Introduction of statutory rights to payment, adjudication & recovery processes
Crucially, the New Act introduces a statutory payment process, meaning particular parties will have a statutory right to receive payment & to make a claim for payment that will operate independently of their contractual rights & entitlements.
The adjudication process under the New Act differs considerably to the Construction Contracts Act 2004 (WA) process.
Prohibition of certain contract terms – including "pay when paid" provisions
- Contains a broader prohibition on "paid when paid" provisions – it prohibits clauses that: (a) make the liability of Party A to pay an amount owing to Party B contingent on Party A receiving payment from a third party; (b) makes the due date for payment of an amount owing dependent on the date Party A receives payment from the third party; & (c) makes any of the following contingent on the operation of another contract: liability to pay an amount owing, the due date for payment of an amount owing, the making of a claim for an amount owing & / or the release of retention money or performance security.
- Prohibits provisions that purport to exclude, modify or restrict the operation of the New Act.
- Prohibits any purported waiver of an entitlement under the New Act.
- Prohibits provisions if they require a person who is entitled to make a claim under the New Act to engage in a dispute resolution process with the other party to the contract or with a third party as a precondition to: (a) the making of a payment claim by the person; (b) making of an adjudication application or adjudication review application by the person; (c) the exercise of any other right, or discharge of any obligation to, the person under the New Act.
Unfair time bars may be declared void
A party may apply for a notice-based time provision / bar to be declared "unfair" in the case of a particular entitlement under a construction contract – in which case, the time bar will be found to be of no effect or force. This is the first time such a provision has been included in security of payment laws in Australia.
A notice-based time provision will be declared "unfair" where compliance was not reasonably possible" or would be unreasonably onerous. The decision maker (the Court, an arbitrator, an adjudicator or an expert appointed by the parties) will have regard to particular considerations outlined in the New Act when making this assessment.
Right for contractors to suspend work in event of non-payment
A contractor may be entitled to exercise a statutory right to suspend work when an amount owed to it by a principal or owner is not paid & where certain requirements under the New Act are fulfilled.
Introduction of right to exercise a statutory lien over unfixed plants & material in respect of unpaid progress payments
When progress payments become payable, claimants (such as contractors) may be entitled to exercise a statutory lien in relation to the unpaid amount over any unfixed plant or materials supplied by the contractor for use in connection with the carrying out of the construction work for the principal or owner.
Improvements to administration of adjudicators, "review adjudicators" & nominating authorities
The changes include specifications as to the experience & qualifications parties will need to have in order to qualify as "adjudicators" or "review adjudicators" & the introduction of detailed codes of practice which nominating authorities & adjudicators will be expected to comply with.
Introduction of new Regulations to support operation & administration of the new legislation
The Building and Construction Industry (Security of Payment) Regulations 2022 also came into operation on 1 August 2022 & serve to clarify various key operational aspects of the New Act.