Construction Contracts Amendment Bill 2016 passed – new rules for rapid adjudication

We have previously foreshadowed an expectation that the Construction Contracts Amendment Bill 2016 would be passed before the year is out.

The Bill has since been passed by both houses of the Western Australian Parliament and it will take effect as the Construction Contracts Amendment Act 2016 (WA).

Most of the changes introduced by the Bill to the Construction Contracts Act 2004 (WA) (CCA) are intended to come into force on 15 December 2016, other than the reduction in the maximum payment terms (to 42 days down from 50 days) which will come into force on 3 April 2017. Our detailed update on the changes can be accessed here:

To recap – the CCA will be amended as follows:

• For future contracts, payment terms exceeding 42 calendar days (previously 50 days) will be prohibited.
• Increasing the time limit for lodging an adjudication application to 90 business days (previously 28 calendar days).
• Amending the time limit for lodging responses to 10 business days (previously 14 days).
• Permitting adjudication on “recycled” claims.
• Avoiding the Christmas present adjudication – 24 December to 7 January to be excluded from counting of days.
• Amendment of the processing plant exception – the fabrication or assembly of items of plant used for extracting or processing oil, gas, or mineral bearing or other substances will be excluded from the definition of “construction work”.
• Relaxation of the strict form requirements – adjudicators may still able to adjudicate a payment dispute where an applicant fails to strictly comply with some of the formal requirements (in some circumstances).
• Possible second chance to lodge an adjudication application for some applicants.

Other changes on the horizon

The State Government has also foreshadowed the introduction of other measures intended to assist subcontractors – including the introduction of anti-avoidance mechanisms (to make it an offence to intimidate, coerce or threaten a person or business in their access to remedies under the CCA and the introduction of penalties for failures to comply with the CCA), the introduction of mandatory Project Bank Accounts for certain projects and introducing a Code of Conduct on state government run projects.

Lavan will keep you updated on the status of the other proposed changes affecting the WA construction industry.