adjudication – and without the other party’s permission

Adjudication isn’t fun, but in the world of contracting, sometimes it’s the only way to get money in your bank account. But barrelling in to the process without doing due diligence? Not a great idea. 

In 2013, a contractor worked for a developer on a project in an NT shopping centre. One thing led to another, and the contractor decided that taking two disputes it had to adjudication was the best approach. Both disputes related to the same contract. 

But there was a problem. Under the relevant Act, adjudication of more than one dispute could not begin without consent of both parties. Unfortunately for the contractor, consent was not obtained at the necessary time. 

The developer wrote to the contractor explaining that it would not give consent. What followed was a lengthy back-and-forth. 

The contractor opted to withdraw both applications in order to submit new ones. 

Uh-oh. Another problem.

Under the Act, an adjudication application couldn’t be submitted for a dispute if the party had already submitted one for the same dispute. The situation ended up in the Northern Territory Supreme Court, with the second and third applications deemed invalid, and hope for adjudication all but lost.

Avoid this by:

Making sure you’re 100% ready before you press ‘go’ on any adjudication applications. Yes, time is money – but then again, so is money. 

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