Update on the new Security of Payment Laws

On 25 June 2021, Western Australia Parliament enacted the Building and Construction Industry (Security of Payment) Act 2021, with it to come into force at a later date.

Critical changes

Stage 1 will introduce almost all of Parts 1, 2, 3, 5 and 6 of the Act.  Most relevantly these mandate the right to progress claims and the time in which they must be paid, set out a new process for assessment and payment of those claims and modify the current rapid adjudication procedures for recovery of payment claims.

A consequence of these changes will likely be that from 01 August 2022, most standard form building contracts will require some amendment to make them compatible with the Act’s requirements.  By way of example, clause 42 of AS2124 will need to be modified to make the status and timing of a payment certificate issued by a Superintendent consistent with the payment schedule and timing obligations under the Act.

New Regulations

With Stage 1 approaching, the Department of Mines, Industry Regulation and Safety – Building and Energy (Department) has recently released draft regulations for public comment, the Building and Construction Industry (Security of Payment) Regulations 2022.  

Whilst the draft regulations touch on retention money trusts, their main focus is on the rapid adjudication process, including providing Codes of Practice for the nomination of adjudicators and their conduct.

If you want to know more about the Act or how you can prepare yourself for the changes to come, the Lavan team is here to help.