The State Government has announced legislative reforms that will replace the current complex and lengthy Project Bank Account (PBA) processes with simpler trust accounts that will provide the same protection to subcontractors.
The reforms will remove the heavy administrative burden of PBAs including the PBA Trust Deed Poll, PBA Agreement, and Deed of Release/Priority Deed Poll. The PBA will be replaced with a construction trust account, which can be any bank transaction or deposit account set up for the purpose.
It's proposed the deemed construction trust scheme will apply on State Government-led construction projects over $1.5 million, and will cover first-tier subcontractors/suppliers (the Government says cascading trusts, covering the entire subcontracting/supply chain, have proven burdensome and problematic when used in other states).
These appear to be welcome changes as PBAs have proved a nightmare to manage, and the trusts appear to be a simpler and equally effective mechanism. Member feedback is welcome.
New ‘head contractor statement’ provision
The State Government says this will strengthen the existing statutory declaration provisions on government projects. When lodging a payment claim, head contractors will be required to state:
- whether or not they have paid the full amount claimed by each subcontractor
- if not, details of the unpaid claim and why the full amount has not been paid.
Furthermore, the draft legislation then allows the Principal to withhold payments to the head contractor in some circumstances. We will be taking a closer look at these complex provisions and welcome all input.
Amendments to the Security of Payments Act (SOPA)
The Government says these are minor amendments to clarify several minor issues with the SOPA adjudication process, specifically in relation to serving of notices, adjudication fees and ‘pay when paid’ provisions in contracts. The Explanatory Memorandum (link below) has more details.
Have your say through CCF WA
The draft legislation and Explanatory Memorandum are available online here
CCF WA will be making a submission by the deadline of November 14. Please email us with any input by COB Friday, November 7.
CCF WA will keep Members well informed as these reforms progress to implementation next year.
