Subcontractor's charge - an easier way to secure your money
20th April, 2011
Subcontractor's charge - an easier way to secure your money
- Recover debts directly from the employer/ developer.
- Bypass reluctant contractors/ builders.
- Monies owed for work performed.
- Notice of claim of charge.
What is a subcontractor's charge?
A subcontractor's charge is a tool which enables a subcontractor to recover a debt owed by a contractor (such as a builder) for building works directly from the employer (such as a developer) who engaged the contractor to perform the building works. It is an effective method for a subcontractor to secure payment for work done by by-passing a reluctant or insolvent contractor. This is a statutory security which is governed by the Subcontractor's Charges Act 1974 ("Act").
Who can lodge a charge?
The Act defines a subcontractor as a person who contracts with a contractor or with another subcontractor for the performance of work.
Definition of "Work"
The act has a very specific definition of Work but, broadly, it covers the provision of both labour and materials intended to be used by the subcontractor (exclusions apply).
It is important to note that a subcontractor will not be entitled to lodge a charge for monies owed for Work which falls outside the definition in the Act.
What can be secured under the charge?
A subcontractor's charge can only secure an interest over the money owed to a contractor by an employer under the building contract as long as the employer still has the money and still owes a debt to the contractor.
Notice of claim of charge
A Notice of Claim of Charge is given by a subcontractor to the contractor and the employer specifying the amount and particulars of the claim in relation to the work performed. This notice must also be accompanied by a declaration of the subcontractor (or an officer if the subcontractor is a corporation) about the correctness of the claim and the amount.
The Act provides strict procedural rules that must be followed, including time limits for giving of notices. If a Notice of Claim of Charge is received, it will be wise to seek prompt legal advice so as not to unwittingly prejudice your position in the claim.
A charge will not place extra burden upon an employer as it only redirects payment of monies due under a contract to a subcontractor. Generally speaking, the employer will not have to pay more money than they would have under the original contract.
FOR MORE INFORMATION
At Scoglio Law we can assist you with all aspects of a subcontractor's charge - from issuing a Notice of Claim of Charge through to commencing court proceedings for its enforcement.
If you are subcontractor who is looking to recover monies owed by a contractor, or you are a contractor who has received a notice of claim of charge from a subcontractor, or simply want more information about how our processes can work for you, please contact Tony Scoglio of Scoglio Law on (07) 3833 2100 or email tony@scogliolaw.com.au.
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