WA Security of Payments law passed

The Building and Construction (Security of Payments) Bill 2021 was passed by the WA Parliament on 22 June 2021, and brings WA into line with other national security of payments legislation for the building and construction sector. Importantly, it:

(a) strengthens contractor payment protections by enshrining payment rights, capping payment times and recognising contractors’ rights to claim a lien over unfixed plant and equipment where progress claims are unpaid;

(b) expands the application of the law and further narrows the mining exemption which will be mean construction work undertaken in relation to resources projects will likely be captured;

(c) broadens voidable contract provisions by extending the prohibition of ‘pay when paid’ provisions to include provisions dependent upon the operation of another contract, and enabling a decision-maker to deem void any onerous or unreasonable time-bar provisions (e.g. requiring certain notice or steps to be taken to preserve contractual claims for delays, variations and latent conditions, etc.);

(d) deems that retention monies are held on trust and are to be managed as trust monies in trust accounts to insulate them from a head contractor’s insolvency;

(e) requires notice to be given before calling on a performance security and enables contractors to exchange performance bonds for retention monies; and

(f) enables the Building Services Board to better manage ‘phoenix’ activity by builders with a history of insolvency by declaring them ‘excluded’.

Companies engaged in or procuring construction work should review their contracts to ensure they accommodate the new law and do not contain potentially voidable provisions, and ensure their processes and procedures are compliant before the new law comes into effect. For assistance, contact Perth Commercial Lawyers today.