By Dr Samer Skaik and Ali Alkhatatneh
Low-value claims adjudication has become an increasingly intricate process, particularly for small subcontractors and individuals lacking legal expertise. This post delves into key factors influencing complexity in low-value claims adjudication, as outlined in our recent academic article commended in the 2023 Brooking Prize by Society of Construction Law Australia.
Legalese-Laden Legislation:
A significant hurdle identified by study participants is the legalese-laden nature of the Security of Payment (SOP) Act, creating barriers for claimants. The complexity of legal language and excessive details within the legislation poses a challenge for average builders and subcontractors. The study reveals that approximately 75% of claims require legal guidance due to misunderstandings, leading to potential invalidations. However, perspectives differ on whether this complexity acts as a substantial barrier, with some attributing it to contractors’ unwillingness to engage with the Act, while others highlight the necessity of legal professionals to navigate its intricacies.
Lawyer & Court Involvement:
The involvement of legal professionals introduces another layer of complexity. The superseded WA Act, for instance, is criticised for its appeal process, resulting in multiple court appeals, significant legal fees, and delays. Divergent court rulings and inconsistent decisions, as highlighted in Southern Han Breakfast Point v Lewence Construction [2016] HCA 52, further complicate the adjudication landscape. Participants express concerns that court challenges undermine the Act’s aim of facilitating swift resolutions, while others view legalistic processes as necessary for clarity and amendments.
Procedural Rigidity:
The stringent procedural requirements of the adjudication process emerge as a significant concern for participants. The risk of invalidated claims due to jurisdictional issues is particularly pronounced for smaller subcontractors, who may struggle with the numerous requirements within limited timeframes. Participants emphasise the need for clarity on valid reference dates and the risk of minor administrative errors leading to invalidated claims. Participants also point to the systemic challenges arising from procedural rigidity, including the impact of rigid timeframes for serving payment claims and lodging adjudication applications.
Conclusion:
The complexities surrounding low-value claims adjudication demand a nuanced understanding of the legislative landscape, legal involvement, and procedural rigidity. As the construction industry grapples with these challenges, stakeholders must engage in informed discussions to streamline the adjudication process, ensuring accessibility and fairness for all parties involved. This post serves as a starting point for navigating the labyrinth of complexities within the low-value claims adjudication domain, shedding light on the perspectives of industry experts and the potential avenues for improvement.