27 March 2018

Protecting principals and security of payment – WA Government launches new Industry Advisory Group

In the wake of some high profile WA builders entering administration, the WA Government has launched a review to improve security of payment for local subcontractors.

The reform agenda arguably has 2 key aims.

  1. Help protect principals and main contractors from subcontractors who are experiencing financial difficulties or taking on work beyond their capability or balance sheet. (Such an approach is confusing given the proposed Ipso Facto reforms will deprive principals of some of the contractual protections they currently enjoy.)
  2. Securing cash flow within the subcontracting chain.

A newly formed Industry Advisory Group will be conducting a review focusing on the following:

  1. if amendments should be made to the Building Services (Registration) Act 2011 to:
    1. introduce a demerit system for the purposes of sanctioning registered builders that do not pay subcontractors in a timely manner or engage in behaviour designed to dissuade subcontractors from enforcing their rights under security of payment legislation;
    2. require applicants for registration as a builder to demonstrate sufficient managerial and business acumen qualifications; and
    3. place greater limits on the ability of directors of failed building companies to obtain a new building contract registration.
  2. the need for legislative change to provide fairer contracting practices across a range of areas (including prohibiting unfair terms, implying terms, requiring standard forms and regulating variations, retention monies and deductions);
  3. if improvements can be made to assist subcontractors and suppliers to use the adjudication process for small claims and to improve the compliance framework and standards for registered adjudicators; and
  4. if statutory trust arrangements should be introduced to protect monies owed to subcontractors in the event a head contractor on the project experiences financial difficulty, and, if so, a preferred model for such trust arrangements.

The Industry Advisory Group held its first meeting with stakeholders on 26 March 2018. At this point in time the IAG has not requested public submissions.

If you have any questions on this inquiry now or in the future please contact Katherine Vines or Juliana Jorissen.

Key contacts

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