Complex Legislation and the Death of Queensland Adjudication

The Queensland Government has introduced into Parliament the Building Industry Fairness (Security of Payment) And Other Legislation Amendment Bill. The Bill is 265 pages, containing many substantial penalties for breaches.

115 pages are devoted to the Building Industry Fairness (Security of Payment) Act 2017 (BIF Act). This means the new amended BIF Act will be about 300 pages. This compares to the ‘model’ NSW Security of Payment Act of 40 pages. The NSW Act can generally be understood by subcontractors and other building industry participants. The amended Queensland BIF Act will be incomprehensible.

81 pages of the BIF amendments relate to Project Bank accounts.

The amendments introducing project bank accounts attempt and fail to translate the extraordinarily complex project bank account proposals, which dominate government thinking, to something which vaguely resemble the very simple cascading statutory trust alternative. Cascading statutory trusts protect all levels in the contractual train from principals to sub-subcontractors. Project bank accounts are designed to protect government and tier one contractors and are accompanied by mountains of paperwork and unnecessary cost. All the independent reviews have recommended cascading statutory trusts. They include WA reviewer Wayne Martin AC QC (1995), Royal Commissioner Terrance Cole AO RFD QC (2003), NSW Reviewer Bruce Collins QC (2012), Senate Economics Reference Committee recommendation (2015), Commonwealth Reviewer John Murray AM (2017) and WA Reviewer John Fiocco LLM (2018).

Despite all this history, when the Queensland Government engaged Deloittes (2016 – 2017) to review ‘security of payment reform for the building and construction industry’, the option to establish deemed statutory trusts was EXCLUDED from the options given to Deloittes to review.

Through 2017 – 2019 both the Ontario Provincial Government (Canada) and the Canadian national government commissioned major reviews to recommend ‘prompt payment and security of payment’ reforms. Both reports recommended cascading statutory trusts. Acting on the recommendations, the Ontario Government recently passed the ‘Construction Act’. The entire Act, which in most ways is far superior to the BIF Act, totals 59 pages of which 2.5 pages provide for statutory cascading trusts. That Act is clearly written and comprehensible.

The Building Minister’s Forum (consisting of all Ministers with responsibility for the building industry) has agreed to examine the Murray Review cascading statutory trust recommendations and develop model legislation for adoption by the States. However, it would seem, such sanity doesn’t exist in Queensland.

The legalise, verbosity, complexity and size of the 300-page BIF Act (after amendments) reflect a bureaucracy gone mad. Government needs to regain control of the agenda and simplify their security of payment legislation so industry participants may use the Act without spending tens of thousands of dollars on legal advice before the adjudication application process can commence.

Despite much spin about consultation, the Queensland Government has not engaged building industry participants for many years. Instead they have used their ‘’consultations’ to sell their predetermined views. Government has layered ‘reform’ on top of ‘reform’ to the point where the security of payment process is incomprehensible. Participants want simplicity, they want to understand their options, they want access to the same free professional advice on the procedures to follow to exercise their rights as is available in all other States. They don’t want a Building Commission that takes their adjudication application fees, looks at their application, decides for any of innumerable reasons it may be invalid, advises the claimant to withdraw the application and keeps the application fee.

It should surprise no-one that the number of adjudication decisions in Queensland has plummeted and the number of invalid applications increased from a fall over rate 10 years ago of 23% to 169% last financial year. Refer The Death Knell Bell Does Toll for Queensland Adjudication

Since 2004, the Queensland adjudication registrar has published monthly statistical reports about the number of adjudication applications and decisions. At the time when the monthly reports are highlighting the most appalling of results, the registrar has ceased publishing the monthly reports. She claims, but I do not accept, that discontinuance of the reports is unrelated to the gross failures of the Queensland adjudication regime. Her reason: ‘I will perform no more or no less than my statutory functions’.

Government in Queensland needs to regain the confidence of building industry participants. To begin, they should scrap their 300 pages of legalise, adopt the Murray Review recommendations and, in collaboration with their State colleagues, develop harmonised and simple security of payment legislation.