Major projects & construction 5 Minute Fix 38

Queensland Government Procurement: Ethical Supply

The Queensland Government has announced the commencement of the new:

• Ethical Supplier Threshold; and
• Ethical Supplier Mandate,

under the Buy Queensland Procurement Policy.

From 1 August 2019, all suppliers to the Queensland Government must meet the Threshold requirements as a pre-condition to tendering for Queensland Government work. This means suppliers will need to confirm, among other Threshold requirements, that they have not: 

• paid employees wages below those specified in a modern award;
• failed to make superannuation payments; or
• purported to treat employees as independent contractors when they are not.

The Mandate also applies from 1 August 2019 but its introduction is being staged and at this point only applies to Building, Construction and Maintenance supply contracts entered into after that date (even where the tender process was conducted prior to 1 August 2019). It will apply to Transport and Infrastructure Services suppliers from 1 October 2019 and the dates for application to other suppliers will be determined in 2020.

The Mandate is aimed at addressing concerns around the Queensland Government continuing to do business with suppliers that haven't done what they promised to do by imposing "extra-contractual" penalties for non-compliance. Examples of some non-compliances include:

• failure to deliver local benefits such as commitment to apprentices and trainees or Indigenous (Aboriginal and Torres Strait Islander) businesses;
• non-payment of suppliers and subcontractors; or
• inadequate Workplace Health and Safety systems and standards.

Non-compliance can now result in demerit points being issued by the Queensland Government to the supplier. Demerit points range from 2 to 10 points for minor, moderate or major non-compliances and the accumulation of 20 or more demerit points will result in a 12-month suspension of that supplier tendering for work with the Queensland Government.

Find more information on the changes here.

Stay tuned for further detail as to how the Mandate and Threshold will affect your supply obligations.

Are you ready? NSW SOP Reforms to commence 21 October 2019

In November 2018, the Building and Construction Industry Security of Payment Amendment Act 2018 was passed, introducing significant reforms to the Security of Payment Act 1999 (NSW) (SOP Act).

To facilitate commencement of the reforms, in May 2019, the NSW Government released an exposure draft amending the Building and Construction Industry Security of Payment Regulation 2008 for public consultation.

By Proclamation the NSW Government announced that the Amendment Act will commence on the 21 October 2019. While the amending Regulation is yet to be finalised and published, it is expected to occur in the coming months and that the Amendment Act and amending Regulation will commence concurrently in October 2019.

With the reforms set to commence in less than three months, parties in the construction industry will need to ensure they understand and are prepared for the changes. In particular, parties will now need to review multiple internal processes to avoid breaching the SOP Act (including new offences which have been introduced) and ensure they meet tighter payment timeframes. Directors, in particular, will need to watch out for new liabilities, including certain new offences relating to supporting statements.

When is an arbitration agreement "incapable of being performed"?

The decision of the Supreme Court of Queensland in Bulkbuild Pty Ltd v Fortuna Well Pty Ltd & Ors [2019] QSC 173 provides guidance as to whether an arbitration agreement is "incapable of being performed" in the context of the Commercial Arbitration Act 2013 (Qld).

Despite being a Queensland decision, the decision is of broader interest given the similarities in legislation applying in other Australian jurisdictions, following the harmonisation of domestic commercial arbitration legislation.

The case involved a design and construct building contract that included a dispute resolution clause in which the parties agreed to submit disputes to arbitration. It was agreed that the clause was an arbitration agreement within the meaning of the Act. The Contractor (Bulkbuild) commenced action in the Supreme Court of Queensland against, amongst others, the owner under the building contract (Fortuna). Fortuna sought an order to stay the proceeding brought against it, on the basis that the contract contained a valid arbitration agreement. Section 8 of the Act provides that so long as there is an arbitration agreement that is not null or void, inoperative or incapable of being performed, the court must refer the parties to arbitration.

Bulkbuild argued that the agreement was "incapable of being performed" for the purposes of section 8. Bulkbuild's claim against Fortuna arose out of similar factual matters as its claim against the second and third defendants in the same proceeding. As a result, Bulkbuild contended that there would be a risk of different factual findings if its claim against Fortuna were determined by arbitration but its claims against the other defendants determined by a court.

Justice Bowskill gave short shrift to this argument, finding that having two separate proceedings involving similar factual circumstances would be a "mere inconvenience" that did not render an arbitration agreement "incapable of being performed". Her Honour also went on to elaborate upon circumstances in which an arbitration agreement may be "incapable of being performed" under section 8 of the Act, including:

• where there is contradictory language in the contract that indicates an intention to litigate (rather than arbitrate);
• if a specific arbitrator is stated in a contract who at the time of the dispute is deceased or unavailable; and
• if the arbitration agreement is itself too vague, confusing or contradictory to be performed.

This case highlights that the prospect of inconsistent factual findings in different dispute resolution forums is not enough to render an arbitration agreement "incapable of being performed".

CU colleagues build bridges in the west at the 2019 SoCLA Conference

The longstanding contribution of our Major Projects and Construction Group to the Society of Construction Law Australia’s annual conferences continued last week with the Society’s 2019 Conference in Perth. The Conference featured more than 16 substantive sessions, covering topics from international arbitration to modular construction, along with a vibrant social program including a very well-attended Gala Dinner.

Our colleagues’ involvement included:

• providing four of the six finalists in the Charrett Moot, who fought out the final before a distinguished panel of judges including the Hon Wayne Martin AC QC: George Pasas was part of the winning team, and Alexandria Anthony, James McNicol-Smith and Adele Ta were the runners-up
• Emma Lampard and Dau Dinh’s leading roles on the organising team
• Sean Kelly and Ally van Beers’ presentation on legal issues to be faced in undertaking projects in Australia
• Matthew Bell’s chairing of the Brooking Essay Prize, with the awards presented by the Hon Robert Brooking AO QC.