Do you have a small building or construction project that requires hiring some contractors for a small job or ongoing-work? It is important to consider the legislative provisions that regulate how and when you pay these workers. The Construction Contracts Act 2004 Act (WA) is state based legislation that regulates the payments for work delivered in the building and construction industry.

If you are undertaking a small or large scale building project, LawPath’s expert debt recovery lawyers can help you better understand your rights and obligations when hiring contractors.

What is the Security of Payments Act (WA)

In Western Australia, the building and construction industry is regulated by the Construction Contracts Act 2004 Act (WA) which protects the rights of construction workers to receive progress payments for goods or services delivered. However the Act contrasts the legislation in other states as it will not override terms of the contract that contradict the terms of payment stipulated by the Act.

Entitlement to payment

Under the Act, contractors are entitled to receive progress payments under any construction contract including contracts that are written, oral or a combination of both. The Act also protects the contractor’s right to payment where the contracts were expressed to be governed by the law of another state or place (other than WA). Both parties to a construction contract are free to negotiate and decide on their method and terms of payment and legislation will not override existing contractual provisions.

The Act does not cover:

  • ‘Pay when paid’ provisions;
  • Any provision that requires payment later than 50 days after being claimed; and
  • construction work undertaken for the purposes of mining and construction of artistic works or watercraft.

Interest is payable on the unpaid amount of a progress payment and is calculated at the rate of interest within the contractual provision or at a rate not greater than what is prescribed in the Civil Judgments Enforcement Act 2004.

Payment Claims

Where there is a progress payment owing for construction work and a claim has been made by the owed party, the Act specifies that payment must be made within 28 days after a payment claim has been received. If full payment for the goods or services is not made within the due date, a notice of dispute must be provided to the claimant within 14 days of the claim.

Notice of dispute

If a person does not intend to pay the total amount claimed, they must provide a notice of dispute within 14 days receiving the payment claim. A notice of dispute is a notice in writing that must be addressed to the claimant to inform them why the claim is being rejected.

The notice of dispute must identify the name of the party giving notice and state reasons as to why the person disputes the item(s) in the claim.

Adjudication

The Act provides that where there is a dispute between the parties regarding the amount claimed, the contractor may make an application for adjudication. The contractor must submit their application within 28 days after the dispute arises to the other party, the nominated adjudicator or a prescribed appointer to appoint an adjudicator. After 28 days, the contractor will no longer be able to make an adjudication application regarding the payment dispute.

Breach of the Act

The Construction Contracts Act 2004 Act (WA) protects the rights of contractors and suppliers under a construction contract to receive and recover progress payments for carrying out work and supplying related goods and services. Under the Act, a determination made through adjudication is binding on both parties and can only be reviewed through the State Administrative Tribunal.

If you have a payment dispute or are looking to hire a contractor, LawPath’s experienced debt recovery lawyers can advise you on your rights and obligations.

Want to learn more? Contact a LawPath consultant on 1800LAWPATH to learn more about customising employment contracts, as well as other legal documents and obtaining a fixed-fee quote from our network of 600+ expert lawyers.

Jennifer Wang

Jennifer is a Paralegal, working in our content team, which aims to provide free legal guides to facilitate public access to legal resources. With a keen interest in media and IP law, her research focuses on the evolving role of the law to navigate new and emerging information platforms.