June 25, 2021

On 22 June 2021, the Western Australian Parliament passed the Building and Construction (Security of Payment) Bill 2021 (WA) (the Bill) which is aimed at improving security of payment and fairness in the building and construction industry. While the Bill was first tabled in parliament in 2020, its progress stalled during the recent State election. An overview of the Bill introduced to Parliament in September 2020 can be found here.

The Bill replaces the Construction Contract Act 2004 (WA) and introduces a series of measures, including, amongst other things:

  •    specific procedural requirements for the submission of payment claims, including shorter timeframes within which a party must serve a payment schedule and make progress payments. The penalties for failing to comply with such timeframes have also been amended;
  •    prescribing an adjudication process more closely aligned with the east coast model, including adjusting timeframes for serving an adjudication application and any subsequent response, confining the basis on which a party is entitled to respond, and enabling parties to have an authorised nominating authority select an adjudicator;
  •    granting adjudicators, arbitrators, courts and appointed experts the power to declare notice-based time bar provisions to be unfair and of no effect, if compliance with the provision is not reasonably possible or would be unreasonably onerous in the specific circumstances of proceedings;
  •    establishing a retention trust scheme for retention money and performance bonds, to protect builders, subcontractors and suppliers in the event of another party’s insolvency; and
  •    providing the industry regulator, the Building Services Board, with the power to exclude contractors with a history of insolvency from registering as a building contractor under the Building Services (Registration) Act 2011 (WA).

The Bill will apply to ‘construction contracts’, being contracts, agreements or other arrangements to carry out construction work or related goods and services. The Bill will not apply to contracts, including, but not limited to, those:

  •    for mining related construction work, including drilling;
  •    for homeowner building works worth less than $500,000;
  •    that form part of a loan or guarantee with a financial institution that require repayment of money; or
  •    where consideration is non-monetary.

In the second reading speech for the Bill, Hon Darren West stated that “this Bill will introduce significant and long-overdue reforms to give confidence back to subcontractors.”

The Bill will be enacted following royal assent. The operative provisions of the Act will come into effect on dates to be confirmed by the Western Australian Government. A full version of the Bill can be found here.

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