On 22 December 2017 John Murray AM delivered his report on the national review of the Security of Payment Laws in force around the country to the Honourable Craig Laundy MP, Minister for Small and Family Business, the Workplace and Deregulation.

The report followed a notional roadshow during which Mr Murray interviewed dozens of interested parties and individuals. Solicitors from HFW were retained by interested parties to assist in providing oral and written responses to Mr Murray.

The report was released to the public on 21 May 2018.

The report was commissioned to look at protections for individuals and small business. If the recommendations are taken up it will far reaching implications for all aspects of the building industry.

The report itself is very detailed, consists of more than 350 pages (excluding the executive summary) and makes 86 recommendations. Whatever view one takes of the recommendations it is impossible to deny that the review was carefully considered and comprehensive and is likely to inform future Federal Government policy.

To save you reading the report we provide a summary of the key recommendations and a brief explanation for those less familiar with the Security of Payment lexicon below.

General recommendations

Recommendation Explanation
The Australian Government should intervene to pass nationally consistent security of payment laws Murray is firmly of the view that the security of payment laws should be consistent and cohesive across the nation. He perceives (probably correctly) that this can only occur by intervention of the Federal government. The review foreshadows the Federal, State and Territory governments working together which is perhaps suggestive of either a political or constitutional concern about the Federal government taking over this area by force.
The East Coast model is preferable to achieve the policy objective of maintaining contractor cashflow The legislative model now in force in every state and territory other than WA and NT which only permits adjudication of upstream claims is the preferred national model.
A balance between speed and fairness needs to be struck in the adjudication process No explanation required.
The appointment of adjudicators be left to Regulators Murray recommends retaining Authorised Nominating Authorities (ANAs) to refer adjudication applications to adjudicators, but also recommends that adjudicators should be trained, registered and graded by a relevant regulatory authority and not ANAs or any other private body.
Statutory trusts should be implemented Murray identifies concerns about the protection for contractors and suppliers on the lower tiers of the contractual chain, particularly against insolvency. The report recommends implementing statutory trusts where money paid by a Principal on a project never forms part of the consolidated revenue of any party in the contractual chain, except to the extent that party is entitled to claim money as part of its direct contribution to the project.

A detailed summary of the key specific recommendations will follow.