Media

Lighter workload for construction lawyers

The Australian Financial Review - 21 May 2004
By Tracy Lee

Advocates of alternative dispute resolution (ADR) said NSW construction lawyers could expect their workload to diminish as contractors brought more disputes through a statutory adjudication forum instead of using the courts.

Since amendments were made to the Building and Construction Industry Security of Payments Act in March 2003, more than 658 applications for statutory adjudication have been made.

David Campbell-Williams of the Institute of Arbitrators and Mediators Australia said the number of construction disputes listed on the construction list in the NSW Supreme Court had diminished.

"There has been a definite shift in the work [of construction lawyers]. The main work in back-end construction law will decrease and work will instead be taken up in preparation of adjudication claims."

But lawyers said the legislative reforms that have given rise to the increased use of statutory adjudication had increased their workload and that of the courts.

Corrs Chambers Westgarth construction lawyer Scott Laycock agreed lawyers were doing more adjudication work, but put it down to the increased number of claimants rather than an abandonment of the court system in favour of ADR.

Mr Laycock said the adjudication process was less formal and strict than court rules, and this meant contractors felt it was "worth the role of the dice" to bring a claim.

Enacted four years ago, the Security of Payments Act was designed to enable contractors to recover progress payments withheld by a principal.

However, a determination by an adjudicator, while binding, is only an interim measure and can be challenged during arbitration or in court.

Mr Laycock said several challenges had been undertaken, and estimated about 20 challenges to the jurisdiction of an adjudicator had been brought to the NSW Supreme Court in the past 12 months.

"The technology and construction list has been busier since the amendments," he said.

Challenges to claims are hardly surprising given the amounts of money involved.

Records from the NSW Department of Commerce show the total value of claims since March 2003 exceeds $205 million.

The average amount claimed in an adjudication is $276,000, while the maximum determination made in the last year was for $25.9 million.

The president of the IAMA, Ian Nosworthy, said that while adjudication was an interim measure, it had the effect of reducing the number of claims that would otherwise end up in arbitration or court.

"They [the parties] have heard what the adjudicator has said on the issue, and it gives them an idea of what to expect when they go to arbitration or to court and, therefore, parties are more likely to settle."

Mr Nosworthy also said there was a growing movement in the court system to use cost orders to penalise parties who pursued litigation instead of attempting an ADR process. "People spurn ADR at their own risk," he said.

The institute is holding its annual conference this weekend in Sydney and is expected to praise the wide uptake of statutory adjudication as a win for ADR.

However, the legislation is under review and will take its final form next month.

We gratefully acknowledge the permission from Tracy Lee and The Australian FInancial Review to reprint this article.