Security Of Payment Act Debt Collection For The Western Australia Building & Construction Industry

If you have carried out construction work and or supplied related goods or services and you are not being paid within the terms you have agreed we will help you prepare a claim to be served under the WA Construction Contracts Act 2004.   The WA Construction Contracts Act 2004 is based on contractual entitlement to payment instead of a statutory entitlement as in the rest of Australia, parties are able to effect the application of the Act with customised contractual provisions and the relevance of contract administration is greater in WA. Therefore prudent consideration needs to be applied to inclusion of appropriate contract provisions in building & construction contracts. The Act revolves around Implied provisions Where a construction contract does not contain a express written provision, then particular provisions will be implied into the contract. The implied provisions include terms such as:

  • Variations
  • Contractor’s entitlement to be paid
  • Ability to make progress claims
  • Mechanisms for making payment claims
  • Interest on overdue payments
  • Ownership of goods
  • Duties as to unfixed goods on insolvency

The Act prohibits the following Matters Under the Act there are two types of provision that are prohibited : Firstly : the pay when paid provisions; and Secondly : the clauses allowing payment to be made more than 50 days after payment claims are made which are to be read down to require payment within 50 days. Adjudication of payment disputes under the Act Good news for contractors  is what the Act describes as the object of the adjudication process, that is being resolution of payment disputes:

  • fairly;
  • quickly;
  • informally; and
  • inexpensively.

Unlike the legislation in the rest of Australia, the entitlement to payment must arise under the provisions of a contract. In New South Wales, Victoria, Tasmania, South Australia, Australian Capital Territory, and Queensland the right to make progress claims arises under the statutes of the Act itself. Good news for lots of tradies is that the scope of works covered by the WA Construction Contracts Act 2004 covers home building contracts. They are excluded from the Security Of Payments Acts in the other states. Resolving Payment disputes Under the Act Unlike the other states the adjudication process relates only to payment disputes not merely non-payment. A payment dispute arises where a payment is not made or security/retention not released as required pursuant to the obligations of the contract. A claimant must within 28 days of the payment dispute arising, apply for adjudication. An application is a  written claim that is served on the other party as well as on the authorised nominating authority – the body responsible for appointment of the adjudicator. The respondent has 14 days from the date of service of the application on it to respond. The Act sets out what must be included in the application and in the response. Adjudication procedure under the Act Pursuant to the adjudicator must, within 14 days of being served with a response to an application, or within 24 days of the last date on which a response should have been served:

  • dismiss the application; or
  • determine, on the balance of probabilities, whether one party is liable to pay and in what amount or whether security or retention should be returned.

Under the adjudicator, in making a determination, is required to act informally. He is not bound by the usual rules of evidence that apply in civil court proceedings and may inform himself in any manner he thinks fit. The adjudicator has the power to request further written submissions, and very different to the other Security Of Payment Acts in Australia, request the parties to attend a conference and, unless the parties object, is entitled to attend the project site and inspect the work the subject of the dispute and again very different to the other states engage an expert to report. The adjudicator like the other state’s legislation has power to award interest. Under the WA Construction Contracts Act 2004 the parties are to pay their own costs except where the adjudicator is satisfied that a party has unnecessarily incurred costs because of frivolous or vexatious claim brought against the other party. Effect of determination under the Act An adjudicator’s determination is final and binding and binds the Crown. As per the other state’s Acts there is limited power on the adjudicator to correct accidental slips and omissions and a limited right of review to the State Administrative Tribunal not dissimilar to Victoria.The adjudicator’s determination is enforced like a civil court judgment or an award. The contractor may suspend works under the Act without penalty where an adjudicator has determined an amount payable to the contractor and that amount is not paid. Effect of adjudication on arbitration/litigation The stated purpose of the adjudication process is to ensure continuity of payment to contractors.Specifically its purpose is to enable unpaid contractors and subcontractors to receive payment of disputed claims quickly and at low cost to prevent dire financial consequences. Payments pursuant to an adjudicator’s determination are on account only and can be the subject of further litigation.