“A national industry requires a national approach” …
So says Mr John Murray AM, author of the Commonwealth Review of Security of Payment Laws released this week. Mr Murray’s report comprehensively evaluates cashflow measures, adjudication and protection of payment. Some of the recommendations, if adopted, will create significant change the way that construction contracts operate, nationally.
The Report favours the “East Coast” model, recommending the adoption of much of the NSW Act as its baseline, with aspects of the Victorian, Queensland, South Australian and Singaporean schemes singled out for potential adoption.
Key [recommendations] concerning the application of Security of Payment include:
- defining ‘construction work’ and “related goods and services”, in the broadest terms [4, 5]
- curtailing the rights of claimant corporations in liquidation 
- enabling residential builders to make statutory payment claims against owner-occupiers 
- requiring payment claims to carry a statutory endorsement and include process information 
Perhaps most notably, key recommendations concerning contract terms include  avoiding contract terms that purport to make a right to claim or receive payment, or a right to claim an extension of time, conditional upon giving notice where compliance with the notice requirements would:
- not be reasonably possible or
- be unreasonably onerous or
- serve no commercial purpose.
Adjudication also comes in for an overhaul, with:
- appointment of adjudications by a Regulator, with authorised nominating authorities making nominations of accredited adjudicators to the Regulator [36, 37]
- parties to a dispute being able to agree on an accredited adjudicator in some circumstances 
- respondents being entitled to apply to request an extension of time of up to 10 business days for adjudication responses , instead of a two-tier / composite system of ‘complex’ and ‘standard’ claims, as is the case under the Queensland legislation 
- a review process that is conducted by the most senior registered adjudicator available except if the parties had agreed the adjudicator [43, 45, 48]
- severance of parts of a decision that are infected by jurisdictional error of law where it would not affect the whole of the decision (as modelled on the Queensland Act) 
- sanctions that address adjudicators’ technical errors and acting otherwise than in good faith twice or more within the last 5 years in relation to adjudication duties, [67, 68]
Protection of cascading payments is achieved through a model based on the NSW Act, with:
- a requirement for a head contractor ‘supporting statement’ that is also to be copied to each subcontractor whose work has been included in the head contractor’s payment claim, including a declaration that all subcontractors have been paid the amounts due and payable to them for construction work [32, 33]
- all cash retentions are to be held on trust 
- a deemed statutory trust model that is to apply to all parts of the contractual payment chain for construction projects over $1 million 
In announcing Mr Murray’s recommendations, the Hon Craig Laundy says that Government will now consult with industry to consider the report’s recommendations.
24 May 2018