26 August, 2016
In brief
The Evans Report into the operation and effectiveness of the Construction Contracts Act 2004 (WA) (Act) has been tabled in Parliament.
The Report makes 28 recommendations which include proposed amendments to the Act which, if adopted, will have a significant impact on principals and contractors.
If legislated, some of these recommendations will make the adjudication process more contractor friendly.
If the Act is amended, as recommended, principals and contractors should also review the usual terms on which they contract.
It further highlights the importance of good contract management and record keeping.
Key points from the Statement by the Minister of Commerce1
The report from the independent statutory review of the Construction Contracts Act 2004 (WA) was tabled in Parliament on Tuesday 16 August 2016. The Act provides for security of payment in the construction industry, through the use of rapid adjudication processes to determine payment disputes. The Evans Report (Report) was commissioned to review how the operation and effectiveness of the Act can be improved.
The final Report makes 28 recommendations, which include amending the Act to:
- reduce the maximum contractual payment terms to 30 business days;
- increase the time limit for lodging an adjudication application to 90 business days;
- enable ‘claims recycling’;
- create express statutory trust arrangements for retention of moneys on high value construction projects (to protect retention moneys during insolvency events and ensure it is not unreasonably withheld from subcontractors);
- make it an offence to intimidate, coerce or threaten a person or business in their access to remedies available under the Act; and
- improve the use of other related legislation to discipline contractors who have engaged in unfair behaviour or systematic non-payment of subcontractors.
Minister for Commerce, Michael Mischin, told the WA Parliament that the State Government accepts the majority of the recommendations made in the Report, and that the Government intends to develop the necessary amendments to the Act, as a priority.
Conclusion
Whilst the Report has not yet been made publically available, the limited details which have been released indicate a preference for making the rapid adjudication process more flexible and accessible to subcontractors. The Report also focuses on ways to improve industry awareness of the Act and its functions, and providing new services to contractors and subcontractors to assist them with resolving payment disputes.
If legislated, some of these recommendations will increase pressure on principals, by making the rapid adjudication process more contractor friendly. This re-emphasises the need for good contract management. If these recommendations are adopted, principals and contractors should review the usual terms on which they contract.
Endnotes
16 AUG 2016: WA COUNCIL HANSARD: Independent Statutory Review of the Operation and Effectiveness of the Construction Contracts Act – Report Statement by Minister for Commerce.
For further information, please contact:
Dan Dragovic Partner, Herbert Smith Freehills
dan.dragovic@hsf.com
