The Building and Construction Industry (Security of Payment) Bill 2020 (WA) (the Bill) was introduced into the WA Parliament on 23 September 2020 by Mr J.R. Quigley MLA (the Minister for Commerce). The stated purpose of the Bill is to provide better payment protections to contractors working in the WA building and construction industry to "ensure they get paid on time, every time".
The Bill delivers on the Government’s election commitment to provide better protections to subcontractors and suppliers working in the WA building and construction industry. In his second reading speech the Minister stated:
The Bill also implements many of the remaining recommendations made by Associate Professor of Law John Fiocco in his report to the Government – Final Report to the Minister for Commerce: Security of Payment Reform in the WA Building and Construction Industry (delivered October 2018).
To achieve its purpose the Bill proposes reform across three key areas, as follows:
Some of the more notable changes proposed by the Bill include:
New security of payment laws to speed up cash flow to contractors: The Bill in Parts 2 (Construction contracts and right to progress payments), 3 (Procedure for obtaining progress payments), 5 (Nominating authorities, adjudicators and review adjudicators) and 6 (Miscellaneous) introduces new security of payment laws into WA to ensure that those who carry out construction work can get paid, and any disputes can be resolved quickly and inexpensively so works can continue.
Retention trust scheme to protect retention monies in insolvency: The Bill in Part 4 introduces a new deemed retention trust scheme into WA - a scheme that is aimed at reducing the risks to builders, subcontractors and suppliers where their immediate contractual counterpart on a project becomes insolvent by "ring-fencing" retention money to ensure it is not available for distribution to general creditors. This is proposed to be achieved through deeming, by force of law, retention money to be held on trust from the moment it is held or withheld as a performance security under a construction contract.
Strengthening WA’s building services legislation: The Bill in Part 7 proposes to enhance the powers of the Board to manage the commercial conduct and behaviour of registered building service providers under the Building Services (Registration) Act 2011 (WA), providing better protection to the industry and consumers against incompetent and predatory operators.
With respect to insolvency events and phoenixing, the Board will have the power to exclude an individual, non-corporate body or corporate body as from registration where an "insolvency event" has occurred. This will enable the Board to target problematic "phoenixing" behaviour where it is brought to its attention. The power may be exercised by the Board at the point in time of an application for the grant or renewal of building contractor registration, or in relation to a building service contractor who is already registered, through the issuance of a "show cause" notice.
In the case of an unpaid building service debts and other offence penalties, failure by a building service provider to pay a "building service debt", being an unsatisfied court judgement debt or adjudication determination, will under the Bill also be a disciplinary matter for which the Board can take action against the provider. Further, applicants for the grant or renewal of registration will also need to demonstrate to the satisfaction of the Board that they do not, at the time of making the application, have a building service debt. The maximum fine penalty for the offences of obstruction or failing to comply with directions of an authorised officer under the Building Services (Complaint Resolution and Administration) Act 2011 (WA) is to be increased to $25,000 to reduce the incentive for deliberate obstruction of investigations into other offences under the Bill.
The Bill is currently at second reading stage in the WA Legislative Assembly and in his speech, the Minister emphasised:
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Building and Construction Industry (Security of Payment) Bill 2020 (WA), second reading speech and explanatory memorandum available from TimeBase's LawOne Service.
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