Universities who engage contractors, consultants, manufacturers, suppliers and other parties to perform construction work or supply construction-related goods and services in Australia will be subject to Security of Payment legislation.
Among other things, this legislation imposes statutory requirements for responding to payment claims, which means that in most circumstances universities must meet strict timeframes if they wish to avoid being at risk for paying groundless claims.
This is the second in a series of three articles to be published in the Higher Education Focus relating to security of payment.
In 'Doing construction work? Introduction to Security of Payment', we gave an overview of Security of Payment legislation and considered why it is important for universities.
Many universities have campuses in multiple States and Territories and may find themselves subject to different Security of Payment regimes depending where the work the subject of the claim is carried out. Complex questions can arise where work the subject of the claim is carried out in multiple Australian jurisdictions or, in some cases, where some of the work the subject of the claim is carried out outside Australia.
To avoid the problem of claims being brought in any number of jurisdictions which have a real connexion between the subject matter of the claim and the particular State or Territory, each Act contains a provision which has the effect of restricting the usual rules for determining the extraterritorial application of the Act. This avoids the problem where, for example, a Queensland university enters into a construction contract governed by the laws of Queensland in respect of certain construction work to be carried out on a campus in New South Wales. In that scenario, the NSW Act rather than the Queensland Act would apply.
However, while the Security of Payment regimes operate in a complementary way in this respect, it is not a uniform law. There are important differences between the regimes in each State and Territory. This article summarises some of the differences between the States and Territories in relation to key features of Security of Payment legislation.
One significant difference is what can be claimed under Security of Payment legislation.
The East Coast model restricts a claimant to claims for payment for construction work carried out, or related goods and services supplied, under a construction contract. The Victorian Act is even more restrictive as it also excludes certain amounts from being claimed.
The West Coast model, on the other hand, allows a claimant to make claims for amounts in relation to the performance or non-performance of its obligations under a construction contract. This means a claimant is not prevented from making any claim for moneys payable under the contract. For example, under the West Coast model a claimant could make a claim for damages for breach of contract, whereas such a claim cannot be validly made under the East Coast model.
Another key difference is the timeframes under which the payment claim, payment schedule, adjudication application and adjudication response must be lodged.
A university may have as little as 10 business days to serve a payment schedule after receiving a payment claim (for example, under the New South Wales and Victoria Act) but may have as many as 30 business days (a possibility under the Queensland Act for certain complex payment claims).
The consequences of failing to serve a payment claim are also radically different across the jurisdictions. The East Coast model allows a claimant to recover the claimed amount as a debt due in court (although the Queensland Act gives the respondent a second chance to serve a payment schedule, which should avoid some of the unfortunate disputes that have arisen in circumstances where a payment schedule has not been served due to an administrative error).
In comparison, the West Coast model only provides for the claimant to proceed to adjudication.
A final significant difference is in regards to a respondent's ability to raise reasons in an adjudication response.
In half of the jurisdictions, a respondent is restricted in its adjudication response to the reasons it raised in its payment schedule. However, in Queensland for example, a claimant is entitled to raise new reasons if the payment claim was over a certain threshold.
'Ready reckoner' for in-house counsel
We have prepared a table as a kind of 'ready reckoner' for comparing the Security of Payment Acts in each jurisdiction.
The table paraphrases the process imposed by each Security of Payment Act and is to be used as a guide only and not as a substitute for careful consideration of the relevant legislation and/or formal legal advice to determine the process to be followed under a particular Security of Payment Act.