23 Jun 2021
By David Marsh
SOPA Construction Contracts

With a Western Australian security of payment regime set to undergo a root and branch overhaul, it is time to ask yourself: Am I SOPA ready?

When the Construction Contracts Act commenced, it was immediately distinguishable from its Eastern States analogues by its name – it did not include the phrase “security of payment” in the title.  Dig deeper, and the differences were even more stark.  The most fundamental difference being that the WA Act left the agreed contractual regime in place (with limited exceptions) and bolted a rapid adjudication process on to that regime.  By contrast, corresponding legislation in each of the Eastern States created a separate payment regime that effectively ran alongside the contractual regime and it was this separate regime that ran into the rapid adjudication process.

This week (on 22 June 2021), amendments to the WA regime as set out in the Building and Construction Industry (Security of Payment) Bill 2021 were passed by both houses of WA Parliament and is currently awaiting formal assent by Governor.

Although the amendments to the WA regime contain some nuances and the transition will not be immediate on existing contracts (See below), the WA legislation will follow the Eastern States model – meaning that principals, builders and subcontractors will now have to adjust.

For example, contractors and subcontractors should be ready for the payment schedule regime should they be contemplating an adjudication application, and they will need to ensure that all boxes are ticked in that regard or the application might fail over a lack of not meeting the formal requirements.  Conversely, principals and head contractors need to get ready to respond to the full extent they can when payment claims are made to ensure that they comply with the provisions of the Act specifying how payment claims are to be responded to.

Based on the Eastern States’ experience, while there are general prohibitions on contracting out, it should be possible for the parties to align the new SOPA payment regime requirements into the contract requirements so that the two work neatly together and not against one another. As a minimum, we recommend that parties start preparing checklists for contract administrators (or amending any checklists that are already in existence) in readiness for the likely changes.

There are aspects of the new regime which are worthy of note such as the power granted to adjudicators to override time bar provisions, which also may impact contractual drafting and may not just be a matter dealt within adjudications.  For example, it might be possible to couch time bars in a similar way that parties currently deal with liquidated damages regimes in an attempt to avoid those regimes being deemed penalties.

While the administration of Pindan seems to have caused a minor hiccup in the introduction of the new legislation, its introduction is imminent and affected parties should be prepared.

Register for SOPA Seminars

We will be running seminars on the new legislation so let us know if you are interested by completing the form below, or contacting David Marsh at dmarsh@solbros.com.au or Karen Cogoli at kcogoli@solbros.com.au. We note that there are transitional provisions that apply to contracts entered into before the commencement of the new SOPA regime, which we will cover in our seminars.

Register Interest for Seminar

  • This field is for validation purposes and should be left unchanged.

Recent Insights

Infrastructure expenditure affecting the Western Australian construction market

Over the last 12 months, there have been numerous reports of a skills shortage in the Western Australian building and construction industry – in both blue and white-collar sectors. While the current boom is nowhere near that of 2012, there are a number of factors making it more difficult to top up the Western Australian building and construction industry from outside sources.
Read More

Are you SOPA Ready?

This week (on 22 June 2021), amendments to the WA regime as set out in the Building and Construction Industry (Security of Payment) Bill 2021 were passed by both houses of WA Parliament and is currently awaiting formal assent by Governor. With a Western Australian security of payment regime set to undergo a root and branch overhaul, it is time to ask yourself: Am I SOPA ready?
Read More

Time Bars vs Estoppel: Valmont Interiors Case

At the heart of the appeal was the question of whether an estoppel would operate to prevent a party, which directed additional works outside the express contractual variation regime, from bringing those works back within the contractual variation regime and then using the time bar provisions of that regime to bar the claim.
Read More

Notes on Boilerplate Terms of Contracts Impacting Construction Disputes

This is a short article regarding two dissimilar cases, both of which focus attention on the fact that the boilerplate terms of contracts can have a significant impact on the conduct of construction disputes.
Read More

Commercial Leases in Western Australia during the COVID-19 Pandemic

Acknowledging small business, including the retail sector, have been hard-hit during the COVID-19 pandemic, changes to commercial tenancy laws in WA are providing some relief through what is defined as this “emergency period”. Solomon Brothers partner, Chris Williams, provides a summary of these legislative changes and their impact on both landlords and tenants.
Read More

When Worlds Collide: Indemnities Vs Limitations of Liability

While the usual caveats that apply to the impact of decisions refusing to grant summary judgment apply to NRW Contracting Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [2020] WASCA 2020, there are at least important take-aways from the decision. The fact that it is a Court of Appeal decision also makes it worthy of note.
Read More

ASIC’s beef with Westpac over responsible lending duties

On 13 August 2019, the Federal Court of Australia handed down its judgment in Australian Securities and Investments Commission v Westpac Banking Corporation (Liability Trial) [2019] FCA 1244 (“the Liability Trial”).
Read More

Commercial Rent Reduction Negotiation: Getting a great result for all parties

What to do when a commercial tenant asks for a rent reduction The starting point for a landlord is to...
Read More

“Construct Only” Contract, but is it really?

  The phrases “construct only contract” and “design and build contract” are ubiquitous within the Australian construction and building industries....
Read More

Kilmaley Investments: Putting the brakes on the assignment of statutory compensation

The recent decision of the Supreme Court of Western Australia in Kilmaley Investments Pty Ltd v City of Wanneroo [2019] WASCA 156 is an interesting development in case law relating to the assignability of a right to statutory compensation.
Read More

Get in touch with our Construction Law Team

DAVID MARSH

Partner Litigation