Hi there. Under Australian contract law and NSW building legislation, a person will have a claim against their builder under the building contract if there are unreasonable delays or the work is defective or incomplete. In your situation, it appears that you may have a legal claim for breach of contract against the builder which would entitle you to recover compensation for the loss you have suffered as a result of the breach (i.e. additional costs, rent).

However, your situation is complicated by the fact that the builder has entered voluntary administration. Voluntary administration is commenced when a company is facing insolvency. It involves an external party (the voluntary administrator) taking control of the company to try to save it from going out of business. The voluntary administration is responsible for investigating the company’s financial affairs and presenting different options for the future of the company to creditors. A creditors’ meeting is held where they vote on the future of the company. The company may return to business as usual, it may be wound up (called liquidation), or a legal document called a ‘deed of company arrangement’ may be agreed on to pay off the outstanding debts of the company. More information about voluntary administration is available from ASIC (www.asic.gov.au).

Creditors of a company have a right to be involved in a voluntary administration and to make a claim against the company by completing a ‘proof of debt’ form, available from the voluntary administrator. You may be considered an unsecured contingent creditor because you would be entitled to compensation if you were to successfully sue the builder for breach of contract. You should contact the voluntary administrator of the company to enquire about your right to participate in the administration. If the company has already entered liquidation, you should contact the liquidator about whether you have a right to receive a dividend.

Participation in the above proceedings is likely to be your strongest chance of recovering some of the money you have lost, as the usual option of suing the builder for breach of contract is not available in a voluntary administration or liquidation.

On the question of trading whilst insolvent, there are strict laws that prohibit this type of conduct by companies. If a company is found to have traded whilst insolvent, the directors of the company may be liable for civil or criminal penalties. These proceedings are brought by the corporate watchdog, ASIC, and usually do not involve individual creditors. However, it is possible for a creditor to sue the directors of a company in their personal capacity for trading whilst insolvent, so it may be worth speaking to a lawyer about whether this option is available to you.

Suggested way forward

Although you would ordinarily have a straightforward legal claim against the builder, their insolvency means your legal rights are more difficult to enforce. You would benefit from speaking to a construction lawyer who can advise you of the best course of action. By pressing the “Consult a Lawyer” button, LawAdvisor can help you search for experienced lawyers and obtain fee proposals for their services. Costs for legal advice and representation will vary between providers based on experience and the scope of services.