On 22 November 2016, the WA State Parliament passed the Construction Contracts Amendment Bill 2016 (WA) and it has taken effect as the Construction Contracts Amendment Act 2016 (WA) (the Amending Act). The Amending Act commenced on 15 December 2016, but certain reforms are phased in over time.
The amendments aim at addressing the construction industry issues such as unscrupulous and insolvent contractors, and assisting smaller and exposed subcontractors.
The key amendments effected by the Amending Act include:
- changes the time periods from calendar to business days;
- excludes the Christmas closure period between 25 December in a year and ending on 7 January in the following year;
- the time for applying for adjudication of a payment dispute has increased from 28 days to 90 business days;
- clarifies that a payment dispute arises if “a payment claim is rejected or wholly or partly disputed, thereby clearing up the confusion identified in several decisions;
- permits adjudication of “recycled” claims (allowing claimant to make payment claims of previously made claims, whether rejected or not);
- simplifies the process of enforcement of adjudication determinations through the courts (previously leave of the court was required);
- prohibits payment terms exceeding 42 calendar days (down from 50 calendar days) for construction contracts entered into after 3 April 2017;
- clarifies that only the fabricating and assembling of items of plant used for extracting or processing oil, natural gas or other minerals is excluded from the definition of ‘construction work’, and not normal construction work on a processing facility; and
- construction of wholly artistic work is no longer excluded from the definition of ‘construction work’ for the purposes of the Construction Contracts Act 2004 (WA).
What do contractors and sub-contractors need to do?
- Amend any standard payment terms before 3 April 2017 to ensure that contracts entered after that date have payment terms of no more than 42 calendar days; and
- Familiarise yourself with the measures implemented under the Amending Act.