On December 15, some important changes came into effect in relation to the Western Australia Construction Contracts Act. These changes make it easier to take payment disputes to adjudication, and to enforce judgments for unpaid decisions.
And aren’t there a lot of people complaining about that? "It will increase disputes within the industry!" they cry. "It will make claims confusing!" and "It will add costs across the construction sector!"
What a load of bollocks.
The main changes are:
- The time available to take a matter to adjudication has risen from from 28 days to 90 business days - about 4.5 months.
- A payment claim is not restricted to only a single invoice but can contain previously issued yet unpaid invoices.
- A decision which remains unpaid can now be enforced without the contractor having to have a court hearing to seek permission to enforce an adjudication decision. You can just do it.
The first thing to remember is that these changes in WA have been part of the Security of Payment Act in all other states for many years. There is nothing new here at all. The sky has not fallen in in other states, and the industry continues to function. The fact is that before these changes the WA Act was failing miserably to cater to contractors with payment disputes.
All that has happened now is that these changes have brought the WA Act some way toward how the other states’ Acts operate. More importantly, it also better gels with how the industry actually works and how many payment disputes actually arise.
The complainers don’t complain because it will make life harder for contractors, they complain because it will make life easier. It will be easier to have more matters decided in adjudication instead of the alternative of high insolvency, and with contractors left no pathway to resolving the dispute and just wearing the debt.
The first very significant change is that a payment claim can now contain claims/invoices that were previously issued but not paid or only paid in part. This is hugely significant. Before this, a contractor either had to take every single unpaid invoice to adjudication within 28 days of the date for payment or lose the ability to claim it ever again. That was just too short a period. Most contractors could not do so and didn’t even know there was cause for a dispute in such a short period. Once they did, it was too late.
They usually had four or five unpaid invoices and were left unable to have any of them adjudicated with no chance to simply combine them in order to make one claim and only one adjudication application. That is why the numbers of adjudications in WA was always so low; most contractors were too late.
Some have complained that these claims are ‘recycled’ claims. Recycled? That is a bizarre and deliberately denigrating term to use in order to bring the validity of those invoices into doubt. They are not recycled claims; they are unpaid claims!
But now a payment claim can include all other unpaid invoices from the same contract. What’s more, the time in which an application can be made now runs for 90 business days after the due date for payment of the most recent claim, or from receipt of a notice of dispute to that claim. As we know, it is at the end of the work where these issues mostly arise, and now contractor can bundle the unpaid invoices with the most recent invoice into a single claim and have them adjudicated altogether.
The bottom line is that these changes won’t increase payment disputes; they give existing payment disputes somewhere to go and a way to be heard. And just to repeat, this is the way other states have handled adjudication for years.
The other significant change is the ability to register and enforce a judgment without court involvement. The reliance on the courts just created another costly time-consuming hurdle that contractors had to get over just to enforce a matter that has already been decided, and at some expense. It was madness to require court approval to enforce a decision already achieved under a statutory process. Again, this is only bringing the WA Act into line with other states where the ability to register and enforce a judgment without court hearings or permission, has been in place from the very beginning.
These changes are good news for all WA contractors, and after a horrific year of insolvencies, it’s amazing that anyone is complaining about them.