The reference arose from sustained evidence of problems experienced by the building and construction industry primarily as a result of the practice of subcontracting. In a conventional building contract the client pays the head contractor, who engages other contractors (or subcontractors) to perform particular work or supply materials. Problems occur when there are insufficient funds available to pay subcontractors for work done or materials supplied, for example if the head contractor is declared insolvent.
Liens legislation would permit subcontractors to register liens against the land on which building operations were being carried out, as security for payments due to them under their contracts. Charges legislation would enable subcontractors to charge money due from the owner to the builder, and the superior subcontractors.
Terms of Reference
In June 1974 the Commission was asked to advise on the practical effects of enacting liens and charges legislation to protect the interests of persons involved in the building and construction industry.
Outcomes
Following consideration of the submissions, the Commission recommended that no legislative action be taken to provide for registration of contractors’ liens and charges. It did, however, suggest that alternative proposals for the protection of those engaged in the building and construction industry be examined by government.
