A new report on the "toxic" state of security of
payment legislation in Australian states has called for the
harmonisation of laws across the country and found cases of bias
and breaches of natural justice are frequent and nearly always
The "default" nature of the payment legislation and an
experimental adjudication system substantially run by
"for-profit" companies were particularly to blame,
according to Phillip Greenham, former Chairman of Society of
Construction Law Australia (SoCLA), which released the report last
"The SoCLA report shows the experiment has not been
successful, and is now causing considerable damage to the
construction industry. Our report highlights the key problems for
the construction sector and the 'toxic' nature of the
'payment schedule' system together with our recommended
solutions", he said. "In cases where the respondents are
willing and able to put up the significant legal cost of
challenging the determination, the courts are increasingly finding
that the determinations are fundamentally flawed. Last year (2013),
80% of determinations that were challenged in court were
The report prefers the "evaluative systems" operating
internationally and in Western Australia and the Northern Territory
and makes the following key recommendations:
harmonisation of security of payment laws across Australia as
recommended by the Cole Report in 2003
abandoning the default feature of legislation in
Australia's Eastern States, which penalises "a paying
party who fails to respond to a payment claim within a very short
time frame by way of payment schedule"
improving the quality of adjudicators and maintaining a
national central register
prohibiting for-profit companies from acting as Authorised
Nominating Agencies (ANAs) which appoint adjudicators, and banning
arrangements whereby an adjudicator shares their fee with their
permitting parties to agree on the identity of their
giving more power to adjudicators to look at the real merits of
a claim, to see if the sum claimed is really due.
A full copy of the report is available for purchase at
SoCLA's website, www.scl.org.au.
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