Construction Contracts Act 2004

The Act casts a wide net. The central definition in s.3 identifies a "construction contract" as any agreement (written, oral or mixed) under which a "contractor" assumes one or more of four obligations: to carry out construction work, supply related goods to site, provide related professional services, or provide on-site services. "Principal" means the counterparty to whom those obligations are owed.

Section 4(2) defines "construction work" expansively to include reclamation, civil works, buildings, installation of fittings (electrical, hydraulic, fire protection, lifts, etc.), demolition, and all preparatory, integral or completion work such as excavation, scaffolding and landscaping. Exclusions are narrow: oil and gas drilling, mining shafts, fabrication of processing plant, watercraft construction, and any prescribed exclusions. Related goods and services are defined in s.5 to capture materials that become part of the works, plant and equipment supplied to site, and professional services (surveying, design, project management) but not accounting, financial or legal advice.

Consequently, the legislation affects virtually every participant in the WA construction supply chain: head contractors, subcontractors, consultants (architects, engineers, quantity surveyors), suppliers of concrete, steel and prefabricated components, labour-hire firms, and developers. Section 7(1) limits current application to contracts entered before the 2021 Security of Payment Act's operative date, but the breadth of the definition means legacy disputes continue to surface on projects commenced years ago. Section 7(3) excludes employment contracts, preserving the Industrial Relations Act 1979 regime for employees. Section 8 binds the Crown, so State agencies, local governments and public works departments are principals.

Adjudicators, prescribed appointors and the Building Commissioner occupy administrative roles. Only individuals meeting regulatory qualifications may be registered (s.48). Parties cannot contract out (s.53), so even sophisticated commercial parties and their lawyers must comply. Insolvency practitioners become subject to the unfixed-goods duties in Sch. 1 cl. 10 when a principal or upstream entity enters administration. Courts, the State Administrative Tribunal (SAT) and arbitrators are affected by the primacy given to determinations (ss.38, 45) and the limited review rights (s.46).

In practice, tier-1 contractors use the Act defensively against subcontractor claims while simultaneously deploying it against developers; subcontractors rely on the implied terms and adjudication to overcome unequal bargaining power. The 2016 amendments widened the definition of payment dispute (s.6(aa)) and adjusted timelines, extending the Act's reach to "resubmitted claims" via transitional s.57.

Contracting parties owe duties shaped by the interplay of express, prohibited and implied terms. Principals must pay within the shorter of the contract period or 42 days (s.10, Sch. 1 cl. 7(3)). They must respond to payment claims with a detailed notice of dispute within 14 days or pay the claimed amount (Sch. 1 cl. 7(1)–(2)). Retention money is held on trust (Sch. 1 cl. 11) and cannot be applied except in accordance with the contract or a determination. On insolvency of the principal or an upstream entity, the principal must preserve unfixed goods for repossession (Sch. 1 cl. 10(g)–(h)).

Contractors gain rights to progress claims at any time after performance (Sch. 1 cl. 3–4), to interest on overdue amounts (Sch. 1 cl. 8), and to ownership of goods until paid or fixed (Sch. 1 cl. 9). They may suspend work after three business days' notice if a determination is not satisfied (s.42), without liability for resulting loss. Both parties may apply for adjudication within 90 business days after a payment dispute arises (s.25–26), provided no prior adjudication or arbitral/court order exists on the same matter.

Adjudicators must determine disputes fairly, quickly, informally and inexpensively (s.30), acting on the application, response and any further submissions (s.32). They may inspect works, test materials or engage experts with consent (s.32(2)), but are not bound by evidence rules. Determinations must be in writing, reasoned, identify confidential material, and be served on parties and the Building Commissioner (s.36). Parties must bear their own adjudication costs unless frivolous or vexatious conduct justifies shifting (s.34).

The Building Commissioner maintains the register of adjudicators (s.48), publishes determinations in anonymised form (s.50), and may appoint adjudicators when prescribed appointors fail (s.28(2)). Registered adjudicators must publish their hourly rates (s.51) and may require deposits (s.44(8)).

Limited rights of review exist: disqualification of an adjudicator for material personal interest may be declared by SAT before a determination (s.29(3)); dismissal decisions under s.31(2)(a) are reviewable in SAT (s.46(1)); registration decisions are likewise reviewable (s.49). Otherwise determinations are final (s.41) and binding even if parallel proceedings exist (s.38, s.45(2)).

The Act creates no criminal offences; enforcement is civil. A determination may be filed in a court of competent jurisdiction together with a certified copy and affidavit of non-payment, whereupon it takes effect as a court order (s.43(3)). Interest continues at the statutory rate until filing (s.39(4)).

Non-compliance with a determination allowing suspension triggers s.42: the contractor may suspend after giving three business days' written notice complying with the prescribed form. Suspension is limited to three business days after eventual payment, but the contractor retains all contractual rights including termination and suffers no liability for principal's losses.

Adjudicator costs are recoverable as a debt (s.44(12)). Where an adjudicator decides that one party must pay another's adjudication costs because of frivolous conduct, that decision is itself enforceable under Divisions 4 and 5 (s.34(4)). Joint and several liability for adjudication costs exists, subject to equal-share adjustment (s.44(5)–(6), (10)–(11)).

Failure to comply with implied trust obligations over retention money or unfixed goods on insolvency may sound in breach of trust or breach of statutory duty, though the Act itself does not spell out additional remedies. Section 53 voids any contracting-out provision, so attempts to oust the adjudication regime are ineffective.

The only direct "penalty" mechanism is the potential cancellation of an adjudicator's registration for misconduct or incompetence (s.48(5)), or costs orders against vexatious participants. The legislation relies on commercial pressure, suspension rights and swift court enforcement rather than fines.

The Act is not a code. Section 45(1) expressly preserves rights to commence arbitral or curial proceedings. However, any amount paid under a determination must be taken into account in later awards or judgments, with restitutionary powers available (s.45(4)). Evidence from adjudications is inadmissible in other proceedings except on disqualification applications or SAT reviews (s.45(3)).

Interaction with the Building and Construction Industry (Security of Payment) Act 2021 is explicit: the 2004 Act applies only to contracts entered before the 2021 Act's s.22 commencement (s.7(1)). Transitional provisions in Part 6 address the interface, preserving extended time periods for claims lodged before 15 December 2016 (s.58) and validating certain suspension notices given in late 2016 (s.59). Section 60 preserves the pre-2017 42-day rule for older contracts.

The Interpretation Act 1984 governs construction of implied terms (s.23). Interest rates are borrowed from the Civil Judgments Enforcement Act 2004 s.8(1)(a) (Sch. 1 cl. 8(3), s.33(1)(b)). Insolvency definitions in Sch. 1 cl. 10(1) adopt the Corporations Act 2001 (Cth) concepts of "insolvent under administration" and "Chapter 5 body corporate".

The State Administrative Tribunal Act 2004 supplies the review mechanism for dismissal decisions and registration matters (ss.46, 49). The Building Services (Complaint Resolution and Administration) Act 2011 establishes the Building Commissioner, whose functions under the 2004 Act include registration, publication and appointment fallback (ss.28, 48, 50).

Common-law doctrines of frustration, repudiation and estoppel continue to operate except where implied terms or prohibitions conflict. The prohibition on pay-if-paid clauses (s.9) mirrors similar provisions in the Building and Construction Industry Security of Payment Act 1999 (NSW) and equivalents, promoting national consistency while preserving WA-specific adjudication timelines.

The most significant recent amendments appear in the Construction Contracts Amendment Act 2016 and the Building and Construction Industry (Security of Payment) Act 2021. The 2016 Act inserted s.6(aa) to treat rejection of a payment claim as a dispute, expanded the definition of "payment claim" to include repeat claims, adjusted the prohibition period in s.10 from 30 to 42 days (later qualified by transitional s.60 for pre-3 April 2017 contracts), lengthened the application window in s.26 from 28 to 90 business days, and introduced new dismissal grounds and simultaneous-adjudication powers in ss.31–32.

These changes responded to industry feedback that the original 28-day limit was too tight for complex claims and that technical dismissals were occurring on procedural defects. The 2016 amendments also inserted Part 6 transitional provisions (ss.57–60) to manage the shift, clarifying that earlier adjudications count for the purposes of the new s.6(2) bar on repeat claims.

The 2021 Act fundamentally altered the landscape by creating a new security-of-payment regime modelled on the Eastern States "deemed acceptance" model. It repealed parts of the 2004 Act (deleting ss.47 and 52) and renamed the surviving statute the Construction Contracts (Former Provisions) Act 2004. Section 7(1) now confines the former Act to pre-2021 contracts, while s.48(2A) prevents new adjudicator registrations under the old scheme. The 2025 Statutes (Repeals and Minor Amendments) Act made only minor updates to the insolvency definition in Sch. 1 cl. 10.

The policy driver has been harmonisation with national models while preserving a functional legacy regime. The 2016 changes sought to reduce technical dismissals and improve cash flow; the 2021 overhaul aimed to align WA with the "East Coast" model that deems a claim accepted if no payment schedule is served, thereby shifting the onus more heavily onto respondents.

Western Australian courts have emphasised the Act's speed and finality. In Perrinepod Pty Ltd v Georgiou Building Pty Ltd [2011] WASCA 217 the Court of Appeal confirmed that an adjudicator's jurisdictional error does not render the determination a nullity for enforcement purposes unless the error is of a type that goes to the existence of the power. The decision reinforced s.38's "binding even though other proceedings" rule.

The SAT has considered disqualification applications under s.29. In several unreported decisions the Tribunal has stressed that a "material personal interest" requires more than mere prior professional acquaintance; an actual conflict affecting impartiality must be shown. Review of dismissal decisions under s.46 has been narrow; SAT will not re-merit the underlying dispute but will examine whether the adjudicator's jurisdictional reasoning was reasonable.

Controversies have centred on the high rate of technical dismissals under the original s.31(2)(a) grounds. Industry bodies complained that respondents exploited minor formatting defects to obtain dismissal, prompting the 2016 amendments that added the "sufficiently complies" carve-out in s.31(2)(a)(iia). Another flashpoint has been the interaction with arbitration clauses. Courts have consistently held that the existence of an arbitration agreement does not prevent adjudication (s.25(b) only bars where an order or finding has already been made).

The confidentiality carve-out in s.36(e) and the Building Commissioner's publication practice under s.50 have generated debate. Some adjudicators liberally designate material as confidential, reducing the utility of the public register as a precedent source. Immunity under s.54 has been upheld in cases where disappointed parties sued adjudicators in negligence or for alleged bias; the good-faith threshold has proved high.

The shift to the 2021 regime has itself been controversial. Legacy contractors argue the former Act's "balance of probabilities" merits review is fairer than the new "deemed acceptance" model, while principals welcome the stricter payment-schedule discipline. Transitional litigation has tested the precise cut-off date in s.7(1), with courts looking to the date the contract was executed rather than the date of any variation.

Most practitioners miss that a "payment claim" under the Act includes a claim by the principal against the contractor for back-charges or liquidated damages (s.3 definition, Sch. 1 cl. 5(1)(b)). This reciprocity surprises principals who assume the Act is a one-way street for contractors.

The 90-business-day limit in s.26(1) is calculated from the earlier of rejection or the due date for payment (s.6(3)). In complex projects with monthly claims, the clock can expire before senior management realises a dispute exists. The phrase "by the time when the amount claimed ... is due to be paid" has generated satellite litigation over whether contractual notice requirements extend the due date.

Adjudicators may consider multiple disputes simultaneously under s.32(3)(c) even without party consent, provided no prejudice to fairness. This power is rarely invoked but can ambush a respondent who has prepared only for sequential adjudication. Conversely, the prohibition on using the same material twice (s.6(2)) means a claimant who includes previously adjudicated items risks total dismissal.

The trust imposed on retention money (Sch. 1 cl. 11) survives insolvency of the principal and may give the contractor priority over secured creditors, yet many contracts still contain "retention" clauses that fail to address the statutory trust. Failure to segregate funds has led to claims for breach of trust not barred by the Act.

Section 42 suspension rights are exercisable only after a determination, not after mere non-payment of a claim. Many contractors issue invalid suspension notices, exposing themselves to damages claims. The three-business-day notice must comply with the regulations; minor defects have been held fatal.

Finally, the "former provisions" label misleads some into thinking the Act is repealed. It remains fully operative for the large cohort of contracts signed before August 2022. Legal advisers who rely on the short title without checking s.7(1) risk missing live rights and obligations.

Compliance begins at contract drafting. drafters should insert express provisions on variations, payment claims, response times, interest, title to goods, retention and unfixed goods that meet or improve upon the Schedule 1 minima. Any clause requiring payment later than 42 days must be deleted or amended (s.10). Pay-if-paid language must be excised entirely.

Project managers should establish internal calendars keyed to "business days" (s.3 definition excludes 25 December to 7 January). Payment-claim registers must record receipt dates, calculate the 14-day dispute-notice deadline and the 28-day payment deadline under the implied terms. Automated systems that flag claims on day 10 are advisable.

When a dispute crystallises, the claimant must prepare an adjudication application that includes the contract (or extracts), the payment claim, all supporting submissions, and the prescribed information (s.26(2)). The application must be served on every other party, the chosen adjudicator or prescribed appointor, and accompanied by any required deposit. Late service outside the 90-business-day window is fatal.

Respondents must serve a compliant response within 10 business days (s.27). The response cannot raise new grounds not previously notified in a timely notice of dispute; adjudicators routinely disregard "ambush" material. Both sides should assume the adjudicator will decide on the papers and provide all evidence upfront.

Adjudicators' published rates (s.51) should be checked before nomination. Deposits may be required; failure to provide them can stall the process. Once a determination issues, payment must occur by the stated date. Interest runs automatically (s.39). If payment is not made, the contractor should issue a precisely worded s.42 notice and, if necessary, file the determination under s.43. Parallel arbitral or court proceedings should be commenced within limitation periods, remembering that the determination amount must be brought to account (s.45(4)).

Principals holding retention must maintain separate trust accounts or at least ring-fence the funds. On any hint of contractor or upstream insolvency, legal advice on Sch. 1 cl. 10 duties is mandatory to avoid personal liability.

Annual compliance audits should verify that all active contracts predating the 2021 regime remain under the former Act and that staff understand the 90-business-day adjudication trigger. Training on the expanded s.6 payment-dispute triggers introduced in 2016 is essential. Finally, organisations should maintain precedents of compliant payment claims and notices of dispute that satisfy the detailed content requirements of Schedule 1 clauses 5 and 7; minor omissions continue to generate unnecessary adjudications.