Do you know your limits?

9 December, 2016

Practitioners who are experts in a specific area of law sometimes find themselves in unfamiliar territory without realising it.

Practitioners who usually do domestic conveyancing maybe out of their depth when they receive instructions about the purchase of a commercial building with multiple tenants and where the purchaser is a self-managed superannuation fund who will borrow to fund the purchase. There are a number of issues in this sort of transaction which may not have been encountered by practitioners doing ‘cottage conveyancing’ such as the establishment of a bare trust and the requirement for the bare trustee to be the registered proprietor. More information on these issues can be found in our Saving Superannuation claims practice risk guide.

Another example is a practitioner who has dealt with numerous domestic building contracts and receives instruction for a commercial building dispute.

In one such claim a practitioner was instructed to issue a default notice against a builder for breaches of a commercial building contract. On receipt of the default notice the builder sent a reply denying there was any default. The builder also issued a payment claim in accordance with the building contract.

As the practitioner had not previously acted in commercial building disputes he was unaware of the landowner’s right to dispute the payment claim in accordance with the Building and Construction Industry Security of Payment Act 2002 (Vic). This Act does not apply to domestic building disputes within the meaning of the Domestic Building Contracts Act 1995 (Vic).

The Building and Construction Industry Security of Payment Act 2002 (Vic) specifies that the landowner must serve a ‘payment schedule’ within 10 business days of receiving a payment claim. The payment schedule must specify the amount (if any) the landowner is willing to pay and why it is any different from the amount claimed.

Failing to provide the payment schedule means the full amount claimed must be paid.

The dispute between the landowner and builder ultimately went to court and the builder was successful in obtaining judgment against the landowner for payment of the amount owing as specified in the payment claim. The landowner then brought a claim against the practitioner for failing to advise on the process to dispute the payment schedule. The claim eventually settled with a substantial payment to the landowner client.

One way to avoid this sort of claim is for practitioners to recognise their limits and seek assistance from a barrister with expertise in the matter at hand. Alternatively the client should be referred to a firm who deals with such matters.