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Recently there have been numerous construction companies shutting down building sites and going into external control, such as administration or liquidation. If you are a subcontractor or contractor that is owed money by a construction company, it is imperative to act quickly to secure progress payments owing. One option is for subcontractors to serve a subcontractor’s charge to secure monies owing by a construction company under the Building Industry Fairness (Security of Payments) Act 2017. Unfortunately, helping out a builder by accepting payment arrangements can have serious ramifications if the builder is later put into liquidation. In some instances, a liquidator might seek to have repaid anything received within the 6 month period prior to liquidation. We can assist with all aspects of recovery of monies owing under the Building Industry Fairness (Security of Payments) Act 2017. If you are owed money by a construction company, it is time to act now. Justin Mathews is a registered Adjudicator for building claims in Queensland and the Northern Territory and specializes in building and construction law. You can contact him by email justinm@qbmlaw.com.au or 5574 0111.

With mobile phone detection cameras deployed, a number of drivers complain that they have been penalised even when the phone is not in use. The penalty itself is contained in section 300 of the Transport Operations (Road Use Management – Road Rules) Regulation 2009 https://www.legislation.qld.gov.au/view/html/inforce/current/sl-2009-0194 – otherwise known as the “Queensland Road Rules”. Section 300 provides that a driver must not use a mobile phone while the vehicle is moving or is stationary but not parked.  The Transport Operations (Road Use Management) Act 1995 defines “Park” as meaning “incudes stop the vehicle and allow the vehicle to stay, whether or not the driver leaves the vehicle”.  There is a question over whether a vehicle has to be turned off to be “parked” in particular a manual vehicle. Also it should be noted that there are further restrictions for drivers on provisional licenses. In any event, section 300 clarifies that: There are further provisions in section 300 relevant to using the phone for the production of identification or to obtain or use money (eg in a drive through situation), or for uses of bicycles or personal mobility devices.  So is a smart watch a mobile phone? Unfortunately the regulation does not say what is or is not a mobile phone. It excludes a CB or two way radio, so it clearly isn’t intended to be limited to a traditional telephone. And a smart watch performs the same functions as a mobile phone – calls, texts, emails, media player. And it could be every bit as distracting. So if one then assumed that a smart watch is a mobile phone, would wearing one offend section 300? Well it isn’t in the driver’s hand. Is it “resting” on the driver’s body, if it is strapped to the wrist? If it is, then wearing a smart watch while driving would be using a mobile phone. Oddly enough, it has been reported that Queensland Road Rules do not deal with smart watches. that would not necessarily be consistent with a literal reading of section 300, and assumes that a smart watch is not a mobile phone. The miscellaneous provisions of the road rules (sections 288 to 300E) cover a number of other interesting situations including:

In February 2023, the Queensland Government announced proposed changes to Body Corporate legislation which would “make it easier for units to be redeveloped”.  The background is that, when looking to sell all units in a Body Corporate complex so that a developer can redevelop the site, it is common for there to be a small number of “hold outs” who will refuse to sell, whether at all or at a particular price. Hold outs may not necessarily be acting out of greed or opportunism.  Often, people are particularly happy with a modest apartment due to its location, and could not afford to buy elsewhere in a similar location.  Some people might have a sentimental attachment to a building that they are in, and it might meet their needs perfectly.  Further, there are a number of reasons why contracts usually proposed by developers for the assembly of a development site (ie for all of the units in a building) might not necessarily be attractive.  They generally contain terms which favour the developers.  Most will be subject to conditions such as the obtaining of satisfactory development approvals, which might not be achieved for a few years.  Then they would generally be conditional upon the settlement of all other lots, a condition which might fail for any number of reasons.   As a consequence, an offer to buy a unit by a developer – even if for a price premium – will often involve very unattractive terms, and lead to significant uncertainty such that the owner would be unable to plan for some years not knowing whether or not the contract would settle.  Furthermore, a price that was attractive at the time of the signing of the contract might be particularly unattractive one to three years later once all conditions are satisfied.  In addition, even if the contract is unconditional, many are entered into by special purpose vehicle companies with no assets meaning that if the contract fails and the buyer does not settle, the seller is left with no remedy. Against those matters, the Queensland Government is proposing to amend the Body Corporate legislation to allow (indirectly) for owners to be compelled to “sell”.  I’ve put the word “sell” in inverted commas because that is not what is proposed.  Instead, what would happen is that, if 75% of owners or more supported the termination of the scheme itself on the basis of an agreement that it is more financially viable for lot owners to terminate rather than to maintain or remediate the scheme, then the scheme is terminated which has the result that the freehold interests are lost, and the Body Corporate itself then is the owner of the entire site which it can sell.  This would have the result that (say) a scheme in which there had been 50 lots, all individually owned by different owners will have (post termination) 1 lot with those 50 owners all holding as tenants in common proportionate to their interest schedule lot entitlements.  If the owners could not agree on the sale, then an external trustee would have to be appointed to facilitate the sale, with the owners to eventually receive their share of the proceeds after expenses.  The proposed amendments (which have not been published) would need to deal with transparency and allow for remedies to be available to allow for an independent assessment of what is or is not financially viable.  The draft legislation is not yet available. For advice in relation to community titles scheme and contracts generally, please contact Peter Muller at peterm@qbmlaw.com.au, Jessica Murray at jessicam@qbmlaw.com.au or Megan Hanneman at meganh@qbmlaw.com.au

In this time in which the failure of building companies is quite frequent, it is good to be mindful of the presence of “charging clauses” in credit agreements.  Charging clauses quite often appear in the fine print of director’s guarantees given in favour of credit supply agreements.  As an example, a painter might operate his business through a company, in which he and his wife are directors.  The painting company might run a credit account with a supplier, which commonly will be supported by a director’s guarantee.  Frequently, the director’s guarantee appears fairly innocuous, and will be in very small print, or otherwise be written in a way which is disarming.  For example, the guarantee might have signing provision that says “signature of director” instead of “signature of guarantor” with the consequence that often guarantees are signed by directors who have not properly read the document and do not necessarily appreciate that they are giving a personal guarantee.  The issue however goes further because many of these guarantees contain charging clauses.  These clauses can be quite bland, for example words such as “the guarantor charges all of the guarantor’s land in favour of the creditor to secure payment of moneys owing by the customer to the creditor”. Some clauses are more sophisticated, and will appoint the creditor to be the agent of the guarantor to sign mortgages and register them over the guarantor’s land.  While generally a mortgage – to be registered over land – needs to be witnessed by a qualified person, that is not the case for a charge given under this sort of agreement.  The creditor can lodge a caveat securing its interest under the charge and then start court proceedings to enforce the charge which can include seeking orders to sell the land, which might include the guarantor’s home.  It is important to bear in mind these potential liabilities, and other potential liabilities such as responsibilities for breaches of workplace health and safety laws when deciding who should be a director of a trading company.  In particular, care should be given in nominating a spouse who has no significant role in the operation of the business as a director.  For advice concerning the structuring of businesses and responsibilities under business agreements, please contact our commercial lawyers Peter Muller at peterm@qbmlaw.com.au, Megan Hanneman at meganh@qbmlaw.com.au and Jessica Murray at jessicam@qbmlaw.com.au