On 23 September 2020, the Attorney General, Minister Quigley introduced the Building and Construction Industry (Security of Payment) Bill 2002 (WA) (the Bill) into Parliament.
If the Bill is adopted, it will replace the Construction Contracts Act 2004 (WA) (the CCA) and provide a new Act for securing payment under construction contracts in the building and construction industry in Western Australia. It will also provide a more harmonised national approach to security of payment disputes.
The CCA will continue to operate for construction contracts entered into before the commencement of the new Act.
The key features of the Bill are summarised below.
|1||Statutory payment claim process||
|2||Home building work||
The Act will only apply to home building work where:
|3||Maximum payment period||
The maximum payment period under the CCA has been reduced from 42 days to:
|4||Notice based time bars||Notice based time bars terms under a construction contract will have no effect if they are declared unfair by an adjudicator, the court, an arbitrator or expert appointed by the parties. Time bars will be unfair if compliance is not reasonably possible or would be unreasonably onerous, taking into account:
The pay – when – paid prohibition under the CCA will be broadened to prohibit terms in a construction that make:
|6||Time for bringing an adjudication application||The time period for bringing an adjudication application is reduced from 90 business days to 20 business days.|
|7||Frivolous or complex claims||An adjudicator may decide that an adjudication application is frivolous or vexatious, or too complex for a fair determination to be made within the time available. In those circumstances, the adjudicator must determine that no amount is payable and give reasons.|
|8||Adjudication process||An adjudicator may call a conference of the parties, arrange for an inspection or testing to be carried out, or obtain an expert report.|
|9||Adjudication reviews||Either party can apply for review of an adjudication determination in certain circumstances. That review is undertaken by another adjudicator (the ‘review adjudicator’). This process appears to allow a merits review of the original determination.|
|10||Christmas period||The Christmas period exclusion has been expanded from any day that falls between 22 December to 10 January (inclusive).|
|11||Recourse to performance security affected||A party to a construction will only be entitled to have recourse to performance security under the contract if it gives the other party five business days’ written notice of its intention to call on the security.|
|12||Deemed trust schemes||A trust scheme has been introduced where retention monies are held on trust by the party to a construction party who retains the money and that party must ensure the money is paid into a trust account and only withdrawn in limited circumstances.|
|13||Registered adjudicator scheme||The bill provides for certain conditions of authorisation and a code of practice for ANA’s and a registration scheme for adjudicators.|
|14||Model construction contracts||The Building Commissioner may publish model construction contracts.|
|15||Building service contractors||The bill establishes offences for registered building service contractors:
Building service contractors without appropriate registration will not be entitled to issue a statutory payment claim under the Act.
When the Bill is passed the WA legislative regime dealing with payment disputes in the building and construction industry will be more consistent with the ‘east coast’ SOP model. The Bill introduces some interesting new protections for contractors working under unfair notice-based time bars and a new adjudication review process.
The Bill is currently in the WA Legislative Council and expected to commence in 2021. Morrissey Law & Advisory will keep you updated on further developments.
For more information on how this may affect you or if you require any assistance, please do not hesitate to contact Morrissey Law + Advisory.
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