Western Australia: Building and Construction Industry (Security of Payment) Act 2021 (WA)

Western Australia Building and Construction Industry (Security of Payment) Act 2021 Western Australia Building and Construction Industry (Security of Payment) Act 2021 Contents Part 1 — Preliminary Division 1 — Introductory 1. Short title 1 2. Commencement 1 3. Object of Act 1 Division 2 — Interpretation 4. Terms used 1 5. Term used: construction contract 1 6. Term used: construction work 1 7. Term used: related goods and services 1 8. Value of construction contract 1 Division 3 — Application of Act 9. Construction contracts to which Act applies 1 10. Construction contracts to which Act does not apply 1 11. Act binds Crown 1 Part 2 — Construction contracts and right to progress payments Division 1 — Form and content of construction contracts 12. Model forms of construction contracts 1 13. Construction contracts that are to be in writing and contain mandatory information 1 14. Prohibited terms: pay when paid provisions 1 15. Other prohibited terms prescribed by regulations 1 16. Notice‑based time bar has no effect if declared unfair in particular case 1 Division 2 — Right to progress payments 17. Right to progress payments 1 18. Amount of progress payment 1 19. Valuation of construction work and related goods and services 1 20. Due date for payment 1 21. Interest on payment after due date 1 Part 3 — Procedure for obtaining progress payments Division 1 — Payment claims and schedules 22. Making payment claims 1 23. When payment claims may be made 1 24. Content of payment claims 1 25. Response to payment claim: payment schedule 1 26. Claimed amount becomes payable if payment schedule not duly given 1 27. Consequences of not paying claimed or scheduled amount 1 Division 2 — Adjudication of payment disputes 28. When claimant may apply for adjudication of payment claim 1 29. To whom adjudication application made 1 30. Requirements relating to adjudication application 1 31. Withdrawal of adjudication application 1 32. Appointment of adjudicator 1 33. Disqualification of adjudicator with conflict of interest in adjudication application 1 34. Adjudication response 1 35. Adjudication procedures 1 36. Jurisdiction to make determination, frivolous or vexatious applications and complex applications 1 37. Time allowed for adjudicator to determine adjudication application 1 38. Adjudicator's determination 1 Division 3 — Review of adjudications 39. When claimant or respondent may apply for review of adjudication 1 40. Adjudicated amount in dispute to be paid into trust account before respondent may make adjudication review application 1 41. To whom adjudication review application made 1 42. Requirements relating to adjudication review application 1 43. Withdrawal of adjudication review application 1 44. Appointment of review adjudicator 1 45. Adjudication review response 1 46. Adjudication review procedures 1 47. Time allowed for review adjudicator to determine adjudication review application 1 48. Review adjudicator's determination 1 Division 4 — Adjudication fees and expenses 49. Terms used 1 50. Adjudication fees and expenses 1 51. Miscellaneous provisions relating to adjudication fees and expenses 1 Division 5 — Payment and recovery of adjudicated and other amounts 52. Requirement to pay adjudicated amount or to repay excess amount 1 53. Certification of determination if adjudicated amount not paid or excess amount not repaid 1 54. Certified copy of determination enforceable as monetary judgment 1 55. Effect of this Part on civil proceedings 1 Division 6 — Claimant's rights with respect to performance security 56. Terms used 1 57. Right to receive notice before recourse to performance security 1 58. Right to release of performance security 1 59. Right to substitute performance security 1 60. Requirements for compliant performance bond for substitution of performance security 1 61. Application of Division where third parties involved in performance securities 1 Division 7 — Claimant's right to suspend work or supply 62. Claimant's right to suspend work or supply for non‑payment 1 63. Provisions relating to suspension of work or supply 1 Division 8 — Claimant's right to lien 64. Lien over unfixed plant and materials in respect of unpaid progress payments 1 Division 9 — Miscellaneous provisions relating to payment claims 65. Threatening or intimidating claimants or persons entitled to make claim 1 66. Jurisdictional error in determination of adjudicator or review adjudicator 1 67. No appeal or review of determination of adjudicator or review adjudicator except under this Part 1 68. Application of Part to corporate claimant in liquidation 1 Part 4 — Retention money trusts 69. Terms used 1 70. Construction contracts to which Part applies 1 71. Retention money to be held on trust 1 72. Beneficial interests of parties to contract in retention money trusts 1 73. Requirement to draw down debt facility or otherwise set aside retention money required to be held on trust 1 74. Establishment of retention money trust accounts and payments into trust accounts 1 75. Requirements relating to establishment of retention money trust accounts 1 76. Withdrawals from retention money trust accounts 1 77. Decisions on payments into or out of retention money trust accounts by adjudicators, courts, arbitrators and experts 1 78. Trust account interest and fees 1 79. Trust records 1 80. Power to employ agents 1 81. Recognised financial institutions not subject to certain obligations and liabilities 1 82. Application of Personal Property Securities Act 2009 (Cwlth) 1 83. Trusts under this Part prevail over construction or other contracts 1 84. General jurisdiction of courts to supervise trusts preserved 1 85. Application of Trustees Act 1962 1 86. Indemnity of trustee from trust under this Part 1 87. Offence for failure to comply with certain requirements of this Part 1 Part 5 — Nominating authorities, adjudicators and review adjudicators Division 1 — Authorisation of nominating authorities 88. Application for authorisation 1 89. Maximum number of persons who may be authorised 1 90. Authorisation of nominating authorities 1 91. Eligibility to be authorised 1 92. Conditions of authorisation 1 93. Term of authorisation 1 94. Revocation of authorisation 1 95. Review by State Administrative Tribunal of decisions of Building Commissioner 1 96. Information to be provided to Building Commissioner by authorised nominating authorities 1 97. Code of practice for nominating authorities 1 98. Making and determining applications for authorisation before commencement of Division 1 Division 2 — Registration of adjudicators and review adjudicators 99. Registration of individual as adjudicator, review adjudicator or both 1 100. Application for registration 1 101. Registration as adjudicator or review adjudicator 1 102. Eligibility to be registered 1 103. Conditions of registration 1 104. Renewal of registration 1 105. Term of registration 1 106. Suspension or cancellation of registration 1 107. Public register of adjudicators and review adjudicators 1 108. Review by State Administrative Tribunal of decisions of Building Commissioner 1 109. Code of practice for adjudicators and review adjudicators 1 110. Transitional registration on commencement of Division 1 Part 6 — Miscellaneous 111. No contracting out 1 112. Immunity from civil liability 1 113. Service of documents 1 114. Approved forms 1 115. Annual report on operation of Act 1 116. Use or disclosure of confidential information 1 117. Criminal proceedings generally 1 118. Liability of officers for offence by body corporate 1 119. Regulations 1 120. Review of Act 1 Part 7 — Consequential amendments to other Acts Division 1 — Building Services (Complaint Resolution and Administration) Act 2011 amended 121. Act amended 1 122. Section 3 amended 1 123. Section 70 amended 1 124. Section 71 amended 1 Division 2 — Building Services (Registration) Act 2011 amended 125. Act amended 1 126. Section 3 amended 1 127. Section 18 amended 1 128. Section 32A inserted 1 32A. Notification of new directors 1 129. Section 53 amended 1 130. Section 57 amended 1 131. Section 58 amended 1 132. Section 59 amended 1 133. Part 5A inserted 1 Part 5A — Insolvency of building service contractors 63A. Terms used 1 63B. Excluded contractors not to be registered 1 63C. Declaration of excluded contractors 1 63D. When individual or non‑corporate body may be declared excluded contractor 1 63E. When corporation may be declared excluded contractor 1 63F. Procedure for declaring excluded contractor 1 63G. When declaration of excluded contractor takes effect 1 134. Section 64 amended 1 Division 3 — Construction Contracts Act 2004 amended 135. Act amended 1 136. Section 1 amended 1 137. Section 7 amended 1 138. Section 48 amended 1 139. Section 52 deleted 1 Division 4 — Procurement Act 2020 amended 140. Act amended 1 141. Section 4 amended 1 Notes Compilation table 1 Defined terms Western Australia Building and Construction Industry (Security of Payment) Act 2021 An Act to provide an effective and fair process for securing payments under construction contracts in the building and construction industry, and for related purposes. Part 1 — Preliminary Division 1 — Introductory 1. Short title This is the Building and Construction Industry (Security of Payment) Act 2021. 2. Commencement This Act comes into operation as follows — (a) Part 1 (but only Division 1) — on the day on which this Act receives the Royal Assent (assent day); (b) Part 5 (but only Division 1 and only section 98) — on the day after assent day; (c) the rest of the Act — on a day fixed by proclamation, and different days may be fixed for different provisions. 3. Object of Act (1) The object of this Act is to provide an effective and fair process for securing payments to persons who undertake to carry out construction work, or to supply related goods and services, in the building and construction industry. (2) That object is achieved primarily by — (a) giving those persons a statutory entitlement to progress payments; and (b) establishing an expedited procedure for making claims for progress payments, for responding to those claims and for the adjudication of disputed claims; and (c) ensuring money is held on trust if it has been retained to secure the performance of the contractual obligations of those persons; and (d) giving those persons other statutory entitlements, including the right to suspend work or supply if not paid and to access retained money by substituting a performance bond. Division 2 — Interpretation 4. Terms used (1) In this Act — adjudicated amount means — (a) the amount of a progress payment that an adjudicator determines is payable under section 38(1)(a); or (b) if the determination of the adjudicator is quashed on review — the amount of a progress payment that a review adjudicator determines is payable under section 48(2)(a); adjudication application has the meaning given in section 28(1); adjudication fees and expenses has the meaning given in section 49; adjudication response has the meaning given in section 34(1); adjudication review application has the meaning given in section 39(1); adjudication review response has the meaning given in section 45(1); adjudicator means — (a) an individual registered by the Building Commissioner under Part 5 Division 2 as an adjudicator; and (b) in relation to an adjudication application — the adjudicator appointed under section 32 to determine the application; administrative duties, of adjudicators or review adjudicators, includes — (a) sending and receiving documents, submissions or other communications to and from claimants, respondents or the Building Commissioner; and (b) arranging conferences, inspections and tests; and (c) engaging experts; and (d) giving invoices to claimants or respondents for adjudication fees and expenses; approved form means a mandatory form approved and published by the Building Commissioner under section 114(1); authorised nominating authority means a person authorised by the Building Commissioner under Part 5 Division 1; Building Commissioner means the officer referred to in the Building Services (Complaint Resolution and Administration) Act 2011 section 85; business day means a day other than — (a) a Saturday, Sunday or public holiday; or (b) any other day that falls between 22 December in any year and 10 January in the following year (inclusive); claimant means a person who makes a payment claim; claimed amount has the meaning given in section 24(1)(b); construction contract has the meaning given in section 5; construction work has the meaning given in section 6; corporation in liquidation means — (a) a company that is being wound up under the Corporations Act 2001 (Commonwealth); or (b) any other corporation that is being wound up under the written law of the jurisdiction in which it is established; corresponding security of payment law means a law of the Commonwealth or of another State or a Territory that corresponds substantially with this Act; court of competent jurisdiction, in relation to a payment claim or a certified copy of the determination of an adjudicator or review adjudicator, means a court with jurisdiction to deal with a claim for the recovery of a debt of the same amount as the amount that is payable as set out in the payment claim or determination; due date, for a progress payment, means the date on which the progress payment becomes payable under section 20; head contractor has the meaning given in subsection (3); home building work has the meaning given in the Home Building Contracts Act 1991 section 3(1); multiple dwellings — (a) means 2 or more dwellings as defined in the Home Building Contracts Act 1991 section 3(1); but (b) does not include — (i) 2 dwellings (whether attached or detached) on the one lot of land; or (ii) a strata‑titled dwelling as defined in that Act; named month means January, February, March, April, May, June, July, August, September, October, November or December; payment claim has the meaning given in section 22(1); payment schedule has the meaning given in section 25(1); performance bond has the meaning given in section 56; performance security has the meaning given in section 56; principal has the meaning given in subsection (2); progress payment has the meaning given in section 17; recognised financial institution means — (a) an authorised deposit‑taking institution as defined in the Banking Act 1959 (Commonwealth) section 5(1); or (b) any other body prescribed by the regulations for the purposes of this definition; recourse, to performance security, means — (a) in the case of a performance bond — the person named in the bond demanding and receiving payment under the bond; or (b) in the case of retention money — the person who retains the retention money taking the money for themselves; related goods and services has the meaning given in section 7; release, of performance security, means — (a) in the case of a performance bond — the return or cancellation of the bond; or (b) in the case of retention money — payment of the money to the party who has carried out construction work, or supplied related goods and services, under a construction contract; respondent means a person who is given a payment claim under section 22(1); retention money means — (a) money (inclusive of GST) retained by a party to a construction contract, out of money payable by that party under the contract to another party to the contract, as security for the performance of obligations of that other party under the contract in relation to the carrying out of construction work, or the supply of related goods and services, by that other party; or (b) money (inclusive of GST) paid to a party to a construction contract, by or on behalf of another party to the contract, and retained as security for the performance of obligations of that other party under the contract in relation to the carrying out of construction work, or the supply of related goods and services, by that other party; Note for this definition: Retention money is also referred to in the building and construction industry as a "hold‑back". retention money trust account has the meaning given in section 74(1); review adjudicator means — (a) an individual registered by the Building Commissioner under Part 5 Division 2 as a review adjudicator; and (b) in relation to an adjudication review application — the review adjudicator appointed under section 44 to determine the application; scheduled amount has the meaning given in section 25(2)(c); serious offence means an offence for which the maximum penalty is (or includes) imprisonment for 5 years or more; subcontractor means a person who undertakes to carry out construction work, or to supply related goods and services, under a construction contract otherwise than as head contractor; value — (a) in relation to a construction contract — has the meaning given in section 8(1); or (b) in relation to construction work or related goods and services — means the value of the work or of the goods and services determined under section 19. (2) In this Act, the principal is the person — (a) for whom construction work is to be carried out, or to whom related goods and services are to be supplied, under a construction contract to which the person is a party (the main contract); and (b) who is not themselves engaged under a construction contract to carry out construction work or supply related goods and services as part of or incidental to the work carried out, or goods and services supplied, under the main contract. (3) In this Act, the head contractor is the person — (a) who, as a party to the main contract, undertakes under that contract to carry out construction work for, or to supply related goods and services to, the principal; and (b) for whom construction work is to be carried out, or to whom related goods and services are to be supplied, by another person under a separate construction contract as part of or incidental to the work carried out, or goods and services supplied, under the main contract. Note for this subsection: There is no head contractor when the principal contracts directly with subcontractors. 5. Term used: construction contract In this Act — construction contract means a contract, agreement or other arrangement under which one party undertakes to carry out construction work, or to supply related goods and services, for another party. 6. Term used: construction work (1) In this Act — construction work means the following — (a) the construction of buildings, structures or civil works (whether permanent or not) that form, or are to form, part of land (including the seabed); (b) the installation in or on any building, structure or civil work referred to in paragraph (a) of fittings that form, or are to form, part of the building, structure or civil work, including for — (i) the supply of electricity, gas or water; and (ii) air‑conditioning, heating, ventilation, lighting, fire protection, irrigation, sanitation, cleaning, security or communication systems; and (iii) lifts or escalators; (c) the alteration, repair, restoration, maintenance, extension, demolition, dismantling or removal of any building, structure or civil work referred to in paragraph (a) or fitting referred to in paragraph (b); (d) the reclamation, dredging or prevention of subsidence or erosion of land; (e) any work that is preparatory to, necessary for or an integral part of anything referred to in paragraphs (a) to (d), including — (i) site clearing, excavating, earth‑moving, tunnelling or boring; and (ii) laying foundations; and (iii) erecting, maintaining or dismantling cranes, scaffolding or other temporary buildings or structures; and (iv) cleaning, painting, decorating or treating surfaces; and (v) site restoration and landscaping; (f) work prescribed by the regulations to be construction work for the purposes of this Act. (2) In subsection (1) — civil works includes the following — (a) roads; (b) railways (including light rail); (c) bridges or underpasses; (d) airport runways; (e) waterways, harbours, ports or marinas; (f) electricity or telecommunication lines; (g) water, gas, oil, sewage or other pipelines; (h) dams, levees, aqueducts, drains, seawalls or retaining walls; (i) pavements, ramps, slipways or tunnels; (j) works, apparatus or structures associated with the works referred to in paragraphs (a) to (i). (3) However, in this Act construction work does not include — (a) drilling for the purposes of discovering or extracting oil or natural gas, whether on land or not; or (b) constructing a shaft, pit or quarry, or drilling, for the purposes of discovering or extracting any mineral or other substance; or (c) constructing or fitting out the whole or any part of a watercraft; or (d) work prescribed by the regulations not to be construction work for the purposes of this Act. 7. Term used: related goods and services (1) In this Act — related goods and services means — (a) goods of the following kinds — (i) materials or components (whether pre‑fabricated or not) that are to form part of any building, structure, civil work or other thing resulting from construction work; (ii) plant or materials (whether supplied by sale, hire or otherwise) for use in connection with the carrying out of construction work; and (b) services of the following kinds — (i) the provision of labour to carry out construction work; (ii) professional services that relate directly to construction work or the assessment of its feasibility, including surveying, planning, costing, testing, architectural, design, plan drafting, engineering, quantity surveying, and project management services, but not including accounting, financial or legal services; and (c) goods or services prescribed by the regulations to be related goods and services for the purposes of this Act. (2) However, in this Act related goods and services does not include any goods or services of a kind prescribed by the regulations not to be related goods and services for the purposes of this Act. (3) A reference in this Act to related goods and services includes a reference to related goods or services. 8. Value of construction contract (1) In this Act — value, of a construction contract at any relevant time, means — (a) the total amount payable under the contract at that time for construction work undertaken to be carried out, or related goods and services undertaken to be supplied, under the contract (inclusive of GST); or (b) if the contract does not provide for the total amount payable under the contract at that time — a reasonable estimate of the total amount at that time calculated as follows — (i) the estimate is to be based on all the construction work to be carried out and all the related goods and services to be supplied, including any to be carried out or supplied at the option of either party to the contract; (ii) an estimate of quantities is to take into account all relevant information in the possession of the parties to the contract at that time; (iii) the estimate is to be based on prevailing rates or prices in the building and construction industry at that time; (iv) the estimate is to take into account any anticipated movements in those rates or prices during the period of the contract. (2) The value of a construction contract that is a component contract for a project is taken to be the total value of all the component contracts for that project. (3) Construction contracts are component contracts for a project if — (a) the parties to the contracts are the same; and (b) the construction contracts are for the carrying out of construction work, or the supply of related goods and services, at the same site or at adjacent sites; and (c) a single construction contract could have been entered into instead of those separate contracts; and (d) the construction contracts do not include a contract entered into after a separate tender process. Division 3 — Application of Act 9. Construction contracts to which Act applies (1) A provision of this Act applies to construction contracts entered into after the provision comes into operation under section 2(c). Notes for this subsection: 1. Section 2(c) enables the staged commencement of this Act, including the later commencement of new industry requirements (such as those relating to retention money trusts). 2. The Construction Contracts Act 2004 (renamed the Construction Contracts (Former Provisions) Act 2004) continues to apply to construction contracts entered into before the commencement of section 22 of this Act. (2) This Act applies to a construction contract — (a) whether written or oral, or partly written and partly oral (and even if it is required by this Act to be written); and (b) whether entered into in this State or elsewhere; and (c) whether expressed to be governed by the law of this State or the law of another jurisdiction. 10. Construction contracts to which Act does not apply (1) This Act does not apply to a construction contract for home building work if — (a) the principal is an individual; and (b) the work is not carried out in relation to multiple dwellings or for the purposes of a residential development business of the principal; and (c) the value of the contract does not exceed $500 000 (or any greater amount prescribed by the regulations for the purposes of this paragraph); and (d) the contract is not between a head contractor and a subcontractor, and not between 2 subcontractors, in relation to the carrying out of the work. Note for this subsection: On the enactment of this Act, a construction contract the value of which is $500 000 (or another amount prescribed by the regulations) or more is not a home building work contract as defined in the Home Building Contracts Act 1991. (2) This Act does not apply to a construction contract to the extent that it provides that a party undertakes to carry out construction work, or supply related goods and services, as an employee (as defined in the Industrial Relations Act 1979 section 7(1)) of the party for whom the work is to be carried out or to whom the related goods and services are to be supplied. (3) This Act does not apply to a construction contract to the extent that it provides that a party undertakes to carry out construction work, or supply related goods and services, as a condition of a loan agreement with a recognised financial institution. (4) This Act does not apply to a construction contract to the extent that it forms part of a loan, guarantee or insurance agreement under which a recognised financial institution undertakes any of the following or to the extent that it provides that a party to the contract undertakes any of the following — (a) to lend money or to repay money lent; (b) to guarantee payment of money owing or repayment of money lent; (c) to provide an indemnity with respect to construction work carried out, or related goods and services supplied, under the contract. (5) This Act does not apply to a construction contract to the extent that it provides that the consideration payable for construction work carried out, or for related goods and services supplied, under the contract — (a) is not monetary consideration; or (b) is to be calculated otherwise than by reference to the value of the work carried out or the goods and services supplied. (6) This Act does not apply to a construction contract to the extent that it deals with construction work carried out outside Western Australia or with related goods and services supplied for construction work carried out outside Western Australia. (7) For the purposes of subsection (6), Western Australia includes any area of water adjacent to Western Australia — (a) that is within the territorial limits of the State; or (b) that is outside the territorial limits of the State if the construction contract is governed by the law of the State. 11. Act binds Crown This Act binds the Crown in right of Western Australia and, so far as the legislative power of the Parliament permits, the Crown in all its other capacities. Part 2 — Construction contracts and right to progress payments Division 1 — Form and content of construction contracts 12. Model forms of construction contracts (1) The Building Commissioner may, for the purpose of assisting participants in the building and construction industry, prepare and publish model forms of construction contracts. (2) Different model forms may be prepared and published for use in different circumstances. (3) The use of a model form of construction contract is not mandatory. 13. Construction contracts that are to be in writing and contain mandatory information (1) In this section — building service has the meaning given in the Building Services (Complaint Resolution and Administration) Act 2011 section 3; building service contractor means a person registered under the Building Services (Registration) Act 2011 section 18. (2) This section applies to a construction contract if — (a) a party to the contract is a building service contractor; and (b) the contract is for the carrying out by that or the other party to the contract of construction work that is a building service or for the supply by that or the other party to the contract of related goods and services for a building service; and (c) the registration of the building service contractor entitles the contractor to carry out the building service referred to in paragraph (b); and (d) the value of the contract exceeds the amount prescribed by the regulations for the purposes of this paragraph. (3) A building service contractor who enters into a construction contract to which this section applies commits an offence if — (a) the contract is not in writing; or (b) the contract is in writing but does not include the mandatory contract information under subsection (6). Penalty for this subsection: a fine of $2 000. (4) A building service contractor who has entered into a contract that becomes a construction contract to which this section applies because of a variation of the contract commits an offence if — (a) the contract as varied is not in writing; or (b) the contract as varied is in writing but does not include the mandatory contract information under subsection (6). Penalty for this subsection: fine of $2 000. (5) It is a defence to a charge for an offence under subsection (3) or (4) to prove that — (a) it was not reasonably practicable to comply with that subsection; and (b) the work was required to be carried out, or the related goods and services were required to be supplied, urgently. (6) For the purposes of subsections (3)(b) and (4)(b), the mandatory contract information is as follows — (a) the names of the parties to the construction contract; (b) the registration number of the building service contractor; (c) a general description of the construction work to be carried out or of the related goods and services to be supplied; (d) the amount to be paid for carrying out the construction work or supplying the related goods and services (or how that amount is to be calculated); (e) any other information prescribed by the regulations for the purposes of this paragraph. (7) A construction contract is not invalidated because a building service contractor contravenes this section in relation to the contract. 14. Prohibited terms: pay when paid provisions (1) In this section — amount owing, in relation to a construction contract, means the amount owing for construction work carried out or undertaken to be carried out, or for related goods and services supplied or undertaken to be supplied, under the contract; pay when paid provision, of a construction contract, means a provision of the contract — (a) that makes the liability of one party (the first party) to pay an amount owing to another party (the second party) contingent on payment to the first party by a further person (the third party) of the whole or any part of that amount; or (b) that makes the due date for payment of an amount owing by the first party to the second party dependent on the date on which payment of the whole or any part of that amount is made to the first party by the third party; or (c) that otherwise makes any of the following contingent or dependent on the operation of another contract — (i) the liability to pay an amount owing; (ii) the due date for payment of an amount owing; (iii) the making of a claim for an amount owing; (iv) the release of retention money or of a performance bond. (2) A pay when paid provision of a construction contract has no effect in relation to any payment for construction work to be carried out, or for related goods and services to be supplied, under the contract. Note for this section: Some provisions defined in this section as pay when paid provisions may also be referred to in the building and construction industry as "pay if paid" provisions or "pass‑through" provisions. 15. Other prohibited terms prescribed by regulations (1) The regulations may prohibit other provisions of construction contracts. (2) The regulations may prohibit those provisions in all or any class of construction contracts. (3) A provision of a construction contract that is prohibited by the regulations has no effect. 16. Notice‑based time bar has no effect if declared unfair in particular case (1) In this section — notice includes notice of the actual or estimated time or cost for doing a thing, notice of intention to do a thing, notice of the description of a thing or notice of any other kind; notice‑based time bar provision, of a construction contract, means a provision of the contract that makes any of the following contingent on the provision of notice by a party to the contract — (a) an entitlement to payment for construction work carried out or undertaken to be carried out, or for related goods and services supplied or undertaken to be supplied, under the contract; (b) an extension of time for doing a thing that affects an entitlement referred to in paragraph (a). (2) A notice‑based time bar provision of a construction contract may be declared under this section to be unfair in the case of a particular entitlement under the contract if compliance with the provision in that case — (a) is not reasonably possible; or (b) would be unreasonably onerous. (3) A notice‑based time bar provision of a construction contract may be declared to be unfair by — (a) an adjudicator or review adjudicator for the purposes of adjudication proceedings under this Act in relation to the contract; or (b) a court for the purposes of proceedings for the recovery of money or enforcing other rights under the contract; or (c) an arbitrator for the purposes of arbitration proceedings under the contract or under any separate agreement between the parties; or (d) an expert appointed by the parties for the purposes of proceedings to determine a matter under the contract. (4) A notice‑based time bar provision of a construction contract that is declared to be unfair has no effect in the case of the particular entitlement that is the subject of the proceedings in which it was declared unfair, but continues to have effect in other circumstances or challenges arising under the same or a related contract. (5) The party in any proceedings who alleges that a notice‑based time bar provision is unfair bears the onus of establishing that it is unfair. (6) In determining whether a notice‑based time bar provision is unfair, the adjudicator, review adjudicator, court, arbitrator or expert must take the following into account — (a) when the party required to give notice would reasonably have become aware of the relevant event or circumstance, having regard to the last day on which notice could have been given; (b) when and how notice was required to be given; (c) the relative bargaining power of each party in entering into the construction contract; (d) the irrebuttable presumption that the parties have read and understood the terms of the construction contract; (e) the rebuttable presumption that the party required to give notice possesses the commercial and technical competence of a reasonably competent contractor; (f) if compliance with the provision is alleged to be unreasonably onerous — whether the matters set out in the notice are final and binding; (g) any matter prescribed by the regulations for the purposes of this paragraph. (7) In determining whether a notice‑based time bar provision is unfair, the adjudicator, review adjudicator, court, arbitrator or expert must not take into account the provisions of any related contract or the things that happened under any related contract. Division 2 — Right to progress payments 17. Right to progress payments (1) A person who, under a construction contract, has undertaken to carry out construction work, or to supply related goods and services, is entitled to receive payment under this section (a progress payment). (2) A progress payment to which a person is entitled under this section includes the following — (a) the final payment for construction work carried out, or for related goods and services supplied, under a construction contract; (b) a single or one‑off payment for construction work carried out, or for related goods and services supplied, under a construction contract; (c) a milestone payment under a construction contract, being a payment that is based on an event or date. (3) A progress payment to which a person is entitled under this section does not include payment for any expenses, loss or damages incurred because of a breach of a construction contract. (4) The entitlement to receive a progress payment under this section is, subject to section 55(3), a separate and additional entitlement to any entitlement to payment under a construction contract, and accordingly a reference in this Act to a progress payment is a reference to a progress payment to which a person is entitled under this section. (5) A person is not entitled to receive a progress payment under this section in respect of anything for which the person is not entitled to monetary or other consideration under the Building Services (Registration) Act 2011 because of a contravention of section 7(1) of that Act. Notes for this section: 1. Section 23 sets out when claims for progress payments under this Part may be made. 2. Section 55(3) prevents double payment by requiring any progress payment under this section to be deducted from any payments that a court would otherwise order to be paid in proceedings to enforce the construction contract. 3. A person contravenes the Building Services (Registration) Act 2011 section 7(1) by doing a thing without the appropriate registration as a building service contractor required under that Act for doing that thing. 18. Amount of progress payment The amount of a progress payment to which a person is entitled in relation to a construction contract is — (a) if the contract provides for the matter — the amount calculated in accordance with the contract; or (b) if the contract does not provide for the matter — the amount calculated on the basis of the value of construction work carried out or undertaken to be carried out, or of related goods and services supplied or undertaken to be supplied, by the person under the contract. 19. Valuation of construction work and related goods and services (1) Construction work carried out or undertaken to be carried out under a construction contract must be valued for the purposes of a progress payment — (a) if the contract provides for the matter — in accordance with the contract; or (b) if the contract does not provide for the matter — having regard to each of the following — (i) the contract price for the work; (ii) any other rates or prices set out in the contract; (iii) any variation agreed to by the parties to the contract by which the contract price, or any other rate or price set out in the contract, is to be adjusted by a stated amount; (iv) if any of the work is defective — the estimated cost of rectifying the defect. (2) Related goods and services supplied or undertaken to be supplied under a construction contract must be valued for the purposes of a progress payment — (a) if the contract provides for the matter — in accordance with the contract; or (b) if the contract does not provide for the matter — having regard to each of the following — (i) the contract price for the goods and services; (ii) any other rates or prices set out in the contract; (iii) any variation agreed to by the parties to the contract by which the contract price, or any other rate or price set out in the contract, is to be adjusted by a stated amount; (iv) if any of the goods are defective — the estimated cost of rectifying the defect. (3) In the case of materials and components that are to form part of any building, structure, work or other thing resulting from construction work, the only materials and components to be included in the valuation for the purposes of subsection (2)(b) are those that have become or, on payment, will become the property of the party or other person for whom the construction work is being carried out. 20. Due date for payment (1) A progress payment (other than for home building work) becomes payable — (a) in the case of a progress payment to be made by a principal to a head contractor — on the date that is 20 business days after a payment claim is made under Part 3 for the progress payment; or (b) in the case of a progress payment to be made to a subcontractor — on the date that is 25 business days after a payment claim is made under Part 3 for the progress payment. Note for this subsection: The due date for payment by a principal when there is no head contractor is 25 business days after the payment claim is made as provided by paragraph (b) — see definitions of head contractor and subcontractor in section 4(1). (2) However, if the construction contract provides that the progress payment becomes payable on an earlier date than that provided by subsection (1), the progress payment becomes payable on that earlier date. (3) A progress payment for home building work becomes payable — (a) if the construction contract provides for the matter — on the date determined in accordance with the contract; or (b) if the construction contract does not provide for the matter — on the date that is 10 business days after a payment claim is made under Part 3 for the progress payment. Note for this section: Section 14(2) provides that a pay when paid provision in a construction contract has no effect. 21. Interest on payment after due date Interest is payable on the unpaid amount of a progress payment that has become payable at the greater of the following rates — (a) the rate provided in the construction contract; (b) the rate prescribed under the Civil Judgments Enforcement Act 2004 section 8(1)(a). Part 3 — Procedure for obtaining progress payments Division 1 — Payment claims and schedules 22. Making payment claims (1) A person who is or claims to be entitled to a progress payment may give a claim for the progress payment (a payment claim) to the person who, under the relevant construction contract, is or may be liable to make the progress payment. (2) A payment claim is made for the purposes of this Act when the claim is given under subsection (1). Note for this section: Section 113 deals with the manner in which claims and other documents are to be given under this Act. 23. When payment claims may be made (1) In this section — defects liability period, for a construction contract, means the period that — (a) starts on the day of the practical completion of construction work under the contract; and (b) ends on the last day that any omission or defect in the construction work may be required or directed to be rectified under the contract and written law; final payment means the final payment (or a single or one‑off payment) for construction work carried out, or related goods and services supplied, under a construction contract; practical completion, of construction work under a construction contract, means — (a) if the contract provides for the day on which there is practical completion of the work — that day; or (b) in any other case — the day on which the work is completed in compliance with the requirements of the contract and without any omission or defect that unreasonably affects the intended use of the work. (2) A payment claim for a progress payment may be made — (a) on or after the last day of the named month in which construction work was first carried out, or related goods and services were first supplied, under the construction contract; and (b) on or after the last day of each subsequent named month. (3) However, if the construction contract provides that a payment claim for a particular named month may be made on or after an earlier date, then the payment claim may be made on or after that earlier date. (4) A payment claim for a progress payment (other than for a final payment) may only be made before whichever of the following is the later — (a) the date (if any) determined in accordance with the construction contract; (b) the date that is 6 months after the construction work to which the payment claim relates was last carried out or the related goods and services to which the payment claim relates were last supplied. (5) A payment claim for a final payment may only be made before whichever of the following is the latest — (a) the date (if any) determined in accordance with the construction contract; (b) the date that is 28 days after the end of the last defects liability period for the construction contract; (c) the date that is 6 months after the completion of all construction work to be carried out under the construction contract; (d) the date that is 6 months after the supply of all related goods and services to be supplied under the construction contract. (6) If the construction contract is terminated, a payment claim may be made on or after the date of termination and before the relevant date provided by this section. (7) Unless the construction contract otherwise provides, a claimant may only make one payment claim under the construction contract for a particular named month. (8) Subsection (7) does not prevent the claimant from — (a) making a single payment claim in respect of more than one progress payment; or (b) including in a payment claim an unpaid amount that has been the subject of a previous payment claim. Note for this section: Division 6 extends the payment claim provisions of this Part to claims for the release of retention money or other performance security or for the substitution of performance security. 24. Content of payment claims (1) A payment claim must — (a) be made in writing and be in the approved form (if any); and (b) indicate the amount of the progress payment that the claimant claims is payable by the respondent (the claimed amount); and (c) describe the items and quantities of construction work, or related goods and services, to which the progress payment relates; and (d) state that it is made under this Act; and (e) include any other information required by the regulations. (2) A payment claim given to the principal for home building work under a construction contract the value of which exceeds the amount referred to in section 10(1)(c) must include a homeowner's notice in the form prescribed by the regulations unless — (a) the principal is a corporation; or (b) the work is carried out in relation to multiple dwellings or for the purposes of a residential development business of the principal. Note for this subsection: A homeowner's notice is not required for a payment claim given under a contract between a head contractor and a subcontractor or under a contract between 2 subcontractors. (3) A payment claim may be a document described as an invoice and, if so, the amount stated in the invoice is sufficient indication of the claimed amount. (4) A payment claim need not be signed by the claimant. 25. Response to payment claim: payment schedule (1) The respondent may respond to a payment claim by giving a schedule (a payment schedule) to the claimant before the earlier of the following — (a) the time required by the construction contract; (b) 15 business days after the payment claim is made. (2) A payment schedule must — (a) be given in writing and be in the approved form (if any); and (b) identify the payment claim to which it relates; and (c) indicate the amount of the payment (if any) that the respondent proposes to make (the scheduled amount); and (d) if the respondent does not propose to make any payment — indicate that the respondent does not propose to make any payment. (3) If the scheduled amount is less than the claimed amount or no payment is proposed, the payment schedule must indicate — (a) why the scheduled amount is less or no payment is proposed; and (b) if the reason is that the respondent is withholding payment — the reason why the respondent is withholding payment. Notes for this section: 1. This Division provides that if no payment schedule is given within the time allowed, the respondent becomes liable to pay the claimed amount. 2. Division 2 provides that if no payment schedule is given within the time allowed, the respondent cannot make an adjudication response to an adjudication application, and that if a payment schedule is given the respondent cannot include in an adjudication response reasons for withholding payment that were not identified in the payment schedule. 3. Division 3 provides that if no payment schedule is given, the respondent is not entitled to make an adjudication review application. 26. Claimed amount becomes payable if payment schedule not duly given The respondent becomes liable to pay the claimed amount to the claimant on the due date for the progress payment to which the payment claim relates if the respondent does not respond to the claim by giving a payment schedule to the claimant within the time allowed for the response. 27. Consequences of not paying claimed or scheduled amount (1) In this section — claimed or scheduled amount owed, in relation to a payment claim, means — (a) if the respondent did not respond to the payment claim by giving a payment schedule to the claimant within the time allowed for the response — the claimed amount under the payment claim; or (b) if the respondent did respond to the payment claim by giving a payment schedule to the claimant within the time allowed for the response and the payment schedule indicates the scheduled amount that the respondent proposes to pay to the claimant — that scheduled amount. (2) If a claimant makes a payment claim for a progress payment and the respondent does not pay the claimed or scheduled amount owed to the claimant in full on or before the due date for the progress payment, the claimant may do either but not both of the following — (a) recover from the respondent the unpaid portion of the claimed or scheduled amount owed as a debt due to the claimant in a court of competent jurisdiction; (b) make an adjudication application in relation to the payment claim. Notes for this subsection: 1. Division 7 provides that in addition to taking debt recovery action or making an adjudication application, the claimant may suspend work or supply under the construction contract. 2. If no payment is proposed in a payment schedule, the claimant cannot commence proceedings in a court under this section, but may make an adjudication application. (3) If the claimant commences proceedings under this section in a court of competent jurisdiction to recover from the respondent the unpaid portion of the claimed or scheduled amount owed — (a) judgment in favour of the claimant is not to be given unless the court is satisfied that the relevant circumstances exist; and (b) the respondent is not, in those proceedings, entitled — (i) to bring any cross‑claim against the claimant; or (ii) to raise any defence in relation to matters arising under the construction contract. (4) The relevant circumstances for the purposes of subsection (3)(a) are as follows — (a) the respondent — (i) did not respond to the payment claim by giving a payment schedule to the claimant within the time allowed for the response; or (ii) did respond to the payment claim by giving a payment schedule to the claimant within the time allowed for the response, and the payment schedule indicates the scheduled amount that the respondent proposes to pay to the claimant; (b) the respondent has not paid the claimed or scheduled amount owed to the claimant in full on or before the due date for the progress payment; (c) if the payment of the claimed or scheduled amount owed is dependent on the substitution of performance security under Division 6 — the requisite compliant performance bond has been duly executed by an authorised issuing institution as referred to in that Division. Division 2 — Adjudication of payment disputes 28. When claimant may apply for adjudication of payment claim (1) A claimant may apply for adjudication of a payment claim (an adjudication application) if — (a) the respondent has not paid the claimed or scheduled amount owed (as defined in section 27(1)) to the claimant in full on or before the due date for the progress payment; or (b) the scheduled amount is less than the claimed amount or no payment is proposed in the payment schedule given by the respondent. (2) If the respondent does not provide a payment schedule in response to a payment claim, an adjudication application cannot be made unless — (a) the claimant has, within 20 business days after the due date for the progress payment, given written notice to the respondent of the claimant's intention to apply for adjudication of the payment claim; and (b) the respondent has been given an opportunity to provide a payment schedule to the claimant within 5 business days after receiving the claimant's notice. (3) The due date for a progress payment is not extended because the respondent is given a further opportunity to provide a payment schedule. (4) An adjudication application must be made within 20 business days after the claimant first becomes entitled to make the application. 29. To whom adjudication application made (1) An adjudication application must be made — (a) if the construction contract provides for the person who is to be the adjudicator for the application — to that adjudicator; or (b) in any other case — to the authorised nominating authority chosen by the claimant. (2) Despite subsection (1)(a), an adjudication application may be made to any authorised nominating authority chosen by the claimant if it is another adjudication application referred to in section 32(8) or 37(5)(b). (3) A claimant is not bound by any provision of the construction contract that designates or restricts the authorised nominating authority to which an adjudication application may be made. 30. Requirements relating to adjudication application (1) An adjudication application — (a) must be made in writing and be in the approved form (if any); and (b) must identify the payment claim and the payment schedule (if any) to which it relates; and (c) must be accompanied by a copy of the construction contract or of the relevant provisions of the construction contract; and (d) if made to an authorised nominating authority — must be accompanied by the application fee (if any) determined by that authority; and (e) may contain submissions relevant to the application that the claimant chooses to include. (2) The claimant must give a copy of the adjudication application (and of any accompanying documents) to the respondent within 1 business day after the application is made. (3) The regulations may prescribe the maximum application fee that an authorised nominating authority may determine under this section (including different maximum amounts depending on the amount of the payment claim or on other specified factors). Note for this section: Under Division 4 the authorised nominating authority or adjudicator may require the payment of a deposit or security for the estimated adjudication fees and expenses of the adjudicator. 31. Withdrawal of adjudication application (1) An adjudication application may be withdrawn by the claimant at any time before the application is determined by giving written notice of the withdrawal — (a) to the respondent; and (b) to the adjudicator appointed to determine the application or to the authorised nominating authority to which the application was made. (2) An adjudication application is taken to be withdrawn if the respondent has, before the application is determined, paid the claimant the claimed amount in full. 32. Appointment of adjudicator (1) If an adjudication application is made to an adjudicator, the adjudicator is taken to be appointed to determine the application when written notice of the acceptance of the appointment is given by the adjudicator to the claimant and the respondent. (2) If an adjudication application is made to an authorised nominating authority — (a) the authority must appoint an adjudicator; and (b) the adjudicator is taken to be appointed to determine the application when written notice of the appointment is given by the authority to the claimant and the respondent. (3) An adjudicator must, within 5 business days after an adjudication application is made, be appointed in accordance with this section to determine the application. (4) An adjudicator who gives written notice of acceptance of the appointment, or an authorised nominating authority who gives written notice of the appointment of an adjudicator, must give a copy of the notice to the Building Commissioner. (5) An adjudicator may, at any time before determining an adjudication application, withdraw from the adjudication by giving written notice of the withdrawal and the reasons for the withdrawal to the claimant and the respondent. (6) An adjudicator who gives written notice of withdrawal from the adjudication must give a copy of the notice to the Building Commissioner and, if appointed by an authorised nominating authority, to the authority. (7) An adjudication application is taken to be withdrawn if — (a) an adjudicator has not, within 5 business days after the adjudication application is made, been appointed in accordance with this section to determine the adjudication application; or (b) the adjudicator withdraws from the adjudication under subsection (5). (8) If an adjudication application is taken to be withdrawn under subsection (7), the claimant may make another adjudication application within 5 business days after the withdrawal despite the expiry of the time otherwise allowed for making adjudication applications. 33. Disqualification of adjudicator with conflict of interest in adjudication application (1) In this section — relevant contract, in relation to an adjudication application, means — (a) the construction contract the subject of the application; or (b) any other construction contract if the work or supply under that other contract is part of, or incidental to, the work or supply under the construction contract the subject of the application. (2) An adjudicator has a conflict of interest in relation to an adjudication application if the adjudicator — (a) is a party to a relevant contract; or (b) prepared (or was involved in the preparation of) a relevant contract or the payment claim, payment schedule, adjudication application or adjudication response; or (c) has a material personal interest in the outcome of the adjudication; or (d) has a conflict of interest of a kind prescribed by the regulations for the purposes of this paragraph. (3) An adjudicator does not have a conflict of interest in relation to an adjudication application — (a) merely because of a previous appointment to adjudicate a payment claim, or of a previous conflict of interest, involving either or both of the parties; or (b) merely because a previous determination of the adjudicator involving either or both of the parties was set aside or quashed by a review adjudicator or by a court. (4) An authorised nominating authority must not appoint an adjudicator to determine an adjudication application if the authority is aware that the adjudicator has a conflict of interest in relation to the application. (5) An adjudicator must not accept an appointment to determine an adjudication application if the adjudicator is aware that the adjudicator has a conflict of interest in relation to the application. (6) If, after being appointed to determine an adjudication application, the adjudicator becomes aware that the adjudicator has a conflict of interest in relation to the application, the adjudicator must withdraw from the adjudication in accordance with section 32. 34. Adjudication response (1) If the respondent has given the claimant a payment schedule within the time allowed by this Part, the respondent may give the adjudicator a response to the claimant's adjudication application (the adjudication response) within 10 business days after receiving a copy of the adjudication application. (2) The adjudication response — (a) must be given in writing and be in the approved form (if any); and (b) must identify the adjudication application to which it relates; and (c) may contain submissions relevant to the response that the respondent chooses to include. (3) The respondent cannot include in the adjudication response any reasons for withholding payment unless those reasons have already been included in the payment schedule given to the claimant. (4) The respondent must give a copy of the adjudication response to the claimant within 1 business day after the response is given to the adjudicator. Note for this section: Division 3 provides that if no adjudication response is given, the respondent is not entitled to make an adjudication review application. 35. Adjudication procedures (1) An adjudicator must, subject to complying with the requirements of this Division, determine an adjudication application fairly and as quickly, informally and inexpensively as possible. (2) An adjudicator cannot delegate the determination of an adjudication application to another person or body. (3) For the purposes of determining an adjudication application, the adjudicator may do any of the following — (a) request further submissions from either party and give the other party an opportunity to make submissions commenting on any further submissions made; (b) set deadlines for any further submissions; (c) call a conference of the parties; (d) carry out an inspection, or arrange for a test, of any matter or thing to which the payment claim relates; (e) engage an expert to investigate and report on any matter to which the payment claim relates; (f) engage an authorised nominating authority to assist the adjudicator with administrative duties. (4) A conference of the parties that is called by the adjudicator must be conducted informally. (5) The adjudicator cannot carry out an inspection, arrange for a test or engage an expert if all the parties object. (6) This section does not authorise the carrying out of an inspection or testing in any premises, or the inspection or testing of any thing, without the consent of the occupier of the premises or the owner of the thing. (7) An adjudicator's determination of an adjudication application is not affected by the failure of a party to make a submission within the time allowed or to comply with the adjudicator's call for a conference. (8) An adjudicator is not bound by the rules of evidence. (9) Adjudicators may, to the extent that their procedure is not otherwise regulated under this Act, determine their own procedure. 36. Jurisdiction to make determination, frivolous or vexatious applications and complex applications (1) An adjudicator must consider whether the adjudicator has jurisdiction to determine the adjudication application. (2) If the adjudicator decides that the adjudicator does not have jurisdiction to determine the adjudication application, the adjudicator's determination of the application must set out that decision and provide that no amount is payable under the determination. (3) If an adjudicator decides that an adjudication application is frivolous or vexatious, or is too complex for the adjudicator to make a fair determination within the time available to the adjudicator, the adjudicator's determination of the application must set out that decision and provide that no amount is payable under the determination. (4) An adjudicator's determination must set out the reasons for a decision that the adjudicator does not have jurisdiction to determine the adjudication application or that the adjudication application is too complex. (5) This section does not prevent an adjudicator's determination specifying any adjudication fees and expenses that are payable. 37. Time allowed for adjudicator to determ