The Master Builders Association has come out in favour of the proposed Security of Payment legislation, provided it follows the Western Australian model, rather than any of the three East Coast models that operate in New South Wales, Victoria and Queensland. In a submission to the legislature, it suggests that:
The issue of which legislation South Australia adopts should be driven by which
gives the best outcomes for all participants and improves relationships within the
industry. Facilitating cooperative contracting is a policy goal of Master Builders
and the State Government and security of payment legislation should reflect this
goal.
In concluding that the Western Australian model, which is now working well after the somewhat slow start encountered in all jurisdictions, is preferable, it has focused particulary on the following shortcomings in the East Coast model:
• The “rubber stamp” approach engenders intractable litigation: In a very
significant proportion of cases, there is no determination on the merits at
all. Statistics show that the vast majority of claims are ‘waved through’
with 100% of the sum claimed being awarded, often for technical not
substantive reasons. Interstate experience demonstrates that mandating
payments without assessment of the substantive merits tends to lead to
the aggrieved party taking an intransigent attitude in subsequent
litigation, exacerbating disputation and encouraging costly litigation.
• No freedom to agree on adjudicators: The East Coast model's inflexible
rules relating to adjudication selection has created a parasitic industry of
adjudicators with a monopoly over adjudication. This leads to:
• Poor quality of adjudicators
• Unhealthy forum shopping
• Inadequate processes; and
• Unhealthy effect of ‘closed shop’
• Restrictions on hearings: Because hearings are restricted, the decisions
lack finality (thereby necessitating further litigation) and promote poorer
decision making by the adjudicators.
• Timescales: Requiring the entire adjudication process to be completed
within ten days is too short for all but the simplest of cases. This
timeframe gives the respondent less than a week to properly assess and
respond to a claim.
• Ambush claims: An applicant can take many months to prepare a claim
but the respondent only has days to respond. This unfair practice can
reinforce an intransigent approach to subsequent litigation.
• One way street: The East Coast model only permits damages claims
allowable by way of defence, but not attack. This distorts the
adjudication process and encourages subsequent litigation.
• Exclusion of financial institutions.
The MBA's analysis thus coincides with the conclusion of reports obtained by the governments of the Northern Territory and Tasmania.