Section 4 provides key definitions. A "construction contract" is a contract, agreement or other arrangement under which one party undertakes to carry out construction work or supply related goods and services for another party (section 5). "Construction work" is defined broadly in section 6 to include construction of buildings, structures or civil works; installation of fittings; alteration, repair, restoration, maintenance, extension, demolition, dismantling or removal; reclamation, dredging or prevention of subsidence or erosion; and preparatory work such as site clearing, excavating, erecting scaffolding, cleaning, painting and landscaping. Exclusions include drilling for oil or gas, constructing shafts or pits for mining, constructing watercraft, and work prescribed by regulations not to be construction work. "Related goods and services" under section 7 includes materials or components that form part of any building, structure or civil work; plant or materials for use in connection with construction work; labour; and professional services directly relating to construction work (surveying, planning, costing, testing, architectural, design, plan drafting, engineering, quantity surveying, project management) but not accounting, financial or legal services.

A "progress payment" under section 17 is a payment to which a person is entitled under the Act for carrying out construction work or supplying related goods and services. It includes a final payment, a single or one-off payment, and a milestone payment, but does not include payment for expenses, loss or damages incurred because of a breach of contract. The entitlement is separate and additional to any entitlement under the construction contract.

Other core concepts: "payment claim" means a claim for a progress payment given under section 22(1); "payment schedule" means a respondent's response under section 25; "claimed amount" is the amount claimed in the payment claim; "scheduled amount" is the amount the respondent proposes to pay; "adjudicated amount" is the amount determined by an adjudicator or review adjudicator under sections 38 or 48. "Performance security" means retention money or a performance bond (section 56). "Retention money" is money retained (or paid and retained) as security for performance of obligations (section 4(1)). "Business day" excludes Saturdays, Sundays, public holidays and days between 22 December and 10 January inclusive. The "value" of a construction contract is defined in section 8: the total amount payable, or if not provided, a reasonable estimate based on contract work, prevailing industry rates and anticipated movements.

The Act affects all participants in the building and construction industry in Western Australia who enter into construction contracts covered by the Act. A "claimant" is any person who makes a payment claim - typically a subcontractor, head contractor, or principal who carries out work or supplies goods/services. A "respondent" is the person who receives the payment claim, liable to make the progress payment. Section 4(2) defines "principal" as the person for whom construction work is carried out or to whom goods/services are supplied under the main contract, who is not themselves engaged under a construction contract to carry out work or supply as part of the main contract. Section 4(3) defines "head contractor" as the person who undertakes to carry out work for the principal and for whom work is carried out by another person under a separate contract as part of the project. "Subcontractor" means any person who undertakes to carry out work otherwise than as head contractor (section 4(1)).

Building service contractors registered under the Building Services (Registration) Act 2011 are particularly affected: section 13 requires them to have construction contracts in writing and include mandatory information (names, registration number, description of work, amount payable). Officers of building service contractors must notify the Board of new directors (section 32A inserted by Part 7). The Act also introduces new insolvency-related exclusions for building service contractors under Part 5A of the Building Services (Registration) Act 2011, inserted by section 133. Corporations in liquidation are prohibited from making payment claims or taking any action under Part 3 (section 68).

Government parties (State, Territory, Commonwealth, their agencies, local governments) are exempt from the retention money trust obligations under Part 4 (section 70(1)(a)). Authorised nominating authorities (organisations that appoint adjudicators) and registered adjudicators and review adjudicators are directly regulated under Part 5. The Act also affects owners of land and third-party creditors, as retention money held on trust is not available for attachment or execution by third-party creditors (section 71(3)). Recognised financial institutions that hold retention money trust accounts have limited obligations and liabilities under section 81.

The Act creates a statutory entitlement to a progress payment for any person who has undertaken to carry out construction work or supply related goods and services under a construction contract (section 17(1)). This entitlement is separate and additional to any contractual right (section 17(4)). The amount of a progress payment is calculated in accordance with the contract, or if the contract does not provide, on the basis of the value of the work actually carried out or goods/services supplied (section 18). Valuation of work and goods is to be done under section 19, considering contract price, rates, agreed variations, and the cost of rectifying defects.

A claimant may give a payment claim to the person liable to make the progress payment (section 22). Payment claims may be made monthly from the first named month in which work was carried out, and for final payments within prescribed time limits (section 23). The respondent must respond by giving a payment schedule within the earlier of the contract time or 15 business days after the payment claim is made (section 25). The schedule must indicate the proposed payment amount (if any) and if less than the claimed amount, give reasons and reasons for any withholding. If the respondent does not give a payment schedule, the respondent becomes liable to pay the claimed amount on the due date (section 26). If the respondent pays less than the claimed or scheduled amount, the claimant may recover the unpaid portion as a debt in a court or apply for adjudication, but not both (section 27). A court is not to give judgment unless satisfied of the relevant circumstances and the respondent cannot bring a cross-claim or raise defences arising under the construction contract (section 27(3)).

Adjudication is initiated by the claimant within 20 business days after first becoming entitled (section 28). The adjudicator must be appointed within 5 business days and must determine the application within 10 business days after the adjudication response (or last date for response) - sections 32, 37. The adjudicator considers only the Act, the construction contract, the payment claim and schedule, submissions, conference outcomes, inspections and expert reports (section 38(2)). The adjudicator’s determination must include reasons and specify the amount payable (if any), due date, and interest rate. Either party may apply for a review of the adjudication determination under Division 3, subject to thresholds and conditions (section 39). A respondent seeking review must first pay the undisputed part and pay the disputed amount into a trust account (section 40).

The Act also confers a right to suspend work or supply for non-payment after giving 2 business days’ notice (section 62). The right continues until the amount is paid and 3 business days have elapsed. A claimant who suspends work is not liable for any loss suffered by the respondent (section 63). Additionally, a claimant has a lien over unfixed plant and materials supplied for use in connection with construction work for the unpaid amount (section 64). The Act gives claimants rights with respect to performance security: the right to receive at least 5 business days’ notice before recourse to performance security (section 57), the right to release of performance security when obligations performed (section 58), and the right to substitute a performance bond for retention money (section 59).

A crucial duty: any pay-when-paid provision in a construction contract has no effect (section 14). Notice-based time bar provisions can be declared unfair by an adjudicator, court, arbitrator or expert if compliance is not reasonably possible or would be unreasonably onerous (section 16). The Act prohibits threatening or intimidating a claimant in relation to their entitlement or exercise of rights (section 65, fine $50,000). No contracting out is permitted - section 111 voids any contract provision inconsistent with the Act or that purports to exclude, modify or restrict its operation.

The Act contains specific criminal offences with fines. Section 65 makes it an offence to directly or indirectly threaten or intimidate a claimant or person entitled to make a payment claim in relation to their entitlement or exercise of rights under Part 3; penalty is a fine of $50,000. Section 87 makes it an offence for a party to a construction contract to fail, without reasonable excuse, to comply with section 74(1) (requirement to pay retention money into a trust account) or section 79(3)(a) (allowing inspection of trust records); penalty is also a fine of $50,000. Section 13 makes it an offence for a building service contractor to enter into a construction contract without writing or mandatory information; penalty a fine of $2,000. Section 116 makes it an offence for a relevant officer to use or disclose confidential information obtained under the Act; penalty a fine of $10,000.

Section 118 applies section 39 of the Criminal Code to offences under sections 65 and 87, making officers of a body corporate criminally liable for the body corporate’s offence. Prosecutions may be commenced only by the Building Commissioner or authorised person, within 3 years of the offence or when evidence first came to attention (section 117).

The primary enforcement mechanism for payment claims is adjudication followed by the ability to obtain a certified copy of the determination from the Building Commissioner (section 53). That certified copy is taken to be a monetary judgment of a court of competent jurisdiction (section 54). It can be enforced under the Civil Judgments Enforcement Act 2004 Part 4, provided an affidavit confirms the amount or part remains unpaid. If proceedings are commenced to set aside the monetary judgment, the person must pay the amount into court as security and cannot bring a cross-claim or raise defences under the construction contract, nor challenge the determination (section 54(5)-(6)). The court may direct the amount be paid to the person entitled pending determination.

If the respondent fails to pay the adjudicated amount, the claimant may also suspend work (section 62). The respondent’s failure to pay retention money into a trust account also triggers suspension rights (section 62(1)(c)). Interest is payable on unpaid progress payment amounts at the greater of the contract rate or the rate prescribed under the Civil Judgments Enforcement Act 2004 (section 21).

For breach of the trust provisions, in addition to criminal penalty, a court may order a party to draw down a debt facility or access other money to pay into the trust account (section 73). The court has general supervisory jurisdiction over the trusts (section 84). The Building Commissioner can suspend or cancel registration of adjudicators or review adjudicators for breach of conditions or loss of eligibility (section 106). Revocation of authorisation of nominating authorities is also possible (section 94).

The Act sits alongside and in many respects overrides other laws and contracts. Section 111 provides that the Act has effect despite any provision in any contract, agreement or other arrangement. Any contract provision that is inconsistent with the Act, or purports to exclude, modify or restrict its operation, or requires a party to reimburse costs of taking action under the Act (except as authorised), or may be construed as an attempt to deter a person from taking action, is void. This is a broad "no contracting out" clause.

The Act does not affect any rights a party may have under the construction contract or apart from the Act in respect of anything done or omitted under the contract (section 55(1)). However, in any civil proceedings before a court or tribunal in relation to a construction contract, the court or tribunal must allow for any amount paid or repaid under Part 3 and may make restitution orders (section 55(3)). Evidence of anything lawfully said or done in the course of an adjudication is not admissible in other proceedings unless the parties consent (section 55(4)). This is significant for litigation strategy.

Section 66 gives the Supreme Court jurisdiction to set aside or part of a determination if jurisdictional error is found. Section 67 provides that except for the internal review under Division 3 and the jurisdictional error review under section 66, no appeal or review lies from an adjudicator’s or review adjudicator’s determination. This limits court intervention.

The Act amends several other Acts via Part 7. The Construction Contracts Act 2004 is renamed the Construction Contracts (Former Provisions) Act 2004 (section 136) and applies only to contracts entered into before the new Act’s section 22 comes into operation (section 137). The Building Services (Complaint Resolution and Administration) Act 2011 is amended to include the new Act as a building service Act and increase penalties (sections 122-124). The Building Services (Registration) Act 2011 is amended to require payment of building service debts before registration, to disqualify excluded contractors, and to create a new Part 5A dealing with insolvency of building service contractors (sections 126-133). The Procurement Act 2020 is amended to replace a reference to the former Construction Contracts Act (section 141).

Section 82 provides that interests in retention money held on trust under Part 4 have priority over any other security interests under the Personal Property Securities Act 2009 (Cth). Section 85 applies the Trustees Act 1962 and equitable principles to the retention money trusts, with specified exceptions (e.g. no duty to act personally or insure). Section 84 preserves the court’s inherent jurisdiction to supervise trusts. Section 11 binds the Crown, so government entities are subject to the Act except as excluded by section 70(1)(a) for retention trust obligations.

The Act interacts with home building work contracts: section 10(1) excludes contracts under $500,000 with individual principals, but the Act’s Part 4 retention trusts may apply to home building work above the threshold if the principal is a corporation or the work relates to multiple dwellings or a residential development business, and to subcontracts (section 70(2)). The Home Building Contracts Act 1991 definition is referenced in section 4(1).

The Building and Construction Industry (Security of Payment) Act 2021 was enacted as Act No. 4 of 2021 and received Royal Assent on 25 June 2021 (assent day). Its commencement is staged under section 2. Part 1 Division 1 (preliminary) commenced on assent day. Part 5 Division 1 section 98 (applications for authorisation of nominating authorities before commencement of the Division) commenced on 26 June 2021, the day after assent. The core operative provisions - Part 1 Divisions 2 and 3, Part 2 (construction contracts and right to progress payments), Part 3 (procedure for obtaining progress payments except sections 57 and 65), Part 5 Division 1 (sections 88-97) and Division 2, Part 6 (except section 118), and Part 7 (except sections 123, 124 and Division 2) - commenced on 1 August 2022 by proclamation (see SL 2022/78). Sections 57 and 65 (notice before recourse to performance security and the intimidation offence), Part 4 (retention money trusts except section 87), sections 118, 123, 124 and Part 7 Division 2 commenced on 1 February 2023. Sections 59-61 (right to substitute performance security and related provisions) and section 87 (offence for failure to comply with retention trust requirements) commenced on 1 February 2024.

The Act was subsequently amended by the Directors’ Liability Reform Act 2023 Part 3 Division 11 (No. 9 of 2023), which commenced on 5 April 2023. This amendment inserted section 118, which applies the Criminal Code section 39 on officer liability to offences under sections 65 and 87 of this Act.

Section 120 requires the Minister to review the operation and effectiveness of the Act as soon as practicable after the 5th anniversary of the day section 71 (retention money to be held on trust) comes into operation. Since section 71 commenced on 1 February 2023, the review is due by approximately February 2028, with a report to be laid before Parliament within 12 months after that anniversary.

The Act is relatively new, with core provisions having only commenced in August 2022 and later provisions in 2023 and 2024. The Act itself does not cite any specific case law. However, the statutory scheme establishes a regime with limited judicial review. Section 66 permits the Supreme Court to set aside a determination (whole or part) if jurisdictional error is found. Section 67 provides that except for internal review under Division 3 and the Supreme Court’s jurisdictional error power, no appeal or review lies from an adjudicator’s or review adjudicator’s determination. This replicates the approach of many security of payment statutes, which aim to keep disputes out of court and within the rapid adjudication framework.

Where a certified copy of a determination is enforced as a monetary judgment (section 54), the person required to pay may commence proceedings to have the monetary judgment set aside, but in those proceedings they cannot bring a cross-claim, raise defences under the construction contract, or challenge the determination itself (section 54(5)). They must also pay the amount of the monetary judgment into court as security (section 54(6)). These restrictions are designed to prevent the adjudication process from being undermined by protracted litigation.

The Act also provides for review by the State Administrative Tribunal (SAT) of certain decisions of the Building Commissioner. Under section 95, a person aggrieved by a decision to refuse authorisation as a nominating authority, to impose or amend conditions of authorisation, or to revoke authorisation may apply to SAT for review. Under section 108, an individual aggrieved by a decision to refuse registration or renewal as an adjudicator or review adjudicator, to impose or amend conditions, or to suspend or cancel registration may apply to SAT. Additionally, under the Building Services (Registration) Act 2011 as amended, a person declared an excluded contractor may apply to SAT for review of that decision (section 63G, inserted by section 133).

The Act also preserves the ability to bring civil proceedings under the construction contract (section 55), but the court or tribunal must account for amounts already paid under the Act. This may lead to litigation where parties seek to challenge the underlying contractual entitlement after adjudication.

Although no cases appear in the text, practitioners should note that the Construction Contracts (Former Provisions) Act 2004 has a body of case law that may be relevant by analogy, especially on jurisdictional error grounds. The new Act’s retention trust provisions are entirely new and will likely generate disputes about the scope of the trust, the obligations to pay into trust accounts, and the interaction with other security interests.

Practitioners need to be alert to several traps in the Act. First, the definition of “business day” in section 4(1) excludes not only weekends and public holidays but also all days between 22 December in any year and 10 January in the following year (inclusive). This is a 20-day period over summer when many construction sites close. Deadlines falling in that period are effectively extended. Adjudication timeframes (e.g. 15 business days for a payment schedule, 10 business days for an adjudication response) will be significantly impacted if the calculation straddles that period.

Second, section 68 prohibits a corporation in liquidation from making a payment claim or taking any action under Part 3 to enforce a payment claim, including adjudication or recovery proceedings. Any existing adjudication application is automatically withdrawn if the claimant becomes a corporation in liquidation. This is a harsh provision - liquidators cannot use the statutory adjudication process for pre-liquidation work.

Third, the consequences of failing to give a timely payment schedule are severe: the respondent becomes liable to pay the claimed amount on the due date (section 26), cannot make an adjudication response (section 34(3)), and cannot apply for adjudication review (section 39(3)(a)). The respondent also cannot raise in later proceedings any defence under the construction contract (section 27(3)). Even if the claimant obtains judgment in debt recovery, the respondent is barred from cross-claim or defence under the contract.

Fourth, the right to suspend work under section 62 cannot be exercised while an adjudication review application made by the respondent has not been determined (section 62(2)). This means a claimant who wins at adjudication but faces a respondent’s review application must wait until the review is resolved before suspending.

Fifth, the retention money trust obligations under Part 4 do not apply where the party for whom work is carried out is a government party (section 70(1)(a)). Government entities are also exempt from the requirement to set up trust accounts. But private sector principals and head contractors must hold retention money on trust from the retention money trust commencement date until the trust end date (section 71). Failure to pay into a trust account is an offence with a $50,000 fine (section 87). There is no grace period for setting up the account - it must be established within 10 business days after the contract is entered into (or 20 business days if it later becomes subject to Part 4) under section 74(2). However, if the retention money is not money retained from amounts payable but separately paid as security, the account must be established before the money is paid (section 74(3)).

Sixth, a notice-based time bar provision is not automatically void; it only has no effect if declared unfair in a particular case (section 16). The party alleging unfairness bears the onus and the adjudicator, court, arbitrator or expert must consider specific factors, including the irrebuttable presumption that the parties have read and understood the contract and the rebuttable presumption that the required party has the competence of a reasonably competent contractor. The provisions of any related contract must not be taken into account (section 16(7)).

Seventh, when seeking substitution of performance security (section 59), the claimant must provide a draft compliant performance bond with the payment claim. The adjudication application must then be accompanied by an executed compliant performance bond from an authorised issuing institution. The bond must be unconditional, irrevocable, non-expiring, and meet credit rating requirements (section 60). If the bond does not comply, the substitution right is not affected if there are multiple bonds and the others comply (section 60(2)). However, substitution is not available if the retention money is held by a third party (section 61(4)).

Eighth, section 111(2)(d) voids any contract provision "that may be reasonably construed as an attempt to deter a person from taking action under this Act." This is very broad and could catch confidentiality clauses, penalty clauses, or any provision that discourages making a payment claim or adjudication.

Ninth, the adjudicator’s determination can be corrected for clerical mistakes, accidental slips, material arithmetic errors or material mistakes in description (section 38(7)). But otherwise the determination is final subject to review and judicial review for jurisdictional error only. A party cannot appeal on the merits.

Tenth, the Act’s staged commencement means that different provisions apply depending on when the construction contract was entered into. Contracts entered into before 1 August 2022 (for most operative provisions) remain governed by the Construction Contracts (Former Provisions) Act 2004. Practitioners must check the exact commencement date of each provision relevant to their client’s contract.

For participants in the Western Australian building and construction industry, compliance begins with understanding the contract type. Before entering into a construction contract, determine whether the Act applies (section 9). For building service contractors, the contract must be in writing and contain mandatory information: parties’ names, the contractor’s registration number, a general description of the work, and the amount payable or how it is calculated (section 13). The contract must not include any pay-when-paid provision (section 14), and any notice-based time bar should be carefully drafted to avoid being declared unfair (section 16). Model forms of construction contracts are available from the Building Commissioner but are not mandatory (section 12).

When a progress payment becomes due, a claimant should make a payment claim in the approved form (if any) stating the claimed amount, describing items and quantities of work, and stating it is made under the Act (section 24). For home building work above $500,000, a homeowner’s notice must be included unless the principal is a corporation or the work relates to multiple dwellings or a residential development business (section 24(2)). The claimant may serve the claim by any method in section 113, but should follow any contractual method if reasonably practicable.

A respondent receiving a payment claim must prepare a payment schedule and give it to the claimant before the earlier of the contract time or 15 business days (section 25). The schedule must indicate the proposed payment amount (or none) and if less than claimed, provide reasons and the reason for withholding. This is critical because if no schedule is given, the respondent becomes liable to pay the claimed amount (section 26), loses the right to participate in adjudication (section 34(3)), and cannot seek review (section 39(3)). If the respondent disputes the claim, it should include all reasons in the payment schedule because additional reasons cannot be raised in the adjudication response (section 34(3)).

If the respondent fails to pay the claimed or scheduled amount in full by the due date, the claimant may either recover the unpaid amount as a debt in court (but subject to restrictions on cross-claims and defences) or apply for adjudication (section 27). The claimant must choose one path. If pursuing adjudication, the application must be made within 20 business days after first becoming entitled (section 28). The application must be in the approved form, identify the payment claim and schedule, include a copy of the construction contract, and may include submissions. The claimant must give a copy to the respondent within 1 business day (section 30). If the respondent has given a payment schedule, it may give an adjudication response within 10 business days (section 34). The respondent must not include new reasons.

The adjudicator will determine the matter within 10 business days (section 37). The determination is binding and must be paid within 5 business days (section 52). If not paid, the claimant can obtain a certified copy of the determination from the Building Commissioner and enforce it as a monetary judgment (sections 53-54).

For retention money: parties who retain retention money under a contract subject to Part 4 must establish a trust account with a recognised financial institution within 10 business days of the contract (or 20 business days if the contract later becomes subject). The money must be paid into the account from the retention money trust commencement date (section 74). The party must keep proper records, allow inspection by beneficiaries without charge, and retain records for at least 3 years after the account is closed (section 79). Withdrawals are only permitted for release or recourse in accordance with the contract, by agreement, determination, or other authorised purposes (section 76). Interest earned on the trust account is generally payable to the party who established the account except for interest after the money is required to be released (section 78).

Claimants seeking substitution of performance security must include a draft compliant performance bond with the payment claim and an executed bond with any subsequent adjudication application (section 59). The bond must meet the strict requirements of section 60. Respondents should verify the authenticity and compliance of the bond (section 59(7)).

Finally, all participants must avoid any threat or intimidation in relation to payment claims or exercise of rights (section 65). Contractual provisions that attempt to deter action under the Act are void (section 111). Practitioners should review existing contracts and standard forms for compliance.