Babushka Contracting

babushkaSome feedback on the Society of Contraction Law Australia Linkedin Discussion page prompts me to expand a little on the ways that a head contractor might avoid the very unwelcome risks associated with the supporting statement requirements in the latest NSW SoP amendments.  There was also some discussion about this at the SoCLA event in Sydney last week at which I was a panelist and which, I am told, attracted the biggest response ever for a NSW SoCLA event.

There may be a number of approaches, but at least two seem to me to be obvious contenders: payment disclaims and babushka contracting.

Payment disclaims have been the subject of a previous post. Given subsequent comment, I might just add this: that it is plainly optional for a head contractor (or any other party in the contractual chain) to make a statutory payment claim. Section 13 Continue reading

BIM Tonight

BIMThe Society of Construction Law Australia is going from strength to strength. Tonight it is running a session on BIM in several cities; see details.

BIM is really important. Its name – Building Information Modelling – does not give much away, but it is a radically different way of designing buildings. Instead of drawing lines on a piece of paper, or digitally using a CAD system, designers insert objects into a model. The object might be, for example, a piece of glass. The object is inserted with parameters, like its location (in 3D of course). Other parameters, like the density of the glass, its thermal properties etc, will have been set by the manufacturer. Everybody involved in the project uses the same information. The BIM system will identify clashes (where for example a piece of secondary steel is seeking to occupy the same place as some ductwork). It will instantly return all sorts of data about the building (such as its thermal efficiency). Conventionally, 4D BIM provides information about time, and 5D BIM provides information about cost.

By its nature, BIM requires a cooperative approach that is obviously good for the efficiency of the construction process. It also raises interesting and difficult questions Continue reading


clic2014There are now several Societies of Construction Law around the world; I was previously a member of the SCL in the UK, but now sit on the board of SOCLA, being the Australian member of the family. Every couple of years, the societies get together for an international conference, and last week it was in Malaysia. Perhaps the word “society” was regarded as old-fashioned (if so, I blame that Tony Blair) but in any event, this year’s international gig was entitled CliC2014.

There is no SCL in the USA or Canada, but they do have Continue reading

Amendments to Queensland’s Building and Construction Industry Payments Act 2004

Queensland’s Building and Construction Industry Payments Act 2004  has now been amended by the Building and Construction Industry Payments Amendment Bill 2014. There are a fair few of them; as applied to the existing Act, the  result is here: BaCIPAQ2014. New provisions are shown in red, or, in the case of those relating to the complex claim category, in brown. I have left the formatting more or less as it comes off the AUSTLII copy, but tidied it up somewhat around the changes.

By far the most significant change is that adjudicators are no longer appointed by ANAs, but instead by the government Registrar. This should remove what many have regarded as the institutional pro-claimant bias inherent in the old system.  The change is consistent both with the recommendation of the Wallace Report, and also that of SoCLA’s Report.  Query how long Continue reading

Queensland Edging Closer to Abolition of ANAs

For latest news; see bottom of post.

I am grateful to Matthew Bell for drawing my attention to the recent report of the the Transport, Housing and Local Government Committee Report N0 52 in Queensland.

It is not a very promising title, but nevertheless it is both interesting and important in this area. It arises in this way:

  • Since 2004, private companies have been in the business of nominating adjudicators for construction disputes in Queensland. They are known as Authorised Nominating Authorities, or ANAs.  The busiest ANA has been Adjudicate Today, whose chief adjudicator has been Philip Davenport;
  • It has always been a distinctly suspect system.  For-profit companies have been making their money by marketing the adjudication process to potential claimants, charging potential adjudicators for training, and then charging the adjudicators again a cut of their fees as a condition of appointing them;
  • There has been a chorus of complains about the way the system has worked;
  • Recently, Mr Davenport parted company from Adjudicate Today, apparently unhappy about the way it works, and set up a new ANA;
  • Last year, a Queensland barrister, Andrew Wallace, delivered his report to the Queensland government. Mr Wallace was particularly critical of the ANAs, the expression “conflict of interest” appearing 14 times and the word “bias” appearing no less than 61 times.  Sensibly enough, he suggested that  adjudicators ought to be nominated by a government agency in place of the ANAs;
  • The Building and Construction Industry Payments Bill 2014 was drawn up to implement the substance of Mr Wallace’s recommendations;
  • The ANAs did not welcome these changes, which would of course severely affect their income stream. In the May this year, the Bill was sent off to the Committee for examination.

Continue reading

An irony

shamrockThere is a strange irony that it seems to be much easier to pass bad law than good law, at any rate in the area of construction adjudication.

In New South Wales, the recent amendments – which look like a bad train wreck, passed in a heartbeat. In Queensland, the welcome reforms  following the Mitchell Report have been put on hold. The Society of Construction Law Australia’s Report on Security of Payment and Adjudication in Australia has been widely welcomed, but it would require some considerable optimism to believe that the recommended changes will be implemented with any great rapidity.

On the other side of the world, a really well-drafted Act was passed last year in Ireland, but a commencement date has yet to be set. Senator Feargal Quinn, who was responsible for the Act, has Continue reading

Rough Justice is Ready

My article Rough Justice is Ready was published in the July edition of the South Australian Law Society’s Gazette.

Rough Justice is ReadySecurity of Payment – Rough Justice is Ready

By Robert Fenwick Elliott, Howard Zelling Chambers

It is notorious that litigating building disputes is typically far too expensive and far too slow. Arbitration is usually no better. If the State’s courts follow through with current proposals to create a specialist building and construction list, some improvement is likely, but even so, litigation in the courts is not an effective way for contractors and subcontractors to deal with the perennial problem of non­payment or late payment.

In recent years, the common law world has seen a revolution in this area, with 14 jurisdictions around the world now having legislated for a statutory adjudication scheme. South Australia was a late arrival, the Building and Construction Industry Security of Payment Act 2009 applying to contracts entered into from December 2011. The Act follows what is known as the East Coast Model, and in broad terms, the essentials are Continue reading

Bridging the Gap between Theory and Reality…

SOCLASept14… is a title which might fit all sorts of things. This time, it is for a Society of Construction Law Australia event in Sydney on 24th September.  I will be on a panel discussing

1.   Whether the recent amendments to the NSW Building and Construction Industry Security of Payment Act are likely to achieve the stated outcomes – to reduce insolvency in the building and construction industry in NSW;

and also

2.     The proposed amendments to the Queensland Act which proposes three key areas of reform – Continue reading

Payment Disclaims

I posted a while ago about the recent changes to Security of Payment Legislation in NSW in The Road to Hell.  The changes came into effect for the purposes of contracts entered into from 21st April this year.  One of the changes is to remove the requirement that payment claims state that they are made under the Act; potentially, any document which identifies some work done and puts a price to it might be a payment claim.

That is bad news for head contractors, not least because it is now a criminal offence for them to make a payment claim that is not accompanied by “supporting statement” saying what amounts have been paid, and what claimed amounts have not been paid, to subcontractors (there is a prescribed form for this in the new Regulation).

Despite a determined effort by the new amendments to muddy the waters as between statutory entitlements and contractual entitlements, I wonder how many NSW head contractors will be adding wording like this to their contractual applications for interim payment:

This is not a payment claim under section 13 of the Building and Construction Industry Security of Payment Act 1999 (NSW), and no sum is hereby claimed to be due pursuant to section 8 of that Act.

By expressly disclaiming in this way, a head contractor will presumably be free to get on with life as normal Continue reading