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Article 1 - Security of
Payment Act
The new Security
of Payment Act in NSW is likely to be much more effective than any other way
of guaranteeing cashflow. Payments claims for $33 million dollars have been considered – as usual in 10 days – not to mention the
Cross-claim in the multi-millions. It is not surprising that payment
respondents are now showing some fight. We have now over 150 reported cases in which owners are contesting the adjudication
determinations which they have received. The Court of Appeal has now brought down at least six significant decisions on the Act of which Brodyn is the most important.
In any event,
a well-fought out adjudication is much, much, more cost-effective than any other
method of resolving construction disputes. In our experience, the SoP Application has usually
meant an early settlement of the whole matter. The fact that we have
at times had a Chartered surveyor, an engineer and an architect on our legal
staff has helped us meet the tight turn-around timetable for Security of Payments
claims.
It is not
like the old days when the big firms put pink tape around their documents and
sent them off to their City barrister. No time for that sort
of caper now. Nobody wants another Walters Construction (who scored an early $13.9M one year because some-one on the other side forgot the short deadlines for responses). Xmas time is comming: remember-response times can be as little as five days. Especially if the Adjudicator requests additional submissions or wishes to hold a conference with the parties.
There are
certain limited circumstances in which Adjudicators’ awards can be resisted. Recent decisions have highlighted the need for Adjudicators to respect the application of natural justice principles to adjudication processes – in particular to ensure the full weight is given to the submissions provided by the parties in the Adjudicator’s consideration of the dispute before writing his/her determination. If the Adjudicator has been off-hand or capricious in reaching a conclusion that may be sufficient to have the Supreme Court declare the determination of no effect (‘void’).
Don’t forget you need legal advice in those situations since
costs can run high when the Supreme Court is asked to quash determinations. You should also give more weight to contesting the whole dispute under Section 32 of the Act, rather than spend money on a ‘chancy’ appeal which could be spent on a final decision on the merits of the fight.
Puzzles, Muddles and
your favourite Superintendent.
'An
inadequately controlled muddle'
was how Judge Bowsher described the situation after the Architect's supervision
of a project ceased. The issue of supervision is always present in the chain of
contracts and employment regimes on building sites.
Superintendents,
architects and other consultants or experts are often expected to supervise
but it is not always clear what that involves. In that case, Corfield v
Grant & Ors, the architect had 5 site visits and 5 in office meetings and
sent his assistant to site twice (in the relevant month). All up, the time on
site during 7 visits may have amounted in total to 1 hour. The judge held that
"what is adequate by way of supervision and other work is not in the end to
be tested by the number of hours worked on site or elsewhere, but by asking
whether it was enough". In this example, a hotel development, His Honour
commented that the architect's assistant was not sufficiently skilled or
experienced for fast-tracking a project.
The role of the
supervising consultant engineer was considered in Oldschool.
There the engineer made 6 site visits in 7 weeks. Of course, different
types/frequencies of supervision could be held necessary for different
professions, and in respect of different projects. Here, a party wall was being
under-excavated without adequate shoring. The court was persuaded to find the
engineer was not responsible for doing anything but warn the
contractor about dangers to life and property which were likely to result from
the chosen construction methods:
"I do not consider that the consulting engineer's duty of
supervision extends to instructing the contractors as to the manner in which
they are to execute the work…"
said the judge.
Certifiers
Since
the mid-nineties there has been an increase in reliance upon certificates of
compliance with appropriate codes and regulations. In part this has been
caused by the privatization of certification since many government organizations
have reduced staffs and can no longer perform functions that they have
traditionally undertaken. Often certifiers also act as de facto
supervisors
In Scolari,
a Victorian case, a builder was refused a right to rely upon a
certifier's certificate [which may be a statutory right under S.100 of the
Building Act] on the basis that only $10.00 was charged by the certifier who had
visited the site in order to provide the certificate. In
Austcorp v
Baulkham Hills SC
again a certifier's certificate failed to protect other members of the
construction industry who relied upon it. In that case the Court found the
following defects in the certificate:
-
it was not signed
by the Certifier
-
it did not include
the name of the accrediting body which accredited the certifier
-
it failed to
contain a statement that the work completed in accordance with the plans and
specifications ‘will comply with the requirements of this Regulation’
-
the
building as constructed did not accord with the plans and specifications
purporting to be approved.
The Court gave no
weight to the certificate.
Making sure all
the invitations get issued in time
The
supervision cases illustrate again the need to consider just how many parties
ought be joined in any dispute to ensure that the load of mis-management, or
multiple negligence, is fairly shared amongst those responsible. The election
to join a number of parties in a lawsuit will become even more important now
that insurance cover is so expensive, if not, unattainable, for some
applications. Fortunately, at least two States have introduced modern
legislation allowing judges to better apportion liability between parties.
The low cost of
second opinions
Stop
treating your lawyer like God. If you can’t get them to settle, how
will a bloke who doesn’t even know what went on, get agreement where you can’t
….. Get a second opinion (two Gods are better than one) before you start any
litigation or dispute process – like mediation or expert determination. If you
lose, legal fees hurt like bone grafts…[and you have that long waiting
period for surgery]
Call us for that
second opinion by a construction lawyer: remember EXPERIENCE counts [and
allows us to discount our rates in claims over $500,000. ]
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