Security of Payment and Adjudication in WA - Contracts made before 1 August 2022

The Western Australian Government has recognised that prompt payment is vital to the stability and efficiency of the building and construction industry. Too often the party liable to pay for construction work or related goods or services (the respondent), has manufactured a dispute to deny or delay payment. In other situations, respondents have tried to string out the time for payment with promises of future work if the applicant just waits a bit longer.

In 2021, government strengthened the protections for contractors and mechanisms for the recovery of payments in relation to contracts made on or after 1 August 2022. However the protections available to parties, subject to contracts made before 1 August 2022, remain the same except that the old WA Construction Contracts Act 2004 is renamed the WA Construction Contracts (Former Provisions) Act 2004 (the Act).

The objective of the Act (applying only to contracts made before 1 August 2022) is to:

• prohibit or modify certain provisions in construction contracts;
• imply provisions in construction contracts about certain matters if there are no written provisions about the matters in the contracts;
• provide a means for adjudicating payment disputes arising under construction contracts, and for related purposes.
  

In the words of the WA Supreme Court:

'The broad purpose of the Act, insofar as it relates to payment disputes, is to ensure that, in construction contracts, progress claims are paid on time and that principals obliged to pay do not act as their own judge and jury and hold up payment on their own assertion that they have a defence warranting refusal to pay … It is a 'pay now, argue later' system, with the primary aim of keeping the money flowing by enforcing timely payment … If a payment dispute arises, then the Act provides for a system of rapid and summary adjudication which is conducted without any oral hearing. If the adjudicator, having received written submissions, makes a determination that the payment has to be made, then that determination gives rise to a debt 'presently due' and payable by the principal.'

The Act creates a statutory dispute resolution process (adjudication) that allows a party (the applicant) alleging they are owed monies under a construction contract to promptly obtain payment from the respondent, based on an assessment of the merits of the claim by an appropriately qualified and independent adjudicator. Adjudicate Today, or the parties by agreement, appoint the adjudicator. Adjudicate Today conducts training and mentoring programs for adjudicators.

The object of adjudication of a payment dispute is to determine the dispute fairly and as quickly, informally and inexpensively as possible.

The adjudication process is simple and rapid. Adjudicators must make their determination within 10 business days (unless the parties agree to extend the time) from date of receipt of any adjudication response or when it was due. Generally the costs of adjudication are evenly split between both parties unless the adjudicator considers the conduct of one of the parties was frivolous or vexatious. If a respondent does not comply with an adjudication determination, the applicant may lodge a copy of the adjudication determination, which must be certified by the WA Building Commission to be a true copy, at the appropriate court which registers it as an order of the court and may be enforced accordingly. For most claims referred to adjudication, a lawyer should not be necessary.

In order to commence a claim under the Act, there must be a written payment claim made against a party to a construction contract (either written or oral) in relation to construction work or the supply of related goods and services for construction work in WA.

Time frames under the Act are all important. Subject to the provisions of the contract, applicants have different time frames to serve the adjudication application based on whether a respondent serves or fails to serve a written response to the payment claim (the Act calls this a Notice of Dispute) within defined times. Failure by the applicant to follow the strict requirements of the Act may cause an adjudication application to fail.

The information and flowcharts we publish on this website clearly describe how parties should proceed in preparing and responding to payment claims, what steps should be taken based on the actions of the other party and other steps required by the Act. In addition, our highly trained staff are available to aware questions about how the Act works and what parties need to do to comply with it. We provide this information for free and without obligation. If parties proceed to adjudication, the adjudicator pays us a service fee from his/her fees to cover our costs. Neither party is asked to pay the adjudicator's fee until after the determination is provided to Adjudicate Today.

If you are not familiar with our website, we suggest you read “Navigating this website” below. Otherwise let’s get started.

Let's go to the WA flowchart

Navigating this website

There are two simple ways to navigate this WA based website:

1. Click here to go to our interactive flowchart. Clicking once in any flowchart box provides brief details. Clicking on ‘Read More’ in the new pop-up box provides detailed information about the step;

and/or

2. Use the menu on the left hand side of the page "Start; Notice of Dispute Served; Notice of Dispute Not Served; Adjudication Process; Application Forms; and Resources". We recommend you commence by clicking on a menu item under Start as it provides necessary information which is crucial for making or responding to an adjudication application.

The adjudication process may seem difficult when first encountered. Actually it is not. When an important term used by the Act is first encountered in the text, it is highlighted in blue. Passing the mouse over the term causes a grey box to "pop-up" with a simple explanation of the term.

We explain each step under the Act in a simple manner by using our unique flowchart. The flowchart is interactive. This means that when you click on a box in the flowchart brief details are provided in a pop-up overlay. Clicking the 'Read More' button at the bottom of the overlay provides much more information on a new web-page. The simplest way to return from the information web-page to the flowchart is to click on the back arrow key located on the top left of all browsers.

Let's go to the WA flowchart or Download the flowchart to print