Construction Contracts Act 2004 (the Act)
Note 1: The Act in Western Australia does not operate in the manner prescribed for the security of payment acts in NSW, Queensland, Australia Capital Territory, Victoria, Tasmania or South Australia. Those acts are based on the ‘Australian Model’ where as the Western Australian Act is based on the ‘United Kingdom Model’.
Note 2: The Contractor is the party that has carried out the work. The Principal is the party for whom the work has been carried out.
Note 3: The Act provides that either party may have a payment dispute adjudicated.
Note 4: The following information utilises the 'Implied Provisions' of the Act. These may be revised by some of the written provisions in the relevant construction contract.
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The Act:
(a) Prohibits or modifies certain provisions in construction contracts;
(b) Implies provisions in construction contracts about certain matters if there are no written provisions about the matters in the contracts; and
(c) Provides a means for adjudicating payment disputes arising under construction contracts.
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The Act covers ‘Construction Work’ which is basically all building and related trades, if you are a tradesman or a builder, the Act is there for you to get your money.
The Act also covers ‘Construction related goods and services’, if you are a supplier (such as a wholesaler or equipment hirer) or person who provides services (such as a designer), the Act is there for you to get your money.
Note: The Act does not cover mining work or work associated with wholly artistic work.
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(a) reclaiming, draining, or preventing the subsidence, movement or erosion of, land;
(b) installing, altering, repairing, restoring, maintaining, extending, dismantling, demolishing, or removing, any works, apparatus, fittings, machinery, or plant, associated with any work referred to in paragraph (a);
(c) constructing the whole or a part of any civil works, or a building or structure, that forms or will form, whether permanently or not and whether in WA or not, part of land or the sea bed whether above or below it;
(d) fixing or installing on or in any thing referred to in paragraph (c) any fittings forming, or to form, whether permanently or not, part of the thing, including —
(i) fittings for electricity, gas, water, fuel oil, air, sanitation, irrigation, telecommunications, air-conditioning, heating, ventilation, fire protection, cleaning, the security of the thing, and the safety of people; and
(ii) lifts, escalators, insulation, furniture and furnishings;
(e) altering, repairing, restoring, maintaining, extending, dismantling, demolishing or removing any thing referred to in paragraph (c) or any fittings described in paragraph (d) that form part of that thing;
(f) any work that is preparatory to, necessary for, an integral part of, or for the completion of, any work referred to in paragraph (a), (b), (c), (d) or (e), including —
(i) site or earth works, excavating, earthmoving, tunnelling or boring;
(ii) laying foundations;
(iii) erecting, maintaining or dismantling temporary works, a temporary building, or a temporary structure including a crane or other lifting equipment, and scaffolding;
(iv) cleaning, painting, decorating or treating any surface; and
(v) site restoration and landscaping;
(g) any work that is prescribed by regulations to be construction work for the purposes of this Act.
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(1) Goods are related to construction work if they are —
(a) materials or components (whether pre-fabricated or not) that will form part of any thing referred to in section 4(2)(b) or 4(2)(c) or of any fittings referred to in section 4(2)(d);
(b) any fittings referred to in section 4(2)(d) (whether pre-fabricated or not);
(c) plant or materials (whether supplied by sale, hire or otherwise) for use in connection with the carrying out of the construction work at the site of the construction work; or
(d) goods prescribed by the regulations to be related to construction work for the purposes of this Act.
(2) Professional services are related to construction work if they are —
(a) services that are provided by a profession and that relate directly to construction work or to assessing its feasibility (whether or not it proceeds) —
(i) including surveying, planning, costing, testing, architectural, design, plan drafting, engineering, quantity surveying, and project management, services; but
(ii) not including accounting, financial, or legal, services;
or
b) services that are provided by a profession that are prescribed by the regulations to be professional services related to construction work for the purposes of this Act.
(3) For the purposes of this Act, on-site services —
(a) are services other than professional services referred to in subsection (2); and
(b) are related to construction work if they are —
(i) services that relate directly to construction work, including the provision of labour to carry out construction work; or
(ii) services prescribed by the regulations to be on-site services related to construction work for the purposes of this Act.
(4) The regulations may prescribe goods, professional services or on-site services that are not related to construction work for the purposes of this Act.
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The short answer is yes.
The longer answer is that it gives you the best chance of getting your money. The keys to getting your money are:
(a) Being able to identify your debtor (Principal);
(b) Knowing as much about them as possible such as where they bank and how to contact them; and
(c) The Principal’s ability to pay.
If you have all of these things you have placed yourself in the best position possible to get your money.
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A Payment Claim is the document that establishes the Contractor’s (or the Principal’s) entitlement. The party that submits the Payment Claim is the Claimant.
A Payment Claim must:
(a) be in writing;
(b) be addressed to the party to which the claim is made;
(c) state the name of the claimant;
(d) state the date of the claim;
(e) state the amount claimed;
(f) in the case of a claim by the contractor itemise and describe the obligations that the contractor has performed and to which the claim relates in sufficient detail for the principal to assess the claim;
(g) in the case of a claim by the principal — describe the basis for the claim in sufficient detail for the contractor to assess the claim;
(h) be signed by the claimant; and
(i) given to the party to which the claim is made.
In the case of a claim by the contractor, the amount claimed in a payment claim:
(a) must be calculated in accordance with the contract; or
(b) if the contract does not provide a means of calculating the amount, must be —
(i) if the contract says that the principal is to pay the contractor one amount (the “contract sum” ) for the performance by the contractor of all of its obligations under the contract (the “total obligations” ) — the proportion of the contract sum that is equal to the proportion that the obligations performed and detailed in the claim are of the total obligations;
(ii) if the contract says that the principal is to pay the contractor in accordance with rates specified in the contract— the value of the obligations performed and detailed in the claim calculated by reference to those rates; or
(iii) in any other case — a reasonable amount for the obligations performed and detailed in the claim.
Paragraph (b) foregoing does not prevent the amount claimed in a progress claim from being an aggregate of amounts calculated under one or more of subparagraphs (i), (ii) and (iii) of that paragraph.
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A Payment Claim can be ‘given’ by post, fax, email or hand-delivery.
Fax is the best way (as long as your fax machine provides a fax transmission log).
Email is acceptable if you can get a delivery / read receipt.
Courier is also alright if you can get a receipt.
While the various forms of post are legitimate methods of service it can be hard to prove that your Payment Claim was served.
The key is you need to be able to prove that the Payment Claim was served.
Note: The construction contract will also provide guidelines with respect to the service of documents.
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The Principal (or the Contractor) has 14 days to provide a Notice of Dispute .
Day 1 is the day after the other party receives the Payment Claim.
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A Notice of Dispute is a document that responds to the Payment Claim if the other party does not believe that the Claimant is entitled to the claimed amount.
A Notice of Dispute must:
(a) be in writing;
(b) be addressed to the claimant;
(c) state the name of the party giving the notice;
(d) state the date of the notice;
(e) identify the claim to which the notice relates;
(f) if the claim is being rejected under subclause (1)(a) — state the reasons for the belief that the claim has not been made in accordance with the contract;
(g) if the claim is being disputed under subclause (1)(b) — identify each item of the claim that is disputed and state, in relation to each of those items, the reasons for disputing it; and
(h) be signed by the party giving the notice.
If under the contract the Principal is entitled to retain a portion of any amount payable by the Principal to the Contractor:
(a) .....
(b) the principal must advise the contractor in writing (either in a notice of dispute or separately) of any amount retained under the entitlement.
A Notice of Dispute can be served by post, fax, email or hand-delivery.
The key is you need to be able to prove that the Notice of Dispute was served.
Note: The construction contract will also provide guidelines with respect to the service of documents.
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You have 28 days to have your Payment Claim adjudicated under the Act by lodging an application for adjudication.
Day 1 is the day after the Principal (or the Contractor) has provided the Notice of Dispute.
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The Principal is to pay you in accordance with the contract or 28 days after receiving the Payment Claim. If you are not paid then that is a ‘Payment Dispute’ which can be taken to adjudication within 28 days.
Have a question? Email us or ring 1300 76 86 30 for an outcome.
The Principal is to pay you in accordance with the contract or 28 days after receiving the Payment Claim. If you are not paid then that is a ‘Payment Dispute’ which can be taken to adjudication within 28 days.
Have a question? Email us or ring 1300 76 86 30 for an outcome.
You will need to prepare a document that convinces an adjudicator that you are entitled to the amount that you have claimed.
The application for adjudication must include a copy of the contract, a copy of the Payment Claim and all the information required to prove your entitlements.
Your application for adjudication must be served on the other party.
Your application for adjudication must also be served on the Adjudicator (if one has been appointed by the parties normally in the contract) or a ‘Prescribed Appointer’. Some of these are listed on the useful information and links page.
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Adjudication under the Act is not like a court. In the Australian Model (adopted in most of the other states in Australia) the adjudicator is nominated by an Authorised Nominating Authority that was selected by the Claimant.
In the WA Act the Adjudicator is appointed in the following ways:
(a) If the parties have appointed an Adjudicator (normally this is done in the contract) and the Adjudicator consents to the appointment;
(b) If the parties have appointed a Prescribed Appointer by that appointer; or
(c) Otherwise by a Prescribed Appointer chosen by the party making the adjudication application.
Normally, you will not see or speak to the Adjudicator. All of the submissions are made in writing.
The Adjudicator has nominally 28 days after you have commenced the adjudication process to provide their determination.
The Adjudicator will determine when you are entitled to be paid the adjudicated amount.
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Yes.
The Principal is entitled to provide a response to the application for adjudication.
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You need to wait until after the due date for payment provided in the determination has passed. Then if you have not been paid you can apply to a court to have your determination enforced.
There is no further requirement to prove that you are entitled to the adjudicated amount.
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Yes.
If you have not been paid in accordance with a determination you can issue a ‘Notice of Intention to Suspend’ under the Act.
3 days after that notice is issued you may suspend work. If you are paid you must recommence work within 3 business days.
It is strongly recommended that further advice is sought before suspending work.
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If you are asking this question you need to discuss this with somebody.
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Only you can decide when you need help.
However, the Act in WA is relatively new and while it is different to the other states which use the ‘Australian Model’ there are certain tricks which Principal’s may use that may trap or trick inexperienced Contractors.
If you want to concentrate on taking your company forward you may be better off engaging somebody to rectify the issues of the past; while providing advice on avoiding these problems in the future.
You are a businessperson who makes money building or supplying things; focus on that and get somebody else to clean up this mess.
If you intend to stop work it is highly recommended that you seek assistance.
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If you do nothing it is most likely that you will be paid nothing.
