This is perhaps the most important article I have written because it points out what needs to be in place in your own mind before you try to get your money back.
Most contractors do not have the right thoughts and attitudes when pursuing bad payers. The mindset is too passive and assumes that the power relationship is such that the contractor has no power and the Non Payer holds all the cards.
If that is how you’re thinking you will not be too successful in getting your money. You need to clearly understand and pursue the value of your work, be determined to fight to get it back, and accept the reasonable expense in doing so.
Let me explain what I’m talking about by giving you two recent examples of how Contractors Debt Recovery handled two matters:
An earthmoving contractor carried out work on an hourly hire basis over 39 days, and invoiced the head contractor $46 000.00 for the work. The head contactor did not pay a cent and insisted that the earthmover chase the property owner for payment as there had been a "stuff up" saying it was not their project anymore and they had not been paid. The earthmover talked to the owner who provided a copy of the funds transaction showing that the head contractor had been paid in full for his work 3 weeks previously!
Then for his efforts he also received a fine from the local council for $3000 for carrying out unauthorised work.
Contractors Debt Recovery prepared and adjudication application and submitted a copy to the head contractor. Within 48 hours $44 000 was transferred to the earthmover’s account. [$2000 held on another job].
Contractors Debt Recovery also challenged the fine in court. We prepared a submission to the council setting out the case why the fine should be withdrawn. A day before the court case was due to be heard, they withdrew the fine.
The opening position was a $46 000 debt and a $3000 fine. The closing position was $44 000 in the bank and no fine. Total time for both outcomes; about 10 months.
A plumber had been called in to a block of strata units to fix water leaking into the ceiling of the ground floor unit. As usually\ happens the investigations revealed the root cause to be a leaking sewer pipe on level 2. There was extensive damage to the walls and fittings of both units.
The plumber carried out the work, including a full bathroom re-fit, with the full knowledge of the owners and the strata manager. On completion an invoice for $18 000 was rendered. After much delay the strata paid $10 000 and told plumber to ‘get stuffed’.
Contractors Debt Recovery took the strata to adjudication and got a determination for the full amount owing. We then registered the judgment in court. The strata refused to pay. We then wrote to the Director General of the Department of Fair Trading arguing that the strata managers were in breach of their own Act as regards the running of the strata scheme. This didn’t work but was done to put pressure on the managers. It also distracted from the fact that we had got a garnishee order from the court to take the money out of the strata’s account.
But there was a hitch.
The strata held accounts are held in Trust. They are Trust accounts. These accounts cannot be garnished. But given it was a court order the bank set aside the money until expiration of the agency period. So 4 months later the plumbers received a cheque for the whole amount owing plus all costs and interest.
Total time for outcome; 6 months.
Now just think about the determination and ‘stick to your guns’ mentality that was required to get these payments. Without the right mindset this would not have been possible. But it was worth it, even on a purely ‘justice-has-been-done taught-them-a-lesson’ level.
There are three key things you need to get clear in your own mind when chasing your payments:
- Keep the FULL VALUE of your work front and centre
- Accept that you are STARTING A FIGHT and you will have to be determined to do what it takes to win
- It’s going to COST YOU SOME MONEY to get your money and there is no guarantee of success
Click here to read the full article 'The debt recovery mindset'