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Security of Payments: Identifying commercial and residential worksHome Newsletters Archives 2012 Newsletters June 2012 Security of Payments: Identifying commercial and residential works
Laws relating to security of payment claims do not apply to home owners and home buyers, as a recent case has shown.
The case involved a property bought by a family trust. The director of the trustee company lived in the property, but also stayed in a flat in Sydney where he worked during the week. The director commissioned a builder to develop a one-storey residential building on the land, but failed to pay for the work. The builder then served a payment claim against him.
Under the law, creditors can serve payment claims for works carried out under a construction contract, excluding "residential building work".
The court found that the plans for the property comprised three bedrooms, living and dining areas, bathrooms and other rooms appropriate for a residence. It also found that the director proposed to reside in the newly constructed property – the law did not require a person to only have one residence.
Therefore, the building contract was one for residential works, and the builder was unable to enforce his payment claim.Return to June 2012
In This section:
- Access Announcement
- Videolink not popular with Courts: Witnesses to be there in person
- Security of Payments: Identifying commercial and residential works
- Net cast for tax cheats: Is it tax evasion or tax avoidance?
- Director Liability: Clarifying roles and limiting liability of non-executive directors