The Act establishes a statutory scheme to promote prompt payment and enable a flow of cash down the contractual chain within a building project. The statutory scheme ensures that a person who carries out construction work or who supplies related goods and services under a construction contract, is entitled to receive and able to recover progress payments for carrying out that work or supplying those related goods and services. It also provides a mechanism for the adjudication of payment disputes in the building and construction industry, to ensure the rapid resolution of those disputes.
Adjudicators are appointed by authorised nominating authorities (ANAs), who are authorised by the Minister. There are currently six ANAs operating in South Australia. In cases where an adjudicator determines that a respondent ought to pay an additional amount to a claimant and the respondent fails to pay that amount, the claimant can file an adjudication certificate as a judgement debt in court of competent jurisdiction.
The Act has wide application and applies to most construction contracts for work carried out for goods and services supplied in South Australia. However, it does not apply to contracts for domestic building work for owner-occupiers.
The 2021 Bill was introduced to the House of Assembly on 26 May 2021. The Bill lapsed when Parliament was dissolved by the Governor on 19 February 2022 prior to the state election.
The 2021 Bill sought to make the amendments set out in the 2017 Bill but also proposed to implement most of the recommendations of the Murray Review. These included bringing construction contracts for domestic building work within the scheme, removing the concept of reference dates, extending the reach of adjudication to disputes about the payment of retention money, and giving the SBC responsibility for registration of adjudicators.
The 2021 Bill also included related amendments to the Building Work Contractors Act 1995 and the Plumbers, Gas Fitters and Electricians Act 1995 to enable funding towards the administrative and regulatory costs associated with carrying out the reforms.
The 2017 Bill was introduced into Parliament on 5 July 2017 and passed by the House of Assembly on 31 October 2017. However, on 30 November 2017, Parliament rose before the Legislative Council had completed its consideration of the Bill and it lapsed.
The Bill sought to amend the Act by clarifying that the SBC was responsible for the administration of the Act and prescribing the functions in this regard. It sought to clarify and amplify the powers of the Minister in appointing and revoking the appointments of ANAs, and to require ANAs to provide the SBC with information upon request. It also created an offence for assaulting, threatening or intimidating a person in connection with a claim for progress payment.
In May 2018, the Federal Government released the National Review of Security of Payment Laws, which was carried out by Mr John Murray AM (the Murray Review). The purpose of this review was to identify best practice in the various Australian security of payment regimes, with a view to improving legislative consistency and the level of protection for construction industry subcontractors.
The Murray Review contains 86 recommendations. Contrary to Mr Moss, Mr Murray rejected the idea of having a two-tier system of complex and standard claims, stating that legislation should be drafted and structured as simply as possible. Neither did he favour a requirement for the publication of adjudicators’ determinations.
Download a copy of the Murray Review here.
The Act was reviewed by former District Court Judge, Mr Alan Moss, who handed down his report in March 2015 (the Moss Review). Mr Moss made a number of recommendations including that the Minister for Small Business withdraw all authority from ANAs and appoint the Small Business Commissioner (SBC) as the sole ANA, giving the Commissioner the ability to choose a suitable adjudicator. Further recommendations were that a scale of fees be set for simple and complex adjudications, and that the SBC publish adjudication determinations.
Download a copy of the Moss Review here.