Principal - Western Australia

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.

What does the Act do?
What sort of the things are covered by the Act?
I have received a Payment Claim what do I do?
How do I know that it is a Payment Claim?
What is a Notcie of Dispute?
I did not provide a Notice of Dispute within 14 days.
What is going to happen?
Can I make an application for adjudication under the Act?
How does the Principal make an application for adjudication?

 

 

What does the Act do?

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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What sorts of things are covered by the Act?

The Act covers ‘Construction Work’ which is basically all building and related trades.

The Act also covers ‘Construction related goods and services’, if they have been provided by a supplier (such as a wholesaler) or person who provides services (such as a designer).

Note : The Act does not cover mining work or work associated with wholly artistic work.

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I have received a Payment Claim what do I do?

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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How do I know that it is a Payment Claim?

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)    be 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.

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What is a Notice of Dispute?

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

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I did not provide a Notice of Dispute within 14 days

If you do not pay the Claimant in accordance with the contract or 28 days after receiving the Payment Claim. Then there is a ‘Payment Dispute’ which can be taken to adjudication within 28 days.

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What is going to happen?

If the Claimant still thinks that they are entitled to be paid they may make an application for adjudication.

If they do you will be and given an opportunity to provide a submission in response to the application for adjudication.

In reality if you owe the Contractor money for construction work that has been carried out etc. you should pay them.

However, if you legitimately feel that you are being inappropriately charged or over charged there are ways of maximizing your opportunities and minimizing risks.

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Can I make an application for adjudication under the Act?

Yes.

The WA Act allows Principals to make a Payment Claim and have it adjudicated under the Act.

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How does the Principal make an application for adjudication?

The Principal submits a Payment Claim in relation to performance or non performance under a construction contract. Details regarding Payment Claims are provided foregoing.

The Principal then waits for the Contractor’s Notice of Dispute to be provided within 14 days. Details regarding Notices of Dispute are provided foregoing.

The Principal then makes its application for adjudication within 28 days after the ‘Payment Dispute’ arises.

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