The Western Australian government has sought industry comment on a suite of significant proposed reforms to the WA security of payment regime ("SOP"). If passed, the Bill represents the most significant reform to the regulation of payments in the construction industry since the enactment of the Construction Contracts Act 2004 ("CCA") more than a decade ago, and will make WA the first jurisdiction to adopt significant recommendations of the Murray and Fiocco Reviews. This White Paper introduces the proposed amendments and their potential impact on construction projects in Western Australia.
Many of the contractor/applicant-friendly amendments in the Bill are understandable given the objectives of SOP legislation. However, some of the changes that seek to redress perceived unfairness or inequity of bargaining positions in the construction sector (including those concerning unfair time bars) may have unintended consequences, including a potential spike in litigation over what constitutes an unfair time bar, which would appear to be contrary to the original intent of these reforms. In our view, the reforms foreshadowed by the Bill will not be a panacea to the harm that SOP laws seek to redress, but may be a step in the journey to providing tools for contractors and applicants to improve their cash flow position.
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