News

Construction disputes

Major security of payment upheaval needed: Murray Review released

Released to the public on 21 May 2018 by John Murray AM, the ‘Review of Security of Payment Law – Building Trust and Harmony’ report is a forward thinking and comprehensive look at one of the most dynamic and widely utilised areas of building and construction law, the security of payment legislative regime.

Morrissey Law & Advisory is firmly of the view that the security of payment provisions across Australia are in dire need of harmonisation, and we largely agree with the position adopted in the report.

The report is extensive and contains over 80 recommendations that Mr Murray believes will lead to a more harmonious, effective and accurate security of payment system, including the adjudication of payment disputes.

We have distilled the vast number of recommendations down to five key points, which will give an insight into what will potentially be the future of the security of payment regime across Australia.

1.Australian Government intervention and nationally consistent SOP laws

The report is drafted with the view that the SOP laws should be consistent and cohesive across the nation, and states this will only be possible by intervention of the Federal Government.

This nationwide approach is particularly important as the propensity for construction to be undertaken by entities in several states is only increasing by the day.

We believe this is well overdue, given the vast differences across jurisdictions that currently make navigating the laws extraordinarily difficult.

East coast rules: The preferable model to achieve the primary objective of contractor cashflow

While the report recommends many particular aspects of each state’s SOP regime, the overall consensus is that the east coast model (being the model in force in every state and territory other than WA and NT) is the preferred national model moving forward.

This is due in part to the robust nature of the east coast model which promotes a ‘pay now, argue later’ philosophy.

As regular practitioners in the SOP space, we agree that the east coast model is the better model in this regard.

The need for a balance between speed and fairness in the adjudication process

The report recommended the following be made applicable nationwide:

  • A provision stating that where an adjudicator has committed jurisdictional error of law in part of an adjudication determination which does not affect the whole of the decision, a court with the requisite power may sever that part of the decision that constitutes an error of law, to preserve the correctly determined parts of the decision;
  • The claimant’s ability to withdraw and make a new application if an adjudicator has not accepted its application within 4business days, an adjudicator fails to determine an application within the prescribed timeframe (under the South Australian SOP Act) or an adjudicator has given notice of their withdrawal from the adjudication;
  • The ability of the claimant to suspend construction work being performed for the respondent in certain circumstances and subject to the requisite notice provision (under the NSW SOP Act);
  • A party’s right to make an application for a review of an adjudication determination if the adjudicated amount is equal to or greater than $100,000 of the scheduled amount, or $100,000 (or more) lower than the claimed amount; and
  • The respondent’s obligation to make payment of any adjudicated amount within 5 business days of the determination, or such other period as decided by the adjudicator.

Appointment, training and assessment of adjudicators should be left to regulators

The report recommends retaining Authorised Nominating Authorities (ANA) to refer adjudication applications to adjudicators, a more consistent regulatory focus on ANAs and also that adjudicators should be trained, registered and graded by a relevant regulatory authority and not ANAs or any other private body.

Currently, ANAs are responsible for appointing adjudicators and their conduct and activities are monitored by the regulator, however, there is no uniformity regarding the degree of regulatory oversight of ANAs as some regulators impose stricter oversight methods than others and the legislative provision regarding ANA monitoring differ from jurisdiction to jurisdiction.

Victoria and Tasmania are the only jurisdictions in which the regulator is specifically allowed to impose conditions on an ANA’s authorisation.

It is recommended that the legislation should contain provisions:

  • regulating the oversight of ANAs which required ANAs to provide the regulator with such information as reasonably requested to enable the Regulator to monitor the operation of the legislation and the ANA’s and adjudicators’ activities;
  • regarding the registration, renewal, suspension and cancellation of adjudicators and the review of adjudicators’ performance;
  • so that where an adjudicator has been found by a court to have acted not in good faith twice or more in the last 5 years, such a person must not be nominated or appointed as an adjudicator by an ANA.

The report also recommended that adjudicator’s fees should be fixed at a rate prescribed by the regulator.

Implementing statutory trusts to protect lower tier contractors

The report recommends that in order to protect contractors on the lower tiers of the contractual chain, statutory trusts should be used on all projects worth over $1 million, whereby money paid by a principal never forms part of the consolidated revenue of any party in the contractual chain, except where that party is entitled to claim money as part of its direct contribution to the works or supply.

A statutory trust operates so that whenever a payment is made by a principal or by a head contractor or subcontractor which includes payment in respect of work and materials carried out and supplied by subcontractors, sub-subcontractors or suppliers, then the lead contractor will, from the moment of receipt of those moneys, hold them as trust moneys on behalf of the subcontractors of sub-subcontractors or suppliers as the case may be, for the sole purpose of payment of moneys due and payable to such subcontractors, sub-subcontractors or suppliers.

The major difference between the recommended statutory trust and its predecessor, project bank accounts, is that the PBA regime only provides for the holding and payment of money for and to contractors directly below the lead contractor in the contractual chain by a bank, whereas the statutory trust concept protects all contractors down the entire contractual chain.

Overall, many of these recommendations point towards the same notion, that the balancing act between speed and fairness in the adjudication process as it relates to SOP disputes, must be given the appropriate attention and effort in order to achieve a nationally consistent dispute resolution process.

Morrissey Law & Advisory will keep you updated in respect of the impact this report has on any legislative action, in the meantime do not hesitate to contact us if you have any questions regarding your rights and obligations under the Security of Payment legislative regime that is applicable to you.

This article was prepared by Michael Morrissey and Patrick Ireland.

Disclaimer: This publication by Morrissey Law & Advisory is for general information and commentary only and should not be considered or relied upon as legal advice. Formal legal advice should be sought in relation to any matters or transactions that may arise in relation with communication.

Uncategorized

New window safety requirements for owners corporations

Owners corporations now face a new window safety regime as a result of the introduction of the Strata Schemes Management Regulation 2016, which seeks to increase child protection measures in relation to common property windows in strata property building complexes.

Since 13 March 2018, owners corporations (more commonly known as body corporate) have been required by law to have window safety devices installed on all openable windows which are:

  • More than 2m above the external surface of the building, and
  • Less than 1.7m above the internal floor (i.e. within a child’s reach).

The Regulation defines a compliant window safety device as one:

  • Capable of restricting the opening of a window to 125 millimetres,
  • Capable of resisting an outward force of up to 25 kilograms, and
  • With a child proof release mechanism.

A visual guide explaining which windows this new legislation applies to is available at:

http://www.fairtrading.nsw.gov.au/ftw/Tenants_and_home_owners/Strata_schemes/Window_and_balcony_safety/Window_safety_device_requirements.page#Which_windows_does_this_apply_to?_

As an alternative to the traditional safety devices which only allow the entire window to open 125 millimetres, the installation of security screens, such as bars or grills on the windows, is also appropriate. This is provided that the screen can withstand the required force and does not have gaps larger than 125mm.

Owners corporations that fail to install the appropriate window safety devices on all applicable windows may be liable to pay fines.

A list of FAQs regarding the appropriate measures to be taken is available at:

http://fairtrading.nsw.gov.au/ftw/Tenants_and_home_owners/Strata_schemes/Window_and_balcony_safety/Window_safety_device_requirements.page

If you have any questions regarding the deadline, installation or compliance requirements regarding these changes, or you require advice on the legal requirements of any aspect of strata property, please contact Morrissey Law & Advisory

commercial law

Updating your privacy policy and why it is important

Since the introduction of the Australian Privacy Principles (APP) there has been frequent reviews by businesses and organisations on their privacy policies. Businesses and organisations that are bound by the Privacy Act 1988 (Cth) (the Act) are required under the APP to ensure that they have up to date privacy policy that accurately describes how the business or organisation manages personal information.

Personal information is defined under the Act as, “information or an opinion about an identified individual, or an individual who is reasonable identifiable, whether the information or opinion is true or not and whether the information or opinion is recorded in a material form or not.”

An entity operating outside of Australia will still have obligations under the Act if the entity has an Australian link. This includes if the business was formed in Australia, has its central management and control in Australia or is carrying on business that collects or hold personal information in Australia.

The introduction of the General Data Protection Regulation (GDPR) by the European Union ensures there is adequate protect of personal data of EU citizens. The handling of personal information in Australia is not limited to only businesses operating in Australia as the GDPR will affect Australian businesses that operate or conduct market research in the EU. These include businesses who:

  • Has an office in the EU;
  • Offers goods or services to EU citizens; and
  • Monitor the individuals of the EU.

The Regulations will come into force on 25 May 2018 and if you want more information on how the GDPR may affect you, Morrissey Law & Advisory has previously analysed this in our article on the GDPR.

It is important to note that each privacy policy will vary depending on the particular functions and activities of your businesses. A privacy policy is paramount to ensure that consumers are adequately informed on how their personal information is being collected and handled. It allows consumers to establish trust and allows businesses to ensure they are managing the relationship of existing and potential customers.

Here are some useful tips to assist you in making sure your privacy policy includes the information required.

  1. Ensure you have an overview of the personal information that is held by your business. It is important to ensure you are aware of how the personal information is being handled, the policies and practices. This will ensure you are accurately describing to consumers how your business handles their personal information.
  2. Make your privacy policy specific to your business or operation and consult and seek input from other departments in your business to ensure you are encompassing all areas in your business.
  3. Arrange the information to focus on what readers are likely going to find important. Ensure that your privacy policy is not just a legal document but something that is simple and easy to read for consumers. Summarise where possible and be specific to ensure that information proivides clarity.

If you have any questions about your privacy policies and whether you comply with legislations and regulations please do not hesitate to contact Morrissey Law & Advisory.

 

This article was prepared by Hamish Geddes and Mary Ann Wen.

Disclaimer: This publication by Morrissey Law & Advisory is for general information and commentary only and should not be considered or relied upon as legal advice. Formal legal advice should be sought in relation to any matters or transactions that may arise in relation with communication.

commercial law

Safeguarding Australia’s assets: The Security of Critical Infrastructure Act

The Security of Critical Infrastructure Act 2018 brings with it a new regime of reporting obligations and ministerial powers, aimed at safeguarding Australia’s most relied upon infrastructure assets from the threat of sabotage, espionage and coercion posed by foreign involvement and ownership.

The Act received assent in April this year.  The two major developments of the Act are the implementation of a Critical Infrastructure Assets (CIA) Register and the conferral of a last resort directions power on the Minister for Infrastructure and Transport.

Critical Infrastructure Assets Register

There are four broad categories of CIAs covered in the register:

  • Ports that are vital for defence purposes, liquid fuel imports and bulk cargo exports;
  • Gas processing, storage and distribution facilities and networks ultimately servicing at least 100,000 customers;
  • Electricity networks systems and interconnectors that service at least 100,000 customers, as well as generation stations that are critical to ensuring the security and stability of a state or territory’s electricity network and stations contracted to provide a system restart service; and
  • Water or sewerage systems or networks that service at least 100,000 customers.

(A complete list of the asset coverage criteria is available through the Attorney-General’s website at https://www.ag.gov.au/Consultations/Documents/critical-infrastructure-bill/CIC-factsheet-security-of-critical-infrastructure-bill.pdf)

Which entities are required to report to the Critical Infrastructure Centre?

The Critical Infrastructure Centre administers the Trusted Information Sharing Network, which is used to engage with CIA owners and is the forum through which owners and other involved entities report the required information.

Two types of entities are required to report to the CIC, Direct Interest Holders and Responsible Entities.

Direct Interest Holders are entities holding greater than 10% direct interest in the CIA, or any entity in a position to directly or indirectly influence or control the asset.

Responsible Entities are bodies that are licensed to operate CIAs.

What information must be disclosed and when?

Direct Interest Holders are required to report interest and control information:

  • The legal name, ABN, address and country of origin of the entity;
  • The type of interest (legal equitable, lease or licence interest) and the level of interest (shareholding) the entity holds in the CIA; and
  • Details regarding the control and influence the entity has over the CIA, such as board appointments and voting rights.

Responsible Entities are required to provide operation information:

  • The location of the asset and a description of the area that the asset services; and
  • The name, address and incorporation details of the entity.

Entities will initially have six months to report the CIC’s Trusted Information Sharing Network, following the initial reporting period, entities will then be required to notify the CIC of any changes to the required information within 30 days of a change.

How will the Bill be enforced?

The Minister will have the discretion of seeking, by application to a relevant court, the imposition of civil penalties, enforceable undertakings and/or injunctions.

How will the Ministerial Directions Power effect businesses?

The proposed Directions Power will allow the Minister to issue a direction to an owner or operator of a CIA to mitigate national security risks in instances where the risks cannot be managed through collaboration with owners and operators or via any existing regulatory frameworks.

The specific instances in which the Minister may exercise this power:

  • If there is a risk identified which is prejudicial to the security of the CIA; and
  • Through collaboration, the owner or operator does not or cannot implement mitigations to address the risk; and
  • There are no existing regulatory frameworks that can be used to enforce such mitigations.

If you have any questions regarding your reporting obligations or the ways this legislation may affect your ownership interest, please contact Morrissey Law & Advisory.

This article was prepared by Patrick Ireland and Michael Morrissey.

Disclaimer: This publication by Morrissey Law & Advisory is for general information and commentary only and should not be considered or relied upon as legal advice. Formal legal advice should be sought in relation to any matters or transactions that may arise in relation with communication.