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Resolving Building Contract Disputes - Erina Lawyers

How to Resolve Building Contract Disputes in NSW and QLD

By Litigation

Unfortunately disputes arising from domestic building contracts are a common story. Just ask anyone who has built or renovated a house.

While most disputes can be resolved amicably either before or during mediation on the areas of disagreement, this is not always the case. In both NSW and Queensland there are well-established dispute resolution processes managed initially through the NSW Department of Fair Trading and, in Queensland, the Queensland Building and Construction Commission (QBCC).

In both states the advice and guidance of Felicio Law Firm should be sought before you enter dispute resolution.

Of course, using a state-run dispute resolution services does not prevent either of the parties from seeking legal advice or taking independent legal action in a contractual dispute… but you should definitely seek expert legal advice if this is your preferred course of action.

Terminating a contract for breach requires a number of important procedural steps to be taken in order for it to take effect. There are potentially serious consequences for a party who wrongly terminates a building contract.

Common disputes in regard to domestic building contracts include disagreements about the contract price, the contract clauses relating to variations (of fixtures, or plans, for e.g.), extensions of time, implied warranties (defective work, non-completion, etc) and more.

Contract dispute resolution in NSW

In any dispute with a contractor, it is best to first raise the issue directly with them to see if the area of contention can be resolved to mutual satisfaction.

If that is not possible, NSW Fair Trading provides a dispute resolution service through its Home Building Service. This service aims to provide early intervention to avoid an escalation of the dispute. Statistics on the effectiveness of the service show that over 70 per cent of disputes over building contracts are resolved at the initial mediation or inspection stage.

This process can be commenced by the homeowner/consumer, or the contractor, by a formal request to Fair Trading. If the contractor initiates the request, the homeowner must agree to enter into dispute resolution but if the consumer lodges a complaint, the trader does not need to agree to resolving the dispute (though is strongly encouraged to do so).

Resolution of disputes relies on the work of experienced, trade-qualified building inspectors located throughout NSW who will provide an opinion on whether work performed under a contract is defective or incomplete.

This process may be conducted in the presence of the homeowner and contractor on site, or through inspection of material submitted by both parties combined with phone interviews. If the issue in contention can be resolved, the inspector will compile a complaint investigation report detailing what actions have been agreed upon and what each party has to do.

Where the inspector is satisfied the contractor bears responsibility for defective or incomplete work, a rectification order is issued directing the trader to rectify or complete the work by a due date. Should work not be fixed by the nominated date, the builder will be breach of the Home Building Act 1989.

If on the balance of probabilities the inspector is not satisfied that fault for the dispute solely resides with the contractor, a homeowner can choose to lodge an application with the NSW Civil and Administrative Tribunal (NCAT) to have the complaint heard and determined. Expert legal advice should be sought at this stage.

Statutory warranties under the Home Building Act apply for six years for major defects and two years for all other defects from the date of the completion of home building work. A claim must be lodged with the NCAT within these periods in order for it to deal with the issue.

Resolution of building disputes in Queensland

In Queensland the QBCC provides an Early Dispute Resolution (EDR) Service provided your building contract is not completed or has been terminated. A complaint before a contract has been completed may relate to defective or incomplete building work, or an issue about the contract itself. This service is only available for domestic building contracts worth $3,300 or more.

The aim of the EDR service is to facilitate a speedy resolution of the issue in dispute. Similar to the NSW process, the QBCC will rely on a building inspector to make a visual inspection of a property if work is alleged to be defective or incomplete under the terms of the contract, and make a decision as to what action is required. This may include issuing a Direction to Rectify to the contractor.

The QBCC can help parties reach agreements when contractual disputes arise (progress payments, delays, defective work, for e.g.) but it cannot make orders about a contract, nor force a party to pay or refund monies, or comply with any agreement the parties may reach.

Instead, for enforcement action or in the case of termination of the contract, parties need to take the dispute to the Queensland Civil and Administrative Tribunal (QCAT). In most cases, applications to QCAT need to demonstrate that the parties have tried to achieve a resolution through the QCCB EDR process.

QCAT exercises jurisdiction over most legal disputes involving domestic building contracts in Queensland, including commercial building disputes involving work of a value up to $50,000.

Before initiating legal action in QCAT, the parties to the contract are encouraged to seek advice from a legal representative with experience and expertise in Queensland building legislation, such as Felicio Law Firm.

The importance of good legal advice

Building contracts usually involve significant sums of money and for that reason, emotions can run high when there is disagreement between a homeowner and a building contractor.

But these emotions need to be kept in check. An owner’s inclination to terminate a contract and find new builders can have very detrimental consequences if the document is incorrectly terminated under the terms of the contract.

If you have questions or concerns about how to resolve a dispute about a building contract, contact the professionals with extensive experience in NSW and Queensland building contracts, Felicio Law Firm. Call us today on (02) 4365 4249.

debt recovery in NSW

What You Need to Know About Debt Recovery in New South Wales

By Business Law, Litigation

There are few more frustrating experiences for a company than chasing debts incurred by clients and customers. That frustration is compounded by how much time and money it can take to recover outstanding amounts owed to the business.

While many creditors are inclined to immediately threaten court action to enforce collection of what is owed, this course can prove costly and time-consuming, and should always be seen as a last resort.

Upfront communication with the debtor, payment plans, alternative dispute resolution and a letter of demand are all steps that could be taken to try and recover the debt before the matter needs to proceed to court. Below is some more detail on methods of debt recovery in NSW.

Preliminary methods of debt recovery

Ideally some honest communication with the debtor via phone, email or other means can resolve the issue. This is a process of investigation as to why the debt has not been paid and what is possible – such as instalments, a downpayment or some other payment plan – in order for the debtor to make headway in resolving the issue.

Should this means be unsuccessful, or the results uncertain, the parties might use alternative dispute resolution (ADR) as a way to reach agreement on debt repayment. So long as both parties are amenable, an independent third party can manage negotiations between them to find a mutual agreement on how to resolve the debt.

If ADR fails to recover the debt, most companies will proceed to a letter of demand. In general, this should be drafted after consulting with a lawyer experienced in debt recovery, and constitutes a formal request for payment which will detail the amount owing; the deadline for payment; and the consequences if payment is not forthcoming, including progressing to legal proceedings to recover the debt.

The court process for debt recovery

If the terms set out in the letter of demand are ignored, legal action can commence. A creditor must file a Statement of Claim with the relevant court in order to begin the legal process of debt recovery.

The size of the debt and its nature (business-related, personal, etc.) will determine which court hears the matter and also what the process will eventually cost.

The path to resolution is also complicated when a debtor raises a defence as to why they haven’t paid the debt. When this happens both parties will be required to submit evidence and attend a hearing in court.

Where a debtor does not file a defence, the creditor can apply for a default judgment where the court can order the debtor to pay back the money – known as a ‘judgment debt’ – without a hearing. Once ordered, a judgment debt can empower a creditor to take further enforcement action.

Creditors can begin enforcement proceedings at any time up to 12 years from the judgment date where debtors ignore orders of the court.

Types of enforcement

A creditor can seek court orders for a number of different ways to enforce debt recovery. These include:

  • Garnishee order: this orders a third party who holds money on behalf of the debtor, such as a bank, or someone who owes money to the debtor, to have money deducted and paid towards the debt amount.
  • Writ of execution: an order by which the sheriff’s office can seize and sell property of the debtor to pay off the creditor.
  • Writ for possession of property: directs the sheriff’s office to seize and sell property of the debtor in order to pay the creditor.

Additionally, when the debt is over $5,000 in NSW , a creditor may ask the court to declare the debtor bankrupt. Doing so may result in the debtor surrendering control of their money and other assets to a trustee. The trustee will then try to resolve the bankrupt’s debts.

Where a debtor is a company and the debt is over $2,000, a creditor may issue a statutory demand under section 459E of the Corporations Act 2001 (Cth) which requires the debtor to pay the debt within 21 days. This demand can be made with or without a judgment debt but it should be noted that to do so without may see the debtor challenge the demand on the basis that the debt is in dispute.

A debtor who fails to comply with a statutory demand leaves itself open to a creditor commencing proceedings to find it insolvent. Conversely, should the debtor have limited or no assets, this process may see the creditor never recovering the debt.

In conclusion

The various steps in trying to recover a debt can be complex and consume a lot of valuable company time. Moreover, different strategies apply depending on the amount and type of debt, and different time limits can also apply.

If you need advice on a debt recovery matter, contact our Central Coast Lawyers today on (02) 4365 4249 for an expert assessment of your situation and how we can achieve your desired outcome in a prompt and cost-efficient fashion.

Litigation Guardians

Litigation Guardians – When Is It Appropriate?

By Estate Planning, Litigation

One of the most common misconceptions about hiring a lawyer is that he or she will be solely responsible for making all of the decisions about your case both before and during any litigation.

It is true that your lawyer is legally and ethically obligated to provide the best possible legal advice and act in your best interest but provided you are making sound decisions based on the information he or she provides, your lawyer must also follow your instructions.

But what happens if you aren’t capable of telling your lawyer what to do? If you’re incapable of doing so because you’re under 18 years of age or disabled, the court will appoint someone called a litigation guardian to act on your behalf. In other words, this is someone who will effectively ‘step into your shoes’ to assess your best interests and instruct your lawyer accordingly.

To be selected as a litigation guardian, someone must:

  • be an adult;
  • demonstrate that he or she does not have any interest in the case that is opposed or potentially harmful to the interest of the person in need of his or her services;
  • be able to act fairly and competently;
  • consent to being a litigation guardian under applicable laws.

In some cases, relatives or other concerned parties will ask a lawyer to act as a litigation guardian. This is because a knowledgeable, experienced lawyer can act with a certain degree of objectivity and professionalism.

More often than not, the litigation guardian is a relative, friend or caregiver.  Barring that,  the court may select someone who does not personally know the person requiring a litigation guardian. In either case, the person chosen to fill this role must become familiar with the person’s situation and issue instructions that reflect their charge’s best interests.

Litigation guardians are generally appointed in the following types of cases:

  • Personal injury;
  • a criminal compensation application;
  • various matters related to Wills;
  • family provision applications.

A litigation guardian must be selected to represent someone in any Federal Circuit Court matter in which that party is incapable of understanding the proceeding or its potential consequences; or is incapable of fulfilling his or her legal obligations. Applicable court rules dictate that a minor must have a litigation guardian unless the court orders otherwise.

In accordance with Family Law Rules, a litigation guardian in the Family Court is known as a ‘case guardian’. In any Family Court matter a person who is legally classified as a child or is otherwise incapable of instructing his or her attorney, and/or fulfilling his or her legal obligations, must have a case guardian in order to initiate, continue, respond to, or intervene in proceedings. The only exception to this rule is if the court finds that the child not only comprehends the nature and possible consequences of the case, but can also make certain decisions and meet his or her legal obligations.

There are several methods for appointment. Someone can simply apply to be appointed a litigation guardian or case  guardian. In certain circumstances, the court may ask the Attorney-General to nominate a litigation guardian or case guardian. The court may also make its own motion for appointment of a litigation guardian. It may also remove or replace a litigation guardian.

Once the appointment is finalised, the litigation or case guardian must advise all other relevant parties about it in writing.

A newly-selected litigation guardian or case guardian must also abide by applicable court rules. Furthermore, he or she must do everything ordinarily required of a party to the litigation. Finally, he or she may also do anything that the party to the litigation would ordinarily do for his or her own benefit.

As we have already noted, a litigation guardian must obtain proper legal advice. In this context, he or she must duly consider any proposals for resolution of the case, such as participation in alternative dispute resolution.

In accordance with a relevant court order, any costs incurred by the litigation guardian are paid by a party to the litigation or from the income or property of the person that he or she represents.

To learn more about how to be appointed as a litigation guardian or any related issues, contact our Central Coast lawyers today.