Thursday, November 18, 2010

Security of Payment Registrar supports process over disputes

Michael Chersteman, the BCIPA (Qld) registrar, in an address at the BDPS (Building Dispute Practitioners Society) annual dinner, talked about his views of the Top 10 criticisms of the Queensland security of payment act.  These criticisms are:

  • The pendulum has swung too far towards claimants,
  • It is not intended for payment disputes between large parties,
  • The lawyers have hi-jacked it,
  • It is too complicated,
  • Claimants use the Act to "ambush" respondents,
  • it is not intended for delay claims,
  • Some ANA's are "claimant friendly",
  • Adjudicators ignore contract provisions,
  • it is unfair that claimants can not respond if they have not served a payment schedule;
  • Adjudicators are a bunch of dopes,

Essentially, he does not swallow any of them, but he made a strong point that the Act primarily establishes an orderly payment process and that adjudicators should act more like certifiers than quasi-judges.  

He also talked about the rise of 'creative' contract clauses, designed to impede the operation of the Act, including "look around the corner" provisions, popular with major State government subcontracts.

Most of the current advice in relation to the Act is from legal and claims firms who, quite correctly, concentrate on the collection process and the litigation that surrounds adjudication.  After all, this is their end of the business.

Sadly, there are few champions of the substantial benefits of the payment process established  by the Act.  The professions with the most to gain are accountants and quantity surveyors and they have been ambivalent about driving the process.

State government departments are not championing the Payments Act process in the way that they could and should.

The benefits of the process are:
  • it protects entitlements to payment;
  • it creates a consistent, transparent payment process;
  • it establishes reasonable terms of trade, especially for SME's,
  • it builds trust and business relationships;
  • it creates "bankable" security;
  • it prepares parties for rapid collection in the event of default, and
  • it prepares parties for rapid adjudication of disputed payment claims.

It is time for the professions, Accountants, architects, engineers and quantity surveyors to step up and champion the excellent process that governments around the country have gone to the trouble of establishing for the sustainability of the construction industry.

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