Security of Payment in Western Australia: payment claims and adjudication

Western Australia moved to the east-coast model under the Building and Construction Industry (Security of Payment) Act 2021, regulated by Building and Energy. It applies to construction contracts entered into on or after 1 August 2022.

If your contract was entered into before 1 August 2022, the older Construction Contracts Act 2004 still applies, so the date of the contract decides which scheme you use. This is the most common source of confusion in WA Security of Payment right now, and it will remain relevant for years as projects signed under the old Act continue to reach completion and enter their defects liability periods.

The 2021 Act brought WA into line with the payment claim, payment schedule, and rapid adjudication model used by NSW, Victoria, Queensland, and the other eastern states. Before that, WA operated under the Construction Contracts model, which was closer to the Northern Territory's approach: adjudication was triggered by a payment dispute and the Act mainly implied terms where the contract was silent.

The practical effect for subcontractors and suppliers is a faster, more structured pathway to recover unpaid invoices. For builders and principals, it means tighter response windows and stricter maximum payment terms.

A claimant gives a payment claim that identifies the work, states the amount, and states that it is made under the Act. WA requires that endorsement: leave it off and the claim does not trigger the statutory scheme, even if it otherwise meets every content requirement.

A claim must generally be made within six months of the work being carried out unless the contract allows longer, and can be made from the end of the month in which the work was first carried out. Only one payment claim per reference period is permitted. A reference period defaults to the end of each named month unless the contract specifies otherwise.

The claim must be served on the party liable to pay in writing. Acceptable service methods include hand delivery, post, or electronic means if the contract provides for it. Getting service right matters: a claim that is not served correctly can be challenged on procedural grounds, even if the underlying debt is real.

For residential builds, the most common payment claims are progress claims issued by the builder to the owner at each construction stage (base, frame, lock-up, fixing, completion). For subcontractors, claims are issued to the head contractor after completing the contracted scope. Either way, the statutory endorsement is the line between an ordinary invoice and a document that triggers the full protection of the Act.

The respondent may give a payment schedule before the earlier of the time in the contract or 15 business days after the claim. The schedule must identify the claim, state the amount the respondent proposes to pay (which can be nil), and set out the reasons for paying less than claimed.

If they do not give a schedule in time, they become liable for the full claimed amount on the due date. This is one of the most consequential provisions in the Act: silence is treated as acceptance. A builder who receives a valid payment claim from a subcontractor and simply ignores it has 15 business days before the full amount becomes a debt due and recoverable.

The reasons stated in the payment schedule are also a ceiling. In adjudication, the respondent generally cannot raise reasons that were not included in the payment schedule. If you are going to dispute a claim, the payment schedule is where you make your case, not later in the adjudication response.

The 2021 Act introduced maximum payment terms that cannot be overridden by the contract. A principal must pay a head contractor within 20 business days of the payment claim, and a head contractor must pay a subcontractor within 25 business days. The contract can set an earlier date but not a later one.

This was a significant change from the old 2004 Act, which had no maximum payment terms. Under the old regime, contracts could (and routinely did) push payment dates out to 45, 60, or even 90 days, with cascading effects down the payment chain that left subcontractors waiting months after completing work.

Interest runs on late payments at the rate specified in the contract or, if the contract is silent, at the prescribed court rate. Late payment is not just a contractual issue; it is the trigger that opens the door to adjudication.

The window to apply for adjudication is 20 business days after you first become entitled to apply, a major reduction from the 90 business days that applied under the old 2004 Act. This tighter window catches people out: if you are going to adjudicate, you need to move quickly after the payment dispute crystallises.

Where no schedule was given and no payment was made, the claimant must first give the respondent a notice of the claimant's intention to apply for adjudication, and the respondent then gets a further 5 business days to provide a schedule. If they still do not respond, the claimant can proceed to adjudication.

The respondent has 10 business days after receiving the adjudication application to lodge a response. The adjudicator then decides within 10 business days after the response is given or was due, unless both parties agree to longer.

Adjudication decisions in WA are binding and enforceable as a judgment debt. The respondent must pay the adjudicated amount within 5 business days. If they do not, the claimant can seek enforcement through the courts, which is a summary process designed to be fast. Challenging an adjudication decision on the merits is generally not available; the courts will only review on narrow procedural grounds such as jurisdictional error or denial of natural justice.

The costs of adjudication vary with the size and complexity of the claim. For smaller claims typical in residential construction (under $100,000), adjudication costs commonly run $2,000 to $5,000. The adjudicator allocates costs as part of the decision, with the losing party typically bearing them.

The 2021 Act replaced the old Construction Contracts Act 2004 for contracts entered into on or after 1 August 2022, with later stages commencing in 2023 and 2024. It cut the adjudication application window from 90 business days to 20 and introduced maximum payment terms. The 2004 Act still applies to contracts entered into before 1 August 2022. The transition means WA now has two parallel regimes: check the date your contract was entered into to determine which Act applies to your situation.

Security of Payment is a recovery process you reach for after a payment has already gone wrong. BuildFair works earlier. Project funds sit outside the builder's operating account and are released against the agreed rules, so approved work has a clear path to payment in the first place. It does not replace your statutory rights under the Building and Construction Industry (Security of Payment) Act 2021 (WA), it makes the disputes that trigger them far less likely.

Whichever side of the contract you are on, the same ringfenced funds and shared payment record work in your favour.