Forging a path to protecting subcontractor payments in insolvency

Introduction

On 11 February 2014, voluntary administrators were appointed to a large construction enterprise known as the Forge Group which had become insolvent. At the time of its insolvency, Forge was engaged on two mining construct projects, one in West Angelas and one in Cape Lambert.

Shortly before the administrators had been appointed:

1. Forge had made, and Hamersley had certified, a progress payment claim on account of works carried out under Forge's construction contracts with Hamersley; and
2. Hamersley had claimed liquidated damages on account of delays in Forge's works. After the appointment of administrators to Forge, which resulted in the termination of its construction contracts with Hamersley, Forge's lender, the ANZ Bank, appointed receivers to Forge and asserted a right to have its loans repaid out of Forge's certified progress payments. Hamersley's liquidated damages claim and ANZ's claim against Forge's certified progress payments were