Re Crows Nest Shire Council

The case of Re Crows Nest Shire Council was before the Supreme Court of Queensland, Brisbane. The Council of the Shire of Crows Nest applied to transfer certain actions pending in the Magistrates Court and the District Court at Toowoomba to the Supreme Court at Brisbane and to consolidate these actions with existing Supreme Court proceedings. This application followed the liquidation of Felsmans Building Industries Pty Ltd, the builder of a new Administration Centre for the Council. The central issue was a payment of $35,000 made by the Council to K & W Electrical Pty Ltd after receiving a notice of acceptance of the claim from Felsmans. The sub-contractors argued that the payment was made in contravention of the Sub-Contractors' Charges Act 1974, which required the Council to retain the whole of the moneys payable or to be payable to Felsmans until the quantum of the claims had been established by order of the Court.

Justice White concluded that the Council had failed to retain the amount it was required to retain and must make good the sub-contractor's proportionate loss. The Council is personally liable to each of the sub-contractors with a valid charge who seek to enforce that charge for the amount of the reduction in its share of the charged moneys as a consequence of the Council failing to retain the whole of the moneys charged. The Court ordered the Council to pay into Court a further $4,750, which would be added to the existing sum. The charged fund then available for distribution to the sub-contractors was $162,243.11 plus accretions, if any. The sum of the valid charged claims was $180,869.02. The Court provided a formula to ascertain each sub-contractor's share of the charged fund in Court.

Re Crows Nest Shire Council highlights the importance of compliance with the Sub-Contractors' Charges Act 1974 in ensuring fair distribution of funds among sub-contractors in the event of a contractor's liquidation. The Court's decision emphasised the need for employers to retain the whole of the moneys payable or to be payable to the contractor until the quantum of the claims has been established by order of the Court. Failure to do so can result in personal liability for the employer and a reduction in the sub-contractors' proportionate share of the charged moneys.