Page 4542 - Week 12 - Thursday, 15 October 2009
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Madam Deputy Speaker, it is difficult to quantify the impact that failure to meet payment obligations has had on the industry in the ACT. Where businesses do become insolvent, there does not appear to be any reliable measurement for the factors of that insolvency such as the timeliness of payments.
Several task forces, however, including the final report of the Cole royal commission into the building and construction industry in 2003, cite strong anecdotal evidence across jurisdictions, including the ACT, to support the notion that security of payment problems are widespread within the industry and have a harmful effect.
Improving payment outcomes for all parties operating in the building and construction industry is a key priority for this government. There are instances in the industry where a claim for payment by a subcontractor or supplier is disputed by his or her superior contractor resulting in payments being held up for lengthy periods while the dispute is being resolved.
There is potential in the industry for these payments to be withheld unfairly to the disadvantage of the claimant. The bill now establishes, in relation to construction contracts, a statutory-based system of rapid adjudication for the quick resolution of payment disputes on an interim basis by an appropriately qualified adjudicator. This will allow for payments to flow quickly down the contractual chain.
Rapid adjudication does not extinguish a party’s ordinary contractual rights to obtain a final determination of a payment dispute by a court or a tribunal of competent jurisdiction. Significantly, decisions by an adjudicator are enforceable as a judgement debt if a contracting party fails to pay moneys to a contracted party as determined by the adjudicator.
This represents a significant shift from the current system where responsibility for enforcing payment has ordinarily been left to the contracted party who has performed the construction work or supplied the related goods or services for the benefit of the contracting party.
The application of the bill covers all forms of construction contracts other than contracts involving “resident owners”. The bill does, however, cover a person who holds, or should hold, an owner-builder’s licence under the Construction Occupations (Licensing) Act 2004. There is a default provision in the bill which will apply when parties have not in the formation of their contract included the intervals for making progress claims, times for making payments and how such payments are to be valued.
In the absence of a contractual provision, the bill provides that payment claims must be made at monthly intervals with payment becoming due 10 business days after the payment claim is made. If the construction contract is silent on how a payment is to be valued, the bill provides that the amount is calculated on the basis of the value of work carried out, including related goods and services provided.
As in other states, it is proposed that private adjudicators conduct the adjudication on a user-pays basis. The adjudicator has the power to call for further submissions, hold a conference and view the relevant construction site. An adjudicator must provide to
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