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A single version of the Security of Payment Act is a mirage of wonders lingering on the horizon. Could it happen? It seems so.

Just before Christmas last year, Senator Michaelia Cash released a statement advising that John Murray AM had been appointed to review Security of Payment laws in all states in light of the problematic inconsistencies between the various versions of the Act. These have been identified and discussed in previous inquiries including the most recent Senate Economic Reference Committee’s inquiry that ran throughout 2015. Murray is to deliver a report to the federal government by the end of the year.

The release also notes that any alternate model of the Act is to also consider the Queensland version that existed before 2014 – that is, before the Queensland government completely screwed it up. That is great news, as this version echoes the ‘original’ NSW version, before the NSW government also damaged that Act with its changes in 2015. This means that the starting point of a potential federal Act is the most accessible, straight-forward, common-sense version of the Act which had served the industry very well for over a decade.

One of the possible recommendations of this inquiry may well be that Australia should adopt a single version of the Act for all states; establish federal legislation.

A single Act for the whole country, rather than the current eight different versions is the way to go for the following reasons:

  1. The essential intention and adjudication based approach is the same everywhere. But each state has made small changes for no apparent reason. If the intention and purpose of the Act is the same everywhere, then the Act should be the same everywhere.
  2. The courts already take the position that precedents from one state can be held as judicial authority in another. This position is often taken whilst noting that the Acts in other states are very similar. If the Courts are satisfied that the Acts are similar enough for interstate case law to ‘travel’ then why not simply have one law everywhere?
  3. The differences in the various forms of the Act serve no real purpose and only create confusion. The various states introduced tinkering-type changes that either serve no purpose or create only difficulty for the parties within the process.

Consider the following:

Every state has a different default due date for payment after a payment claim is served. In NSW, it is 30 business days for claims between head contractors and subcontractors, and 15 business days for claims between head contractors and principals…unless it is connected to an Exempt Residential Construction Contract, in which case it is 10 business days. In Queensland, the ACT, Victoria and Tasmania, it is 10 business days no matter who you are. In South Australia, it is 15 business days, and in WA and the Territory, it is 28 days.

How about the default time period allowed, after last work, in which a payment claim can be made? In Queensland and South Australia, it is six months from last work. In NSW, ACT, and Tassie, it is 12 months. In WA and the Northern Territory it is basically any time after you’ve carried out the work. In Victoria it is three months from when you last carried out work if the claim is a final claim. If it is not a final claim, then it is three months from the last reference date – which, under the Victorian Act, has several definitions.

And what about the time period allowed after receipt of the claim, in which to serve a payment schedule? In NSW, ACT, Victoria, and Tassie, it is 10 business days. In South Australia, it is 15 business days. In Queensland, it is 10 business days for replying to a standard payment claim, and 15 business days for complex payment claims…unless the complex claim is served over 90 days after the reference date, in which case the schedule is due within 30 business days. In WA and NT a payment schedule is called a notice of dispute and is due within 14 calendar days.

And as for adjudication, in NSW, ACT, and Tasmania you can lodge the adjudication application with an authorised nominating authority (ANA) who will have an adjudicator nominated to the application. In Queensland, you have to lodge it with the QBCC. In Victoria, you can lodge it with an ANA of your choice unless the contract contains a dispute resolution clause, in which case a choice of at least three ANAs are offered and you need to choose one of those. Where ANAs are involved, the parties do not contact or deal with the adjudicator directly. South Australia is looking to run the process through the Office of the Small Business Commissioner while WA and NT have a ‘prescribed appointer’ process that results in the parties dealing almost exclusively and directly with the adjudicator.

These differences serve no purpose at all in practice and have not made any one version of the Act any better than another. None of the Inquiries noted any great benefit from these differences; only problems.

There are around 2,000 adjudication applications made each year in Australia. Do we really need eight different versions of the Act to deal with them?

As we await the outcome of this review, let’s hope that sanity prevails.

 
  • Having eight different countries for Security of Payment purposes makes no sense at all.

    Lets make them all consistent and have one set of rules which everybody knows how to follow.

  • Are we looking at Security of Payment harmonization or are we looking at harmonization of adjudication . Start looking at keeping participants out of adjudication . The issue is securing subcontractors payments – payment issues were identified in a senate committee report. Let's keep on point – adjudication is a secondary issue.

  • HARMONISED SECURITY OF PAYMENT IS WHAT THE REVIEW IS SUPPOSED TO BE ABOUT – NOT ADJUDICATION – HAS THIS REVIEW LOST ITS WAY ?

Allegion – 300 x 250 (expire Aug 30 2018)
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