Enforcing Adjudication DeterminationsStephen McComishPartner, Jones Day October 2016

Media statement on 22/09/16

• Hon Sean L’Estrange: Minster for Mines and Petroleum; Finance; Small Business

• Hon Michael Mischin: Attorney General; Minister for Commerce

“providing a faster and more efficient means for a party to enforce an adjudication determination through the courts”

Introduction and agenda

• Enforcement: Adjudicator purports to determine an application under s. 31(2)(b). How does the applicant get it enforced?

• Today’s agenda: Why and when do you need to enforce? How do you currently enforce? The new regime: The Construction Contracts

Amendment Bill 2016 (WA).

PART 1:

ENFORCING ADJUDICATION DETERMINATIONS

Effect of determinations (division 4)

• Effective despite other proceedings. (s. 38)

• Unless determination provides otherwise, interest at prescribed rate under Civil Judgments Enforcement Act 2004 is payable on any unpaid portion of the determination after date stated by adjudicator until full compliance or a judgment entered by the court. (s. 39)

• Payments on account. (s. 40)

• Determinations are final, but can correct accidental slips or omissions, a material arithmetic error or material mistake in description of any person, thing or matter. (s41)

• Non payment of a determined amount also gives rise to a contractor’s suspension rights (see s. 42 of the CCA).

Why do you need to do anything else?

• Respondent does not comply:

Considers application should have been dismissed

Cannot comply (eg, does not have the money)

Recalcitrant

• A determination alone does not force a party to comply.

How do you enforce?• Section 43(1) of the CCA states that:

a determination may, with the leave of a court of competent jurisdiction, be enforced in the same manner as a judgment or order of the court to the same effect, and if such leave is given, judgment may be entered in the terms of the determination.

• Step 1: Have the determination certified by the Building Commissioner. This is a straightforward process which involves sending the determination to the Building Commission.

• Step 2: Identify the ‘court of competent jurisdiction’. This will depend on the value of the determined amount.

$75,000 or less – Magistrates Court of Western Australia

$75,001 to $750,000 – District Court of Western Australia

$750,001 and over – Supreme Court of Western Australia

Mechanics of enforcementThe documents to be filed in enforcement proceedings will differ slightly depending on the court. However, it will usually require two documents:

1. An originating motion – filed and served

• Commences the court proceedings;

• Notifies the other party of the application;

• Describes the application for leave to enforce and states the amount to be enforced (including interest).

2. An affidavit – sworn by a representative of the applicant:

• Attaches the certified determination; and

• States the extent of the determined amount that remains outstanding.

What next?• The respondent will (or should) enter an appearance.

• The Court considers the application and (unless there are reasons not to) will grant leave to enforce the adjudication determination.

• The determination is then entered as a judgment and can be treated in the same way as a judgment of the court.

• This grants access to the mechanisms in the Civil Judgments Enforcement Act to obtain payment including (if necessary) a means inquiry, the seizure and sale of assets, and contempt of court.

Judicial review and resisting enforcementThere are limited circumstances where leave will be refused:

1. The determination sum has been paid.

2. The determination is invalid or was made without jurisdiction.

For example, there must be a construction contract and a payment dispute before an adjudicator can make a determination. A determination made without these ‘jurisdictional facts’ may be set aside.

3. A party’s insolvency (along with a significant offsetting claim by the resisting party) has also been sufficient to resist enforcement.

4. An adjudicator’s decision was so unreasonable that no reasonable adjudicator could have arrived at it.

However, an adjudicator can make mistakes. An incorrect decision will not necessarily invalidate a determination.

PART 2:

CHANGES TO THE ENFORCEMENT REGIME

Review of the CCA

Both the Evans Report and the Amendment Bill addressed key issues regarding the enforcement of adjudication determinations.

The Evans Report: Enforcement• Enforcement was not a major issue, only seven responses raised concerns

regarding the enforcement process.

• However, there were concerns of a perception that disgruntled parties were using the enforcement regime to delay the payment process.

• There were also concerns of a lack of awareness in the State’s lower courts regarding the enforcement process. One responder gave an example of a four month delay in enforcing a determination in the Magistrates Court.

Recommendation:

Consideration should be given to the introduction of complementary regulations of the Courts, or a statutory amendment to s. 46 to allow speedy registration of adjudication determinations as a court order.

Construction Contracts Amendment Bill• Against the upshot of recent media scrutiny regarding the management of

publically funded projects, the State Government recently released its response to the Evans Report.

• The Government’s response has been quickly followed by draft amendments to the CCA in the form of the CC Amendment Bill.

• Amongst a raft of other changes, the CCA Amendment Bill foreshadows changes to the enforcement of adjudication determinations.

• The State Government appears to be acting on the complaints that the enforcement process was too complicated and time consuming.

• The proposed changes in the CC Amendment Bill are not dramatic, but they do touch on a number of issues, including the timing of adjudication applications and the enforcement of determinations.

New enforcement process• The proposed amendments to s. 43 removes the requirement for a

successful party to seek leave from the relevant court to enforce a determination.

• A successful party will be required to simply file and serve:

• A certified copy of the determination (as before); and

• An affidavit stating the amount that remains outstanding.

• This amendment was designed to copy the process of registering an order of the Building Commissioner with the courts pursuant to section 50 of the Building Services (Complaint Resolution and Administration) Act 2011 (WA).

Amendments to s. 43• The proposed amendments to s. 43 are designed to

simplify and expedite the process of enforcing determinations.

• These amendments will not remove the right for a party to seek judicial review. This is a constitutionally protected right.

Conclusion• New enforcement regime will be more efficient.

• BUT applications for a stay and judicial review will still result in delay (perhaps not as much).

• Timing?

Introduced, First and Second reading in legislative Assembly on 22/09/16

Commencement:

Section 1 & 2 – Royal Assent

The rest other than 7 & 20, 15/12/16

Section 7 & 20, 3/04/17)?

QUESTIONS?