The review
On 21 December 2016, the federal government announced that Murray was tasked with identifying best legislative practice with a view to improving consistency across all states and territories in terms of the level of protection afforded to contractors.
As part of the review, Murray carried out an extensive process of targeted consultations with key stakeholders across all levels of governments, business, unions and other interested parties. The majority of stakeholders agreed that the construction industry would benefit from a nationally consistent legislative model, however, there were differing views on whether the legislation should be based on the 'east coast' or 'west coast' model.
The recommendations
Murray recommended that security of payment legislation across the nation should be based on the 'east coast' model after determining that it is best able to facilitate the prompt payment of progress claims. He was persuaded by the fact that a failure to respond to a progress claim served on the east coast results in the claimed amount being deemed to be a debt which is capable of being enforced in court proceedings. In comparison, the west coast model does not provide for immediate consequences if a respondent fails to reply to a progress claim.
More particularly, Murray recommended that all states and territories adopt laws based on the New South Wales legislation after determining that:
- all payment claims should be subject to the same process, in contrast to the composite system that currently operates in Queensland;
- the respondent should not be permitted to provide any new or additional reasons in its adjudication response, as both the Queensland and Victorian legislation currently allow (at least in certain circumstances); and
- the legislation should not exclude certain claimed amounts, as is currently the case in Victoria.
- However, Murray recommended that some drastic changes be made to the New South Wales regime, including the addition of a right for the respondent to request additional time to provide its adjudication response; and
- a right for a party that is aggrieved with an adjudication decision to apply for an adjudication review (in certain circumstances and subject to appropriate restraints).
In total, Murray made 86 different recommendations.
What's next?
As legislative responsibility for security of payment rests with the states and territories, whether Murray's recommendations are adopted will be determined by the government of each state and territory. In his report, Murray expressed concern that the states and territories would 'cherry pick' from his recommendations.
While the federal government cannot introduce the recommendations itself, it has said that it is 'committed to working closely with all Building Ministers around the country' to 'harmonise the various state and territory security of payments laws'.
