What can we do? The Top 3

  1. PBAs – Directors' personal liability
  2. Pricing with PBAs
  3. Processes for Chapter 3
  1. PBAs – Directors' personal liability?
    • Corporate trustee is exposed to claim from beneficiaries for conduct which is a breach of trust.
    • Directors' duty is to act in the best interests of the company as a whole (properly manage trust).
    • If directors permit a breach of trust, the company may seek compensation from the directors, through a derivative action initiated by shareholders or (more likely) by a liquidator.
  1. PBAs – Directors' personal liability – what can we do?
    • Corporate trustee indemnifies directors against liability to the corporate trustee (which can be set off against any claim by corporate trustee).
    • Subcontract: exclude personal liability / limit liability to discharge claim out of trust assets (including for breach of trust). But s. 99?
    • Limit the duties of the directors. But Corporations Act?
  1. Pricing with PBAs
    • Retention money (5% of value of subcontractors' contract) removed from cash flow.
    • Potential for negative cash flow in early part of project.
  1. Pricing with PBAs
  1. Pricing with PBAs Consider: Impact of subcontractor's charge.
  1. Pricing with PBAs – what will this drive?
    • Provide security in the form of bank guarantees (but impact on NTA / AAT)
    • Increase debt facility (but impact on NTA / AAT)
    • Improve net asset position (easy to say!)
    • Front load contracts?
  1. Processes for Chapter 3 e.g. subcontracts
    • 25 business days for payment schedule and for payment.
    • Pre- and post-proclamation contract conditions.
    • Process for payment schedules (consequences of no payment schedule/streamline responses).

For further information see Queensland Construction Update - Minister provides timetable for implementation of new BIF legislation

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.