Category Archives: Dispute management

Fiocco on Queen of Hearts Clauses

Posted on by

I am delighted to be able to say that I was not, this year, interrupted over the Christmas holiday by a security of payment claim served on Christmas eve. And so, happily, I was able to enjoy a couple of weeks off.

But before and since then I have been “heads down” on a number of fronts, which means that I have not reported as fully as I might have done on some recent developments.

One of them was the issue of the report late last year in Western Australia of John Fiocco  Security of Payment Reform in the WA Building and Construction Industry. This made a number of detailed recommendations about the way that the security of payment issue should be dealt with in Western Australia. Such State-By-State consideration may well turn out to be pretty much irrelevant in the event that the Federal Government enacts some legislation which applies throughout the country, and pretty much everyone agrees that that would be sensible. The Federal Government is still considering the Murray Report as to such federal legislation.

Diligent readers of these pages might recall that the Murray report includes a suggested treatment of Queen of Hearts clauses, and in particular adopts a suggestion of mine as to how such clauses might be prohibited. The Fiocco Report takes the same line, albeit with a small suggested tweak as to how the prohibition should be worded.

The relevant section Continue reading →

Under African skies…

Posted on by

FlyerOn 31st July, I will be speaking at a seminar in Johannesburg for AFSA Construction and Society of Construction Law Africa.

The title is “International developments and thoughts on the future for South Africa”. My contribution will be to run through what I have seen as the main features of all available methods for the resolution of construction disputes – all the way from the “gin and tonic” approach whereby disputes are resolved by senior executives over drinks in a hotel bar right through to the “full English breakfast” whereby there is a trial with unlimited time for the parties to prove every one of their contentions in accordance with the rules of evidence.

It will a pleasure to be joined by my Keating Chambers colleague Johan Beyers, who is based in South Africa, who will then relate that international experience to African Continue reading →

Murray Colour-Coded

Posted on by

I have now had the opportunity of a further look at the recently released Murray Review, which I briefly mentioned the other day in my post Queen of Hearts – A Good Idea Endorsed.

The Review is a lengthy document, and overall it is a substantial and admirable piece of work. Some of it reaches conclusions that I would not have reached, but I need to be careful here, since it includes quite a bit that I wrote, or which has been redrafted from suggestions that I have made[1], in particular:

  • The phrase “Pay now, argue later”, now widely used around the world to describe the fundamental nature of an excessive adjudication determination (page 82);
  • The Queen of Hearts clause, quoted at page 289 and recommended at Recommendation 84;
  • Several of the extracts from the 2014 SoCLA Report;
  • The “Red card, yellow card” formula to be found in the South Australian Code of Conduct at pages 244 and 245 (Recommendations 67 and 68), which I had originally suggested to Alan Moss for the purpose of the Moss Review;
  • Several of the extracts from SoCLA’s submission to the Murray review, including the recommendation of that system (page 63) and the summation of the June 2017 SocLA event (page 287).

John Murray is an accredited adjudicator in several East Coast jurisdictions, and no doubt one of the very best of them (he is clever, fair and diligent, as well as being good company).  People tend to do what they have done in the past, and to recommend what they know; perhaps it is no surprise that the East Coast model is his preferred starting point for a national system.  An unintended irony lies therein. John Murray includes a revealing graphic about international payment practices on page 14, as follows:[2]

international payment

Australia ranks very porly here. The East Coast model has held most of the field in Australia since its introduction in 1999. It plainly has not worked. And yet John Murray recommends its endorsement, albeit with some useful improvements. Why persist with something which does not work, especially where there are alternatives which do work?  I tried to persuade him to look more closely, not just at security of payment in the region (Australasia and South-East Asia) but the worldwide and particularly UK experiences, but without success – the Review barely mentions the UK or Irish legislative scheme.

Personally, I believe the art of government is best practised with a light hand. The reason I am sceptical of totalitarian solutions – where government imposes rigid Continue reading →

Queen of Hearts – A Good Idea Endorsed

Posted on by

The Australian Government has at last released the Report of John Murray Review of Security of Payment Laws – Building Trust and Confidence.

It will take a while to digest this Report – at 407 pages there are inevitably recommendations which are welcome and others which will be less welcome.

QueenAn aspect of the Report that might come as a surprise to some is its treatment of Queen of Hearts clauses.  I posted about this issue last year in a post called Queen of Hearts in the Dock, and discussed it with John Murray. In short, I suggested that it would be a good idea to introduce a statutory benchmark, to more reliably separate reasonable time-barring notice clauses which should be allowed from unreasonable clauses which should not.

John Murray has agreed with me. His commentary in the Report is thus:

Unreasonably onerous time-barring provisions

When conducting a detailed interview with one of the leading lawyers specialising in this field, Mr Fenwick-Elliott, the issue of unreasonably onerous time-barring provision was discussed. Mr Fenwick-Elliott referred me to his website where, under the article Queen of Hearts in the Dock, he sets out the following synopsis of the range of ‘arsenals’ or principles that the courts have developed to relieve a contractor from the harsh consequences of failing to give a required notice: Continue reading →

Is there Any Evidence for the Rules of Evidence?

Posted on by

GlassIt has been remarked that it is always a mistake to argue with an idiot: the idiot will drag you down to his own level, where he will beat you on experience.

Something of the same principle applies when we construction lawyers have to litigate a construction dispute before a generalist court with little or no construction or engineering expertise. At its worst, of course, it is a court which might be hearing a criminal case one day, and a construction case the next. And one of the worst features of such a court is a propensity to apply the strict rules of evidence.

A competent and experienced construction tribunal will, for very good reason, ignore pretty much all of the rules of evidence which, in a construction case, have the capacity to waste huge amounts of time and money, and to lead to anomalous results.

What are the rules of evidence? My copy of Cross on Evidence (the 9th Australian edition) runs to 1475 pages, and I am not intending in this post, of course, to attempt to summarise them all. The one that is best known to nonlawyers is probably the rule that the past criminal record of an accused may not be disclosed to a jury. This is an aspect of the similar fact rule, that the prosecution is not permitted to put forward evidence that the accused has a propensity to commit a particular type of crime.[1] Many of them, are highly technical and subject to lengthy and complex exceptions. However, by way of very brief indicative summary, they Continue reading →

Well, well, well!

Posted on by
John Chapman

John Chapman, Commissioner for Small Business, South Australia

This is interesting for South Australian construction.

The Fair Trading (Building and Construction Industry Dispute Resolution Code) Regulations 2017 was passed a week or so ago. I have only just seen it.

It contains wide powers for the Commissioner for Small Business (a bit of a misnomer, that one?) to require builders and others  involved in a construction-related dispute to participate in a government-run ADR process, and to exchange information, answer questions and contribute to the cost of  expert advice as required by the government. There is an obligation to act reasonably, fairly, honestly and cooperatively in the ADR process.

The basic expiation fee for non-compliance is $4,000. That might just the start of penalties for those who fail to co-operate.

The Minister talks about Continue reading →

Queens of Hearts in the Dock

Posted on by

QueenOn 15th June, SoCLA is holding a nationwide event to consider the proposal of a new statutory benchmark for unreasonably onerous time-barring provisions in construction contracts.  Discussion in each mainland State in Australia will be followed by a national video hook-up. I will be the convenor for the Adelaide session.

The intention is not so much to move the goalposts here, but to seek to fix the goalposts at a sensible place, since the current reality is that courts, adjudicators and arbitrators use a wide variety of techniques to avoid the inequitable application of Queen of Hearts clauses if they possibly can.

In my book Extra-Contractual Recoveries (still not finished!) I attempt to list the many weapons available in the arsenal of circumvention: Continue reading →

Thanks for Nothing

Posted on by

dead plantWell drafted security of payment legislation would provide that if the claimant makes an application for adjudication, and the adjudicator decides that there is no jurisdiction, then the claimant should pay the adjudicator’s fees. But the legislation in Australia does not currently say that. By way of example, section 30 of the Building and Construction Industry Security of Payment Act 2009 (SA) provides that an adjudicator is entitled to be paid for adjudicating an adjudication application. It might well be thought that that means a valid adjudication application.

Similarly, if anything is agreed by way of fees between the adjudicator in the parties, a sensible agreement might include the same provision.

But what is the position where an adjudicator spends a considerable amount of time considering  what purports to be an adjudication application, and then concludes that there was never a valid payment claim, and hence no adjudication application, or adjudication within the jurisdiction conferred by the Act? As the High Court said in Continue reading →

Long Vac

Posted on by

Just finished eating some supper outside. At 8.30, still 31 degrees.

It was pretty much the first I have seen of the sun today. Why? Because I have been working on an adjudication response.  The Christmas break has become the traditional time to launch adjudication applications, with their very short time scales.

When I started in the law in England, there was something called “long vacation” Which was the summer months of July and August.  Not a lot happened in July and August.

There might be something to be said for the idea that adjudication times should not run between, say, Christmas eve and mid-January. Continue reading →