When security of payment regimes were first introduced in the eastern States, they were relatively uniform affairs. A working knowledge of the regime in one State served reasonably well when considering options, strategies and obligations in another eastern State.
The first major divergence was in 2007 when Victoria pulled the rip cord on claims for delay costs and latent conditions as well as introducing a three month limit time limit on claims and reducing the scope of her act’s application to variations.
New South Wales made material changes in 2010 to enhance the prospects for enforcing adjudicated amounts, but overall their regimes remained well settled, and quite similar.
Fast forward to 2014 and witness the change. In New South Wales the drive to address construction industry insolvency and a perceived imbalance of bargaining power have borne bespoke amendments. In particular, the warning or ‘endorsement’ required to call-up the act’s payment claim and adjudication regime is removed in respect of all payment claims except for ‘exempt residential contracts’[i]. This is significant in that it broadens the number of claims that will fall within the regime and seems likely to give rise to considerable uncertainty and unintended results.
Further, claims by head contractors must be accompanied by a subcontractor statement to the effect that all of its direct subcontractors have been paid, or if not, setting out details of the subcontractor claims that are disputed. False statements are punishable by hefty fines and possible incarceration.
In Queensland the Department of Housing and Public Works has recently announced cabinet approval in three key areas of reform, heralding the most significant divergence between the regimes since they came into effect. The aim of the changes proposed for Queensland is a fairer and more equitable system, striking a better balance between the interests of claimants and respondents. Very different to the New South Wales imperatives.
The Queensland changes, which are pencilled in for commencement on 1 September 2014 include[ii]:
- The end of authorised nominating authorities. The Queensland Building and Construction Commission will have an adjudication registry to administer the Act, monitor performance and appoint adjudicators based on skills, knowledge and experience;
- Reducing the time in which a payment claim can be made from 12 months to 6 months after the construction work was last carried out (unless the contract provides a longer period);
- Extending the time for provision of the payment schedules: in complex claims, ie those for more than $750,000 or involving a latent condition or a time related cost, to 15 business days, and where a claim is served more than 91 days after the reference date, to 30 business days;
- Increasing the time for provision of the adjudication response to not less than 10 business days, with the adjudicator having the power to grant up to an additional 15 business days in large or complex claims;
- Permitting respondents, in their adjudication responses, to include all relevant reasons for withholding payment, regardless of whether they were raised in the payment schedule. (Claimants will be entitled to a right of reply.)
Although each eastern State has similar objectives in its respective act, each seems to have differing views as to how to achieve them. The divergence is increasing over time. A working knowledge in one State is no longer a reliable base for advice in another. A national security of payment code seems more unlikely than ever.