Towards Harmonisation of Construction Industry Payment Legislation: A Consideration of the Success Afforded by the East and West Coast Models in Australia

Abstract

This article considers the success of the two distinct construction industry payment legislative models operating in Australia -"East Coast" and "West Coast" -in achieving their objective of improving cash flow throughout the construction industry. Success parameters are identified by the authors -namely: the levels of justice afforded by the legislation, the administrative and legal burden generated by the legislation, and the impact of the legislation on the relationships between the contracting parties -which are used as a basis to discuss and compare the performances of the East and West Coast models. It is concluded that the West Coast model provides a more just dispute resolution process, generates less administrative and legal burden, and is more conducive towards establishing positive relationships between contracting parties. However, it is recognised that there is a need for more data to be gathered from construction industry stakeholders before any firm recommendations can start to be made as to the most appropriate conceptual framework and detail for a harmonised approach.

Statutory adjudication in Western Australia: adjudicators’ views

“…Interestingly, although all legislations modelled the UK Act in one way or another, there are some major differences in the legislative models in different states of Australia. The two models are sometimes known as "East Coast Model" and "West Coast Model" (Coggins, 2011;Coggins and Donohoe, 2012;Coggins et al, 2010;Speranza, 2011;Zhang, 2009). …”

“…Geographically in Australia, all states in the east and south followed one model while Western Australia and Northern Territory followed another. Therefore the two models were sometimes known 56 ECAM 22,1 as "East Coast Model" and "West Coast Model" (Coggins, 2011;Coggins and Donohoe, 2012;Coggins et al, 2010;Speranza, 2011;Zhang, 2009). These names might not be appropriate when we include the UK, New Zealand and Singapore in the discussion.…”

“…Interestingly, the laws in the Australian East Coast Model are all titled "building and construction industry security of payment acts", while laws in the UK Model are mostly known as "construction contracts acts". Table I Provides a statutory progress payment claim procedure which cannot be contracted out Does not provide a statutory progress payment claim procedure Provides a rapid adjudication procedure Provides a rapid adjudication procedure Major characteristics Davenport (2007), Davenport (2011) Davenport (2007), Brand and Davenport (2011) It is a certification process/defined scheme It is a traditional process/ non-specific scheme Mirrors contractual certification process: the role of adjudicator is that of a payment certifier Does not specify that only one party can make claim Does not limit to progress payment Only applies to progress payment claims made up the contractual link Bell and Vella (2010) and Speranza (2011) More evaluative/investigative in nature Pay now, (maybe) argue later Coggins et al (2010), Coggins (2011), Coggins andDonohoe (2012) Restricted to consider the law, the contract, and documents duly submitted Evaluation Davenport (2007), Brand and Davenport (2011) Davenport (2007), Brand and Davenport (2011) Imbalance is not a problem More expensive, an adjudication in UK can be 20 times more expensive than one in East Coast Model Coggins et al (2010), Coggins (2011), Coggins and Donohoe (2012) Higher level of procedural and substantive justice Limited in scope, enables rapid and relatively inexpensive adjudication of progress claims Imbalance as only one party can make claims Can be abused by claimant to submit "ambush claim" or to claim damages Unjustified incursion of freedom of contract Coggins et al (2010), Coggins (2011), Coggins and Donohoe (2012) Generates significant consequential administrative and legal burdens upon the industry Lack of procedural and substantive justice Effective in terms of swift and cheap resolution of progress payment claims Coggins and Donohoe (2012). There have also been comparisons of the NSW Act with laws in other countries.…”

Developing a fuzzy risk assessment model for guaranteed maximum price and target cost contracts in South Australia

“…While "Delayed payment on contracts" was identified as the least significant risk group among the five KRGs, the problems associated with delayed payments have attracted worldwide attention of the construction industry in recent years and a plethora of effective regulatory measures have been put forward to mitigate this risk in Australia in particular (e.g. Coggins et al, 2010), so the respondents did not regard it as a very significant risk group in this study.…”

The New Zealand Construction Contracts Amendment Act 2015 - For Better or Worse?

“…The Act commences on 1 December 2015 except for the parts dealing with the inclusion of consultants, which commences 1 September 2016, and the introduction of retentions to be held in trust, which commences 31 March 2017. Coggins, Fenwick Elliott and Bell (2010), when comparing some of the equivalent Acts in Australia against the NZ Act identified several advantages of the NZ Act, including (i) allowance for legal and non-legal representation, (ii) any pre-agreement of adjudicator to be non-binding, (iii) both parties to the dispute having the opportunity to defend themselves, (iv) maintaining some element of freedom of contract to agree any payment provision and making payment provisions in the Act only a default provision, and (v) allowing initiation of disputes both up and down the supply chain, insinuating the Act was fairly balanced.…”