Contract law changes will build new industry

Western Australian Government approval of the Construction Contracts Bill, which is designed to change the way the building industry deals with payment disputes, is also expected to generate a new industry of adjudicators in Western Australia.

The bill aims to provide security to subcontractors and allows for the quick resolution of disputes through adjudication.

Several other States have similar legislation including New South Wales, which had nearly 700 applications for adjudication since amendments were made in March 2003, effectively generating an industry in itself.

Adjudicators will need to be appointed by a registrar and meet certain qualification requirements as prescribed by the still unfinalised regulations.

There are currently no provisions for statutory adjudication in WA, meaning a number of people will need to become qualified as adjudicators in order to hear contractual disputes.

The Institute of Arbitrators and Mediators WA chairman Clive Raymond said the institute was running a course to qualify adjudicators in anticipation of the law coming into effect.

He said people who passed the course should be able to be appointed as adjudicators, particularly given the institute’s course had been used to qualify adjudicators in other States.

“This legislation will change the way that disputes are dealt with and promote a very good system of fast, time and cost-effective dispute resolution,” Mr Raymond said.

“In NSW there has been a tremendous amount of adjudication work done and I don’t see why the same won’t happen in WA.”

Hollingdales senior solicitor Jennifer Wiggins said adjudicators would come from people involved in the construction industry, such as engineers, quantity surveyors, lawyers, builders and architects.

“Adjudication is new for the industry, and will be widely used,” she said.

There were a couple of late amendments to the bill, the most important being that the law applied to residential building contracts.

Ms Wiggins said the change was significant and parallel legislation in other States and England did not include residential building contracts.

“This may open the floodgates to a significant volume of adjudication, a lot more so than if the act was just restricted to commercial contracts,” she said.

Freehills senior associate Toby Browne-Cooper said one of the policies driving the exclusion of residential building contracts was the fact disuputes under residential contracts were currently heard by the Building Disputes Tribunal.

“Ultimately it was decided the fast-track adjudication regime should also apply to payment disputes under residential building contracts to supplement the existing tribunal process,” Mr Browne-Cooper said.

He also said the ban on ‘pay-when-paid’ clauses would generate some interest in industry, particularly on large infrastructure projects.

“For example, architects might resist future requests by clients that the architect appoint consultants before the architect first receives payment from the client,” he said.