Important changes to the Construction Contracts Act 2004 (WA) affecting the WA construction industry and security of payment (adjudications)
Over a decade after the Construction Contracts Act 2004 (WA) (CCA) first came into force, the State Government has announced its intention to make changes to the CCA in order improve security of payment for contractors. Following the introduction of the Construction Contracts Amendment Bill 2016 (WA) into the Legislative Assembly on 22 September 2016, it appears likely that these changes will be finalised before the year is out. Contractors and subcontractors alike need to watch this space.
The notable changes contemplated by the Bill include:
- Reducing the maximum time a head contractor can take to pay a subcontractor from 50 days to 30 days.
- Substantially increasing the time limit for lodging adjudication applications from 28 calendar days to 90 business days.
- Amending the time limit for lodging responses (currently 14 days) to 10 business days.
- Permitting adjudication on “recycled” claims: The State Government is contemplating amendments which would enable an applicant to seek adjudication on “recycled claims”. This is with the intention of allowing a party whose initial claim for a progress payment under a construction contract has been rejected or disputed to include those disputed matters in a subsequent progress payment claim, with the time for applying for rapid adjudication to run from when the second claim is disputed. The limitation is that the previously rejected claim cannot have been the subject of an adjudication (ie this is not a right to re-adjudicate).
- Avoiding the “Christmas present” adjudication: The “Christmas period” (24 December to 7 January) will be excluded from the counting of days, preventing parties from attempting to obtain a strategic advantage by lodging last minute adjudication applications shortly before, or during, the Christmas period.
- Amendment of the processing plant exception: The Bill proposes an amendment to section 4(3)(c) to exclude from the definition of construction work the fabrication or assembly of items of plant use for extracting or processing oil, gas, or mineral bearing or other substances (previously “constructing any plant” used for such extraction or processing purposes was excluded).
- Introducing anti-avoidance mechanisms such as:
- Making it an offence to intimidate, coerce or threaten a person or business in their access to remedies available under the CCA.
- Introduction of penalties for failures to comply with the CCA.