Two year old $60,000.00 building design fee dispute resolved and recovered after Roberts Legal was engaged and Security of Payment Law rights identified.

The Background

The client was a design and construction company. The client had been engaged by a developer to design a commercial building. The contract documents were poor and broadly contemplated that the owner would only pay for the design work if the owner did not subsequently enter into a construction contract with the builder.

The contract did not specify how the design work would be valued, if necessary.

The client carried out substantial design and redesign work at the developer’s request, however, the developer did not engage the builder to construct the building and instead indicated that it intended to contract with a third party to build the commercial premises designed by the client.

The client issued a tax invoice for the design work in the sum of approximately $65,000 plus a copyright licence fee of $20,000. The developer disputed the design fee and asserted that it was entitled to engage a third party to construct the building without paying any copyright licence fee.

How We Helped

Roberts Crosbie Mortensen quickly identified that the tax invoice was a valid Payment Claim under the Building and Construction Industry Security of Payment Act (“the SOP Act“) and that due to the developer’s failure to provide a Payment Schedule within the allowed time the client had a statutory right to payment of the design fees by virtue of Section 15(4).

Roberts Crosbie Mortensen also advised that whilst the client did own copyright in the design drawings it had no entitlement to the copyright licence fee or to damages unless a fee was agreed or the developer had actually infringed the copyright by using the drawings.

Roberts Crosbie Mortensen issued a detailed letter demanding payment of the design fees under the SOP Act.

The letter of demand was ignored and Roberts Crosbie Mortensen brought an action in the Local Court relying on the SOP Act and the statutory prohibition on the developer’s ability to bring a Cross-Claim or Defence under the contract.

The developer sought legal advice after receiving the Statement of Claim. The developer attempted to negotiate a settlement of the claim, however, its offers were not acceptable to the client.

The developer’s Solicitors recognised that the filing of any Defence to the Statement of Claim would be futile and only expose the developer to adverse costs orders.

The Outcome

Judgment was obtained against the developer for approximately $79,000.00 (including intent and costs) by default upon the expiration of 28 days, only 12 weeks after Roberts Crosbie Mortensen had been engaged.

Roberts Crosbie Mortensen took action to enforce the Judgment by registering a Writ in respect of the developer’s land, a pre-curser to an Order for Sale.

Shortly thereafter the developer agreed to pay the Judgment debt plus enforcement costs less only a small amount in respect of the design fees which the builder conceded without prejudice may have been inadvertently overcharged.