Plenty of Room for Improvement in Security of Payment in New South Wales

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socla logoSoCLA has submitted its response to the NSW discussion paper on last year’s admendments.

Those amendments have not gone done well in the courts:

  • McDougall J in Kitchen Xchange v Formacon Building Services [2014] NSWSC 1602 said that the  amendment to s 13(2)(c) – removing the requirement for payment claims to identify themselves as such – was “unwise”.
  • In BRB Modular Pty Ltd v AWX Constructions Pty Ltd & Ors [2015] QSC 218 the Supreme Court of Queensland had to consider a contractual provision to the same effect as the new NSW statutory requirement for supporting statements. It found that, on balance, such a requirement ran so counter to the objects of the legislation (those objects being the same in Queensland and NSW) as to fall foul of the anti-avoidance provisions.
  • These ill-considered experiments also fail to take into account the observation of Justice Peter Vickery that[2]:

We now have the luxury of more than a decade of experience derived from the “hard knocks” of litigation and the practice of adjudication. This is an excellent foundation to build upon. Most of the problems, both practical and legal, one way or another have been exposed. It is surely now time to capture the best from all jurisdictions and consolidate them into a coherent national framework.

SoCLA’s response (the drafting of which I led)  likewise urges that these experiments be rolled back, and that instead NSW follow Queensland’s lead in sorting out the problems of perceived bias in the present ANA system.

It is remarkable how poor the States’ record has been in getting its legislation in this area right – bizarely, the most sensible has been the relatively tiny (in population, not area) jurisdiction of the Northen Territory. SoCLA’s Chair Basil Georgiou has written a very sensible letter to the relevant Ministers suggesting that SoCLA could help in putting an effective nation-wide system in place. Good sense would suggest that they will jump at that opportunity. History suggests that that might well be optimistic.

Basil’s letter, and the SoCLA response, is here: sop.2

 

[2] Security of Payment Legislation in Australia, Differences between the States – Vive la Différence? Hon. Justice Peter Vickery Building Dispute Practitioners Society 12 October 2011

 

 

 

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