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?
2. 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.
2. Pricing with PBAs
2. Pricing with PBAs
2. 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?
3. 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
