This article applies to organisations that engage in construction contracts.

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

Relevant provisions of the Building and Construction Industry (Security of Payment) Act 2021 (WA) (the Act) commenced on 1 February 2023.

The provisions that have commenced have introduced a new retention money trust scheme for construction contracts whilst introducing an offence to threaten or intimidate a claimant or person entitled to make a payment claim.

Retention money trust scheme

The Act has introduced a new retention money trust scheme, in which money is retained by a party to a construction contract as security for the performance of obligations in relation to carrying out construction work or the supply of goods and services. The party to a construction contract that retains the money are now required to ensure that the money is paid into a trust account established within 10 business days of entering into the contract or within 20 business days if the contract becomes a construction contract after being entered into.

The Act also outlines the requirements in relation to retention money trust accounts which include:

• the account must be a deposit or transaction account of the recognised financial institution;
• the name of the account and the description of the account in the records of the party who established the account must include the words “trust account”;
• the party who established the account must give the other party to the contract written notice of the establishment of the account and the prescribed particulars of the account.

There is also an obligation that interest earned on any money held in a retention money trust account is payable to the party who established and operates the account unless it relates to any period after the money is required to be released to the other party to the construction contract.

The party to a construction contract who established and operates a retention money trust account must now keep proper accounting records relating to the account that:

• records all transactions relating to the money held in the retention money trust account; and
• shows a true position in relation to the outcome of those transactions; and
• can be readily and properly audited; and
• is in the English language; and
• complies with any other requirements prescribed by the Regulations.

New offences

The Act has also introduced a new offence for a person who directly or indirectly threatens or intimidates, or attempts to threaten or intimidate, a claimant or a person entitled to make a payment claim in relation to:

• their entitlement to, or claim for, a progress payment; or
• their exercise of any other rights under Part 3 of the Act.

Organisations must refrain from engaging in this type of behaviour or risk receiving a fine of up to $50,000.

Further, if an organisation is found guilty of such an offence, an officer of the organisation is also guilty of the offence if the officer failed to take all reasonable steps to prevent the commission of the offence by the organisation.

Provisions yet to commence

Relevant provisions that are yet to commence include:

• Sections 59 and 60 which relate to compliant performance bonds substituting performance security; and
• Section 87 which introduces an offence for failing to comply with certain requirements of Part 4 of the Act.

Conclusion

Organisations should ensure that both themselves and relevant staff are aware of the new requirements outlined above. Any relevant policies and procedures should be updated to ensure they comply with these new obligations.