Search Results

As a response to the concerns about combustible cladding, the Queensland Government passed the Building and Construction Legislation (Non-Conforming Building Products -Chain of Responsibility and Other Matters) Amendment Act (NCBP Act) 2017 on 24 August. On 1 October 2018, the Building and other Legislation (Cladding) Amendment Regulation 2018 came into effect compelling building owners to complete the combustible cladding checklist to determine the type of material used on their building and whether any further assessment is required. The Queensland Government has announced new legislation to increase accountability and disciplinary action for the supply and use of non-conforming building products. What are non-conforming building products? Non-Conforming Building Products (NCBPs) are building products and materials that are not safe, not of acceptable quality, do not meet Australian standards, or are otherwise not fit for their intended purpose.  You cannot rely on product technical material. In some cases,  product technical material may contain false or misleading statements. This Australia-wide issue is very complex, and affects a plethora of industries including manufacturing, importation, retail and construction.  The NCBP Act applies to individuals or corporations who are "persons in the chain of responsibility" for building products, and this includes designers, manufacturers, importers or suppliers and installers.  The NCBP Act casts an important onus on senior executives deemed to be 'controlling minds' in the chain of responsibility. The NCBP Act puts a duty at each stage of the building product supply chain to: ensure that NCBP’s are not used; pass information about the suitability and use of a building product on to the next stage of the chain; notify the Queensland Building and Construction Commission (QBCC) of suspected non-conforming building products. Policed by QBCC The duty will be policed by the QBCC, which the NCBP Act has given powers to enter, inspect, examine and test building products.  The QBCC will be able to impose very heavy fines and other consequences for breaches, including cancellation of building licences and stop-work or recall orders . New duties of care and new offences WARNING - Two key changes in the NCPB Act and Regulations are the imposition of duties on building supply chain participants and the creation of new offences. The imposition of new duties There is now one primary duty, applicable to all participants in the supply chain, and a range of additional duties applying to specific to particular roles within the supply chain. Primary duty The primary duty is that each person involved in the chain of responsibility must ensure, insofar as reasonably practicable, that a product is not a NCBP. The scope of the primary duty is dependent upon where that duty falls in terms of the stage of the supply chain. Do not assume risks ignorance is no excuse in the eyes of the law and the QBCC is here to set punitive examples to illuminate illegal conduct.  Can your business afford  $130,550.00 in fines? Merlo Law is here to help you avoid serious criminal and punitive consequences in running your business. Get Advice now or pay the price later and be held out as a public example by the QBCC. Additional duties Additional duties now operate in conjunction with the overarching primary duty. The additional duties will provide further guidance as to how a person’s primary duty is to be discharged. These duties create the need for significant changes in your business – engage the best, engage John Merlo today to assist your business before you get caught by the new laws and regulations. New Offences The penalty unit value in Queensland is $130.55 (current from 1 July 2018). The amending legislation introduces a number of new offences into the QBCC Act.  These include: An offence, carrying a maximum of 1000 penalty points $130,550.00 - if a breach of any of the duties discussed occur; an offence, carrying a maximum of 1000 penalty points $130,550.00 - if representations are made about the intended use of the product does not comply with requirements for representations prescribed by regulations; and an offence, carrying a maximum of 50 penalty points - if a person in the chain of responsibility has a reasonable suspicion or knowledge that a building product is a non-conforming building product for an intended use and does not give notice to the Commission. Notifiable incidents An additional duty is imposed on all persons in the chain of responsibility to notify the QBCC of any ‘notifiable incident’.  Notifiable incidents include death, serious injury, or an incident that exposes any person to serious injury or illness. Breaching this reporting obligation carries a maximum penalty of 100 penalty units. This publication considers legal and technical issues in a general way. It is not intended to be legal advice. Any legal advice is qualified on the basis that the reader should immediately confirm the information relied upon with Merlo Law. We look forward to being of assistance.

Did you know work health and safety law in Queensland are a serious matter and now impose criminal liability for certain failures. Don’t ‘wait and see’ if you are investigated or fined… the time you take to respond could be the difference between, at best a small fine or a large fine, or at worst, a fine and jail time. Have you ever heard the expression “you never get a second chance to make a first impression”? I can help you make sure you get through what’s occurred the best way possible. Let’s look at the law and where you stand. A breach to work health and safety law in Queensland occurs when: A person conducting a business or undertaking (PCBU), or its senior officers' conduct, negligently causes the injury or death of a worker; or an action is taken that places any person at risk of injury, illness or death; steps are not taken to avoid a risk from occurring; and there is a failure to comply with regulatory requirements. Categories of offences The Work Health & Safety Act (WHS) sets up a ‘health and safety duty of care’. There are 4 categories of offences for failing to comply with a health and safety duty under the WHS Act depending on the degree of seriousness or liability involved. Industrial manslaughter The highest penalty under the WHS Act is for industrial manslaughter where a PCBU, or a senior officer, negligently causes the death of a worker. If a PCBU, or senior officer, commits the offence of industrial manslaughter, a maximum penalty of 20 years imprisonment for an individual or $10 million for a body corporate applies . Category 1 offence The next highest penalty possible under either the WHS Act or the Electrical Safety Act is for a category 1 offence. These offences occur where it is found that a duty holder recklessly exposed and so endangered a person to risk of death or serious injury. These offences will be prosecuted in the District Court. Corporations face up to to $3 million in fines. A person conducting a business or undertaking (PCBU) or an officer will face up to $600,000 in fines and 5 years jail time. A worker faces up to $300,000 in fines and 5 years time. Category 2 offence A category 2 offence is a failure to comply with a health and safety duty or electrical safety duty which exposes a person to a risk of death, serious injury or illness. Offences will be prosecuted in the Magistrates Court. Corporations face up to $1.5 million in fines. An Individual as a PCBU or an officer face fines of up to $300,000 A worker face fines of up to $150,000. Category 3 Offences A category 3 offence is a failure to comply with a health and safety duty or electrical safety duty. Offences will be prosecuted in the Magistrates Court. Corporations face up to $500,000 in fines. An Individual as a PCBU or an officer faces up to $100,000 in fines. A worker faces up to $50,000 in fines. On-the-spot fines An infringement notice, is an alternative to prosecuting alleged offenders directly through court. On-the-spot fines may be issued for work health and safety offences prescribed in the State Penalties Enforcement Regulation 2014. Both PCBUs and workers can be issued with on-the-spot fines. Examples of offences which can be issued with a fine include  failure to record a notifiable incident; failure to allow a health and safety representative to exercise powers or functions; failure to use/wear personal protective equipment (PPE) provided by PCBU in accordance with reasonable instruction information or training given by PCBU; allowing persons to carry out high risk work without noting written evidence that the worker has the relevant high risk work licence; failure to test electrical work; and failure to ensure electrical equipment was de-energised before carrying out electrical work. This publication considers legal and technical issues in a general way. It is not intended to be legal advice. Any legal advice is qualified on the basis that the reader should immediately confirm the information relied upon with Merlo Law. We look forward to being of assistance.

Did you know the Queensland Government has passed further amendments to the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (BIF Act) in an attempt to clarify how project bank accounts (PBAs) are to operate. Get your hand out of the cookie jar The amendments aim to further restrict a head contractor’s ability to access amounts in PBAs. Previously as drafted, Head contractors were able to contort the intent of the laws by relying on the fact that if an amount in the PBA was not due and owing, it was fair game. Head contractors will not be able to withdraw amounts from the general trust account in circumstances where: The head contractor is “liable to pay” any subcontractor amounts, which are amounts certified, stated in a payment schedule or assessed as payable (e.g. by the superintendent); Disputed fund account The money is tied up – possibly for years. Head contractors will not be able to withdraw any amount from the disputed funds account until after the conclusion of the period in which an appeal may be commenced or otherwise the end of the appeals process.  Once the laws are in place this will mean head contractor may be required to hold an amount in the disputed funds account for conceivably years – e.g. after the adjudication process, after application to set aside the adjudication decision, after any appeal, etc.). Further, the amendments provide that: Head contractors will be prohibited from withdrawing any amount from the retention trust account until after the expiry of the defects liability period, unless the withdrawal is: to make payment to the relevant subcontractor; by order of a court; or to make payment to another subcontractor engaged to correct the defects in relation to the first subcontractor’s defective work, subject  to the head contractor having an entitlement to pay itself the amount under the original subcontract to which that retention amount relates. Payment schedules – if you don’t have a good reason right now, you don’t have a good reason later Be warned – the proposed amendments stipulate that the time respondents have to issue a payment schedule will be reduced to the earlier of the period stated under the contract; or 15 business days after the payment claim is given to the respondent – this was previously 25 business days in the last amendments. Get help now The war in these areas is continually being amended and developed as the Commission trials and rolls out its provisions. Penalties are strict. In the midst of COVID19 crisis, You can expect to see rapid regulation in strict terms from a Commission which has already made it very clear that it intends to ‘take a broom to the construction industry’.   Don’t take a risk on incurring heavy penalties and loss of license. Get help immediately and contact Merlo Law.   This publication considers legal and technical issues in a general way. It is not intended to be legal advice. Any legal advice is qualified on the basis that the reader should immediately confirm the information relied upon with Merlo Law. We look forward to being of assistance.

Every moment you waste, could be the difference between a small fine or a large fine at best, and at worst a large fine and jail time. Have you ever heard the phrase “you never get a second chance to make a first impression?“. Well that is the case with the law. With proper help I can get you through your circumstances. On 6 October 2016, a milestone tragedy occurred which changed QLD legislation – seriously. Two workers were crushed to death by 28-tonnes of precast concrete panels during construction of a foul water drainage reservoir at the Eagle Farm Racecourse. During construction, a sewage pipe was used as a makeshift brace for the precast concrete panels and a ladder positioned against one of the slabs was the only escape route located inside the excavation. Authorities also identified that two workers designated as health and safety co-ordinators were not aware of their nominated roles. Work health and safety law in Queensland Work health and safety law in Queensland are a serious matter and now impose criminal liability for certain failures. A breach to work health and safety law in Queensland occurs when: a person conducting a business or undertaking (PCBU), or its senior officers' conduct, negligently causes the injury or death of a worker; or an action is taken that places any person at risk of injury, illness or death; steps are not taken to avoid a risk from occurring; and there is a failure to comply with regulatory requirements. Categories of offences The WHS Act sets up a ‘health and safety duty of care’. There are 4 categories of offences for failing to comply with a health and safety duty under the WHS Act depending on the degree of seriousness or liability involved. Industrial manslaughter The highest penalty under the WHS Act is for industrial manslaughter where a PCBU, or a senior officer, negligently causes the death of a worker. If a PCBU, or senior officer, commits the offence of industrial manslaughter, a maximum penalty of 20 years imprisonment for an individual or $10 million for a body corporate applies . In the Eagle farm tragedy, Principal contractor, Criscon was responsible for safety and management of the site, and after being charged with two counts of a category 1 offence (reckless conduct), Criscon elected to plead guilty to two counts of the lesser category 2 offence of failing to comply with a health and safety duty. In sentencing Criscon, the Magistrate found that despite a safe work method statement (SWMS) being in place the SWMS was not appropriate for the nature of the work and was not being implemented by the subcontractor. Criscon was fined $540,000, which was reduced to $405,000 for the early guilty plea, plus costs. Both Criscon’s site manager and director still face separate charges regarding individual breaches of their duties as officers. The manager of the subcontractor, Claudio D’Alessandro is facing separate criminal manslaughter charges in relation to the fatalities. Consequences and your next step This decision is a cold reminder that safety is everybody’s business and of what can happen principal contractors officers of a company, and subcontractors and employees for unsafe practices. This publication considers legal and technical issues in a general way. It is not intended to be legal advice. Any legal advice is qualified on the basis that the reader should immediately confirm the information relied upon with Merlo Law. We look forward to being of assistance.

The Legislature are preparing for surgery - in the 20 odd years since its inception, the Security of payment laws have ruptured and spread like a tumour throughout the various state jurisdictions causing confusion and inefficiencies. The ‘Murray Report’ of December 2017 made 86 recommendations to improve security of payment, including that Australia should implement a nationally consistent legislative model because of confusion and inefficiencies. In QLD the government commenced its new Building Industry Fairness (Security of Payment) Act 2017 (Qld) (BIF Act) on 17 December 2018). Meanwhile the New South Wales Government proposed further changes to its security of payment regime under the Building and Construction Industry Security of Payment Amendment Bill 2018 (NSW) (NSW Bill). Some time ago, in an effort to encourage subcontractors to use the Security of Payment regime, the NSW government decided to remove the requirement to endorse payment claims as being made under Security of Payment Act. The thought behind that was that head contractors were ‘refusing’ to hire ‘litigious’ subcontractors. Removing the need for subcontractors to endorse their payment claims supposedly addressed that bias. Despite emphasis that the changes are to provide greater payment protection for subcontractors, in a strange turnaround, the NSW government has reintroduced the requirement for subcontractors to endorse their payment claims. Other proposed reforms under the NSW Bill: Other proposed reforms under the NSW Bill include creating an entitlement for claimants to make: a payment claim at least once per month;  reducing the maximum time period for head contractors to pay subcontractors after receiving a payment claim from 30 business days to 20 business days; and creating the right for final payment claim after a contract is terminated. Watch out! the sheriff of Nottingham has the right to enter your castle at any time If you operate from your home you might like to be aware draconian incursions on your civil liberty are on the horizon with the NSW government increasing the compliance and enforcement powers of NSW Fair Trading so that an “authorised officer” can physically enter premises (yes even your home), and inspect documents - without a search warrant. Be very careful what you do and say The current penalty of up to 3 months imprisonment remain. Current fines are proposed to increase to from 200 penalty units to 1000 penalty units (which equates to $110,000) for serving a payment claim without a supporting statement which declares all subcontractors have been paid and providing a supporting statement knowing that the statement is false or misleading. What the? If you are in NSW, we recommend you keep your ear to the ground and invest in debtors insolvency insurance now because it appears liquidators will be explicitly excluded from serving payment claims or taking any action to enforce a payment claim. What now for QLD? It is clear that in the throws of the COVID19/corona Virus, the Commission will certainly move to tighten existing laws. This publication considers legal and technical issues in a general way. It is not intended to be legal advice. Any legal advice is qualified on the basis that the reader should immediately confirm the information relied upon with Merlo Law. We look forward to being of assistance.

From November 2017, the Building Industry Fairness (Security of Payment) Act 2017 (BIF Act) introduced reforms to ensure Queenslanders in the building and construction industry are paid for the work they do. The BIF Act repealed the Building and Construction Industry Payments Act 2004 (BCIPA) and the Subcontractors Charges Act 1974 on 17 December 2018. On 17 December 2018, BIF Act provisions commenced that relate to: Requirements for retention monies and security (to be included in the Queensland Building and Construction Commission Act 1991). Subcontractors’ charges Progress payments Adjudication What this means for you These changes affect payments for construction work and supply of related goods and services in Queensland. New provisions were also introduced to the Queensland Building and Construction Commission Act 1991 via the BIF Act from 17 December 2018. These introduce new penalties for withholding retentions past the end of the defects liability period without a reasonable excuse. The current situation The BIF Act has changed the requirements for payment claims, subcontractors’ charges and adjudication. The BIF Act adopts the same framework and principles of BCIPA but still uses the definitions of ‘construction work’ and the ‘supply of related goods and services’. However, the requirements of the legislation now apply to all payment claims In other words a contractor no longer has to endorse a payment claim with the wording of the Act. The current situation is more a streamlined adjudication process where disputes arise. This is good news if you are a contractor chasing money, but is even more difficult if you are a contractor disputing payment of money as timelines are now even more constricted. Summary All claims for payment (Including actual or merely alleged entitlement) are the subject of the BIF Act - Whether the claim says so on its face or not. If not paying a claim in full by the due date, a payment schedule needs to be issued within 15 business days from receiving a payment claim (Unless required earlier under your contract). All claims for payment must still be paid on time. Strict penalties now apply. You should be aware that these requirements apply to all payment claims, not only those issued from 17 December 2018, But also these requirements apply to existing contracts entered into before the BIF Act was in force. This publication considers legal and technical issues in a general way. It is not intended to be legal advice. Any legal advice is qualified on the basis that the reader should immediately confirm the information relied upon with Merlo Law. We look forward to being of assistance.

What’s a default judgement? A court will issue a default judgement where a defendant has failed to file a defence.  Once the plaintiff/creditor obtains a default judgement, they will then have twelve years to enforce payment of the judgement debt. It will go on your credit record too. No surprises there. But did you know that if you don’t address the situation enforcement action could be taken against you without your notice? Imagine if payments to you were suddenly redirected to someone else without your knowing? Or what if someone turned up to take your possessions? What can I do for you? Don’t standby and let your credit record be destroyed or watch as your possessions are repossessed. Call me today, let’s get started! Step 1: Lets confirm details of the default judgement You will likely not have the full details of the case and default judgement against you, for example because you only fo​und out about it when the sheriff came to your place or money was missing from your bank account. Step 2: Let’s get the forms ready Step 3: I’ll need to prepare an application and affidavit which will at the least: ​​ Ask the court to set aside the default judgement and allow you to file a defence Ask the court to stay enforcement until at least the hearing of your motion State how costs should be dealt with. The affidavit will: Explain why a defence was not filed; Explain any delay in applying to set aside the default judgement; Contain details of your defence to the claim; You need to sign the affidavit  Step 4: I will file your forms Your application and the affidavit will need to be filed at the same court where the statement of claim was filed and the default judgement entered. There may be filing fees too.  Step 5: we will need to file the original plus a copy of the application and affidavit.  The court will keep the original and give us back a stamped copy. I will then need to make a copy of the documents and serve them on the plaintiff or their lawyer. Step 6: The court will give you a hearing date.  Step 7: We will go to court. At the hearing the registrar or magistrate will consider your application and affidavit and any submissions from you and the plaintiff.  If the court did not set aside the default judgement, you may be able to apply to have that refusal reviewed. You must do this within 28 days of the decision.  If we win If the court sets aside the default judgement, the registrar will make orders for you to file a defence within a certain time (usually within 14 days). If you do not follow these orders the plaintiff can apply to have the judgement re-entered.  ​Costs If the court finds that the failure to file a defence within 28 days is your own fault, the court will normally order you to pay the plaintiff's 'costs thrown away'. This is the cost of them attending the hearing, as well as the cost of any enforcement action they may have already taken.  If you are able to prove that you did not receive the statement of claim or that the plaintiff did not serve it properly, the plaintiff may be ordered to pay your costs. The court may instead order: ​'costs in the cause'. This means that the costs of the application to set aside judgement will be dealt with at the end of the case. 'each party bear their own costs'. This means that you and the plaintiff each have to pay your own costs. The court may also order a party to pay any disbursements as well as professional costs. Other types of cost towards can also be made in certain circumstances. Don’t delay! Time is of the essence! Call me today to discuss. This publication considers legal and technical issues in a general way. It is not intended to be legal advice. Any legal advice is qualified on the basis that the reader should immediately confirm the information relied upon with Merlo Law. We look forward to being of assistance.

The essential answer to that question is that depends on what state you live in. Firstly, what is economic loss? The term economic loss encompasses any situation where an individual or organisation losses money. Financial loss is a visible loss that can be identified through legitimate financial statements. This type of damage is not from a property damage, or any other type of non-economic damages that cannot be proven, it has to be a tangible loss of assets. What is a latent defect? Basically a latent defect is one which is a hidden or yet untriggered defect in a product, premises, or title to real property that cannot be discovered by observation or a reasonably careful inspection. Contracts go some ways toward expanding and limiting that definition however. What’s the problem? The rule against economic loss. Defects in buildings can also pose significant problems for you as a subsequent owner who take on a building without having contracted the relevant work. This is because you would have no claim in contract, unless separate rights or a warranty are conferred on on you. The general rule is that damage to a building which is attributable to a defect in the structure or fixtures of that building is not recoverable – such damage is known as 'pure economic loss' as the only loss sustained is that you just paid too much for the property. In 2011 the Court of Appeal clarified that, ordinarily, contractors will not owe duties not to cause pure economic loss. Therefore they will not owe such duties to subsequent owners. Limited exceptions may apply if the new owner is able to show that the contractor had assumed responsibility for that loss through the provision of skilled advice or services or at least some design responsibility, and that the owner had relied on that advice or services or design. Where do you stand? Well, one case made it through two appeals all the way to the High Court of Australia. Brookfield Multiplex v Owners Corporation Strata Plan 61288 & Anor [2014] HCA 36 (You can read about it below), but here’s what it said. On the question as to whether a Builder owed a person a duty to exercise reasonable care in constructing the building to avoid causing the corporations suffering pure economic loss from latent defects: The decision has extinguished any rights against builders in respect of latent defects to common property for a large number of body corporates in Queensland. What can I do for you? Get in touch with me. I can assist you with the contractual allocation of risk and searches in several ways. As a developer, we need to ensure that all your construction contracts contain express warranties to properly address defective works in the event that they arise. You may wish to consider extending the liability period, which is generally 12 months from the date of practical completion, to a more significant time frame. If you are an owner or body corporate, Queensland legislation provides some protection in the form of automatically subrogated rights of under a construction contract regarding works affecting the common property or land that becomes a lot in a community titles scheme.  This means that body corporates and owners have some rights against a builder as if they were the developer. However, it may be difficult for owners and body corporates to enforce these rights.  That is because where owners and body corporates are not a party to the construction contract they may not have copies of the relevant documents and so an understanding of the rights and limitation periods contained in those documents.   Time will be of the essence! Body corporates and owners should not delay investigating any possible claim that may exist. Apartment owners may also be able to claim via the Queensland Home Warranty Scheme or the Australian Consumer Law.   Any such right to claim only arises in very limited circumstances if you an owner you will need to seek legal advice about any possible rights and remedies that are available – yesterday! When purchasing an apartment off the plan Protect yourself by researching the builder and the developer.  This may reveal previous issues with building defects on the QBCC registers, you may find owners unhappy with a builder or developers work.   When purchasing an existing apartment, you should conduct a thorough body corporate records search.   These searches will provide minutes of annual general meetings and any information on the sinking fund which might reveal any planned or recent capital works projects.   This may provide some insight into whether or not latent defects have been found and the potential cost of  repairing the defects.   The Brookfield case The decision of Brookfield Multiplex v Owners Corporation Strata Plan 61288 & Anor (‘Brookfield’) involved a dispute regarding latent building defects in the common property of a set of apartments in Sydney. A dispute arose between the appellant who was the builder, and the respondent who was the owners’ corporation in 2012. The Decision at first instance At first instance the Supreme Court of New south Wales held the appellant did not owe a duty of care to prevent reasonably foreseeable economic loss from the latent defects in the common property caused by defective design or construction. The court recognised and upheld the comprehensive negotiation between the developer and the appellant concerning the allocation of contractual rights. Further, the judge refused to identify or impose any ‘novel duty of care’ between the appellant and the respondent where one was not indicated by the contract.  It was also held that to rule in favour of such a premise would result in venturing into an area which was not provided for by the legislation. His honour therefore held for the appellant in the action. The Decision on appeal to the NSW Court of Appeal The case subsequently went on appeal to the NSW Court of Appeal where the decision at first instance was overturned.  The Court of Appeal rejected the proposition that the contract between the parties by contract and negotiations comprehensively dealt with the imposition of a duty of care to an extent which left no room for imposition of duties in tort.  The Court found a duty, however they limited it to building defects which were structural, and which constituted a danger to persons or property or made the apartments uninhabitable.  The Decision on appeal to the High Court The issue raised in the appeal to the High Court was whether Brookfield owed the corporation a duty to exercise reasonable care in constructing the building so as to avoid causing the corporation to suffer pure economic loss from latent defects.  The High Court overturned the decision from the Court of Appeal. The High Court unanimously found that on the facts, the appellant did not owe a duty of care to the respondent. In so doing, the judges examined the contract between the appellant and the developer and identified that the developer was adequately protected as the contract contained numerous stringent clauses which allocated liability for building defects. Thus, the court stated that to impose any duty of care would improperly modify the careful allocation of risk within the contract. It was for the legislature to act in order to protect subsequent purchasers. While both New South Wales and Victoria have enacted such legislation, Queensland has not. Someone remind me what the QBCC does again?? Thus, in Queensland, apartment owners are not protected from latent building defects and have very limited circumstances where a builder will be liable for repair costs arising as a result of latent defects in a building. The effect of the decision The decision has extinguished almost any rights against builders in respect of latent defects to common property for a large number of body corporates in Queensland. It has likely ensured that new apartment blocks builds will have contracts similar to those analysed in the Brookfield case.  This will ensure that liability is allocated so as to prevent apartment owners having any rights against builders outside those allocated within the contract. This publication considers legal and technical issues in a general way. It is not intended to be legal advice. Any legal advice is qualified on the basis that the reader should immediately confirm the information relied upon with Merlo Law. We look forward to being of assistance.

It’s no secret how common it is in these days for businesses and individuals to negotiate and conclude deals via electronic communication such as e-mail and other forms of messaging.  The speed and casual ease in which emails can be exchanged is their attraction. Matters can progress much more quickly and the issues drilled down on faster using this method. The down side is the danger emails represent when they are used for contractual negotiations, and why parties frequently find themselves in binding contracts unintentionally. Often, the finer details of contracts and other agreements may be discussed in a series of emails. The problem is very much a double edged sword. Both in the sense that if you did not intend to enter into a binding contract you may find yourself caught, and if you did intend to enter into a binding contract, you may find that contract is unenforceable for a wide variety of reasons. If you have started to negotiate by email but don’t want your emails to form a binding contract, then you should clearly state in your emails that “no binding contract is formed unless and until a formal contract has been executed”. But will that still protect you? The answer is no. Not necessarily. But it’s a good start. If you don’t expressly state words to that effect, a Court is unlikely to imply in your emails, that you intended to be legally bound. In the case of Stellard Pty Ltd v North Queensland Fuel Pty Ltd [2015] QSC 119 a binding contract for the sale of land was held as made by email.  Incredibly, both the offer email and the email accepting the offer referred to the offer being “subject to contract” and “subject to execution“. Yet this held was not enough to make the offer conditional. The Court found that the broader context of the emails revealed that the parties had intended to be bound immediately. The Court was also satisfied that the emails met the requirement for a contract for the sale of land under the Electronic Transactions (Queensland) Act 2001(Qld). There is another important take-home from this case, and that is that you should be aware that a document which is labelled as something may not necessarily be found to be that document. For example what you may think is merely a memorandum of understanding, can also be a binding contract and held against you. The Stellard decision was very similar to a decision by the Western Australian Court of Appeal in Vantage Systems Pty Ltd v Priolo Corporation Pty Ltd [2015] WASCA 21. In this case, it was held that a binding contract to lease commercial premises had been made by a series of emails, despite the emails referring to the offer as being “subject to formal approval“.  In NSW too, the Supreme Court found a binding settlement agreement had been made by email between lawyers in Universal Music Australia Pty Limited v Pavlovic [2015] NSWSC 791. The Court held that a lawyer’s email stating that the client would sign the settlement deed, combined with both communications and conduct, was enough to form a binding contract.  Although it was intended that a deed would be signed, the Court refused to imply from the emails that no binding agreement would be created until the deed was actually signed. You can see just how much of a problem this is and you can see a pattern as to how the courts are increasingly treating these matters. Key Takeaways The cases highlight that the Court will assess whether parties intended to form legal relations and a binding agreement which means that it is not the subjective beliefs of the parties about their obligations which govern the contractual relations. And the mere fact that parties anticipate or intend that a formal document will be completed at a later stage does not prevent the informal negotiations from becoming binding. I think the message is clear!  If you believe you have entered into a contract by a series of emails or other correspondence, you should call me immediately, either to enforce your rights or to protect them. Don’t forget time is of the essence as the longer you wait you may not be able to enforce your rights or you may be able to have accepted the other parties conduct and denied your rights. This publication considers legal and technical issues in a general way. It is not intended to be legal advice. Any legal advice is qualified on the basis that the reader should immediately confirm the information relied upon with Merlo Law. We look forward to being of assistance.

Saipem Australia Pty Ltd v GLNG Operations Pty Ltd [2017] QSC 294 This case considered the operation of section 67J of the Queensland Building and Construction Commission Act 1991 (Qld) (QBCCA). The law Section 67J of the QBCCA provided that a party to a building contract can recover a security or retention amount owed under the contract, provided they give written notice of their intention to do so etc.  Subsection 2 qualified that in order to be compliant, the notice must be given within 28 days after the contracting party becomes aware, or ought to reasonably become aware, of their right to retain or obtain the amount owed. Section 67E of the QBCCA rendered any term of a building contract which does not comply with section 67J unenforceable. The Facts Saipem and GLNG Operations entered into an agreement for the construction of a gas transmission pipeline.  Saipem advised GLNG operations they were experiencing cash flow problems. In order to assist, GLNG Operations agreed to certain advance payments, ‘Milestone Advance Payments’. The contract provided for two bonus payments if the work was completed within a specific time window (the ‘bonus window’). The contact expressly outlined that GLNG Operations was able to set off or deduct any amount due payable to Saipem under or in relation to the Contract or the Works, in respect of the Milestone Advance Payments. Clause 60.5 required Saipem to provide bank guarantees to GLNG Operations for an amount equal to the Milestone Advance Payments (“Milestone Advance Security”). The Dispute After completion the work, a dispute arose between the parties regarding the extension of the bonus window. GLNG Operations called on repayment of the balance of the Milestone Advance Payments, and Saipem sought to set off its liability to repay against its asserted entitlement to the bonus payments. Saipem applied to court to prevent GLNG Operations from calling on the milestone payment security.  GLNG Operations argued that section 67J should be read down in order to be limited to only payments under building contracts for building work.  The court rejected the proposition that section 67J of the QBCCA precluded reliance on the Milestone Advance Security. The court saw no reason to limit the provision, noting at [36] that “a building contract need not be a contract which is exclusively concerned with building work”. Complex arguments ensued. The Decision The Court noted that Saipem did have a case for equitable set off.  In determining the application for the injunction the Judge addressed the question of the balance of convenience and held that bank guarantees had the commercial purpose of being regarded equivalent to cash.  The court referred to the decision in Fletcher Construction Australia Ltd v Varnsdorf Pty Ltd emphasising that the purpose of bank guarantees in contracts was to provide security for any valid claim against the contractor, and to allocate risk between the parties pending the resolution of any dispute against them. This Judge outlined the general rule that a court will not enjoin the issuer of a performance guarantee or bond noting that these principles in conjunction with the commercial background of the contract, absent clear wording, do not allow for a construction inconsistent with an agreed allocation of risk in a contract.  Thus, in light of the parties’ agreement on the allocation of risk regarding who would be out of pocket in the case of a dispute, his honour held that the balance of convenience lay in GLNG Operations favour, and the injunction was not granted. Effect of the decision This decision confirms the highly regarded nature of bank guarantees by the courts. It provides authority for the the proposition that the courts will not allocate risk in a contractual dispute in a manner which is adverse to that as represented in the contract. This publication considers legal and technical issues in a general way. It is not intended to be legal advice. Any legal advice is qualified on the basis that the reader should immediately confirm the information relied upon with Merlo Law. We look forward to being of assistance.

Did you know that because of the COVID19/Coronavirus The Federal government has taken urgent steps to assist construction companies and other persons from insolvency? The federal government has taken the action to protect construction companies and other people at risk of insolvency given the current crisis. The Federal Government is temporarily increasing the current minimum threshold for creditors issuing a statutory demand on a company under the Corporations Act 2001 from $2,000 to $20,000 and for bankruptcy notices under the Bankruptcy Act 1966 , $5000 to 20,000. This will apply for six months. The statutory time frame for a company to respond to a statutory demand will be extended temporarily from 21 days to six months. This will apply for six months. The time a debtor has to respond to a bankruptcy notice will be temporarily increased from 21 days to six months. The extension will give a debtor more time to consider repayment arrangements before they could be forced into bankruptcy. This will apply for six months. When a debtor declares an intention to enter voluntary bankruptcy by making a declaration of intention to present a debtor’s petition there is a period of protection when unsecured creditors cannot take further action to recover debts. This period will be temporarily extended from 21 days to six months. This will give debtors more time to consider the options that are best for them. This will apply for six months. Important note Remember debt collection is governed by state, and so until a state government intervenes, creditors will still have the right to enforce debt against companies or individuals through the courts. This publication considers legal and technical issues in a general way. It is not intended to be legal advice. Any legal advice is qualified on the basis that the reader should immediately confirm the information relied upon with Merlo Law. We look forward to being of assistance.

Did you know that the Building Industry Fairness Act (QLD) 2017(BIF Act) repealed the Building Construction Industry (security of payments) Act (QLD) 2004? Amongst other key changes made the defects liability period notice for building and construction work was changed. The BIF Act also made changes to the QBCC Act in relation to retention monies or security held under a building contract. The BIF Act introduces: A statutory default defects liability period of 12 months from the date of practical completion, where a contract doesn’t provide a defects liability period; Penalties for not paying retention or security back to a contractor where there is no reasonable excuse at the end of the defects liability period; A requirement that a person withholding a retention under a building contract must provide a notice in the approved form notifying of the end of the defects liability period to the person whom a retention or security is being with held from; Though this doesn’t apply to a contracting party who enters into a building contract as a principal. This publication considers legal and technical issues in a general way. It is not intended to be legal advice. Any legal advice is qualified on the basis that the reader should immediately confirm the information relied upon with Merlo Law. We look forward to being of assistance.