Statutory Construction Adjudication: Analysis of the New Zealand and Malaysian Legislations

Abstract

The construction industry contributes significantly to any country’s economy. However, there remain two chronic problems. They are: (i) delayed or non-payment, and (ii) costly and protracted dispute resolution. The severity of these problems have led to several jurisdictions including the UK, New Zealand, Singapore, Malaysia, and Australia to legislate on payment provisions and introduce adjudication as a rapid dispute resolution method. This research was done to analyse the effectiveness of adjudication provisions in legislation governing payment and adjudication focused on the New Zealand and Malaysian Acts. To achieve this aim, research objectives were formulated under 6 areas: (i) analysis of construction dispute resolution methods, (ii) key coverage and scope of the adjudication provisions in the Acts, (iii) clarity of legislative drafting and style, (iv) time taken to resolve disputes in adjudications, costs of adjudications, and quality of adjudicators’ decisions, and (v) quality of adjudicators and their training, and (vi) an initiation of the development of a decision-making model for adjudication legislation. These objectives were achieved using a mixed method to analyse the key features and effectiveness of the adjudication provisions in these Acts. The mixed method comprised legal documentary analysis by examining primary and secondary legal sources (including legislation and case law), a quantitative approach (through questionnaires distributed to adjudicators in New Zealand), and a case study relating to the Malaysian Act. The findings show that although all these Acts use the same term - adjudication, a deeper analysis shows some of the concepts and details are significantly different among jurisdictions. There appear to be two major models – the narrower New South Wales model that focuses on payment adopted by several other states in Australia and Singapore and the wider UK model adopted with modifications by New Zealand where all disputes may be resolved through adjudication. The Acts in New Zealand and Malaysia have very similar objectives on dispute resolution, but a detailed analysis shows the details are different. The findings show there is incongruence between the objectives and the detailed provisions of the Malaysian Act. The Malaysian Act provides the longest adjudication durations and the most elaborate adjudication processes including provisions for hearings, ordering discovery of documents, and even ordering evidence to be given on oath. However, despite the long durations, the Act takes the narrow path of only allowing adjudication for payment claims for work done or services rendered. Empirical evidence was also obtained from a questionnaire survey of adjudicators in New Zealand, which had a response rate of 73% of the total number of adjudicators listed on the then three adjudicator authorised nominating authorities in New Zealand. The main findings from the documentary analysis and the survey indicate that (i) the legislative drafting style of the New Zealand Act and some of the Australian Acts were written in modern plain language while others such as Singapore adopted the traditional style, (ii) the majority of adjudicators in New Zealand found the Act easy to understand, the actual time taken in adjudications were generally within the overall timeframes provided under the Act, and costs were well contained. Case analysis shows a significant number of adjudicators’ decisions that were referred to court were related to procedural matters. Although the proportion of adjudication decisions that were referred to court are relatively small at under 5%, if the quality of adjudicators were improved through enhanced training, there may be a possibility the number of cases being challenged in court could be lowered. A new task-based approach to developing adjudicator standards and testing and accrediting adjudicators was developed as a proof-of-concept. This approach was demonstrated using the Malaysian Act as a base and modified and adapted to apply to the New Zealand Act. The findings also led to a development of a preliminary decision-making model on adjudication legislation. To demonstrate its potential application the model was applied to the Malaysian Act and the first court case on adjudication in Malaysia. Among the conclusions is that the decision-making model could be used by countries considering adjudication and those considering amending their existing payment and adjudication Acts. The model can help in making informed choices and direction on concepts for the Act being considered. Among the conclusions formed as a result of these findings was the recommendations to the Commonwealth Association of Legislative Counsel to produce a uniform drafting style guide for all Commonwealth countries. Consistency in drafting style can help avoid discrepancies in interpretation.