Effective from 1 February 2023, the Building and Construction Industry (Security of Payment) Act 2021 (WA) (SOPA) brought about significant amendments to the Building Services (Registration) Act 2011 (WA) (BSR). These changes empower the Building Services Board (Board) with new authority to take action against building service providers who engage in 'phoenixing' practices or deliberately withhold payment for building service debts.
The Board will now possess the means to impose restrictions or penalties on such entities, reinforcing accountability and promoting fair practices within the industry.
What this article covers
This article covers recent amendments in Western Australia's Building and Construction Industry Act, empowering the Building Services Board to act against 'phoenixing' practices and unpaid building service debts.
New Obligations and Consequences
Under the new amendments the Board gains the power to exclude builders (individuals and companies) from registration as a builder where they are declared an excluded contractor.
The primary goal is to crackdown on 'phoenixing' practices, where a Builder becomes insolvent only to reemerge under a new company name under a new builder’s registration.
These powers can be enforced either during the registration process or after the builder has already been registered.
In cases where the Board holds concerns about the directors' history, it has the discretion to restrict the appointment of the director.
A "show cause" notice will be issued to the Builder, prompting them to provide reasons why the Board should not exercise its power to remove the director. These measures aim to uphold the integrity of the construction industry and curb unscrupulous practices.
Building Services Debt - Penalty
Under the new amendments, if a builder fails to meet a building service debt, the Board can take disciplinary action, including fines or suspension/cancellation of the builder's registration.
A building services debt arises from a judgment or adjudication determination related to building services under SOPA or the Construction Contract Act 2004 (WA). It is considered not met if not paid in full within 28 days of the judgment or when payment arrangements are not fulfilled.
Going forward building service registration renewals and applications will need to demonstrate (to the Boards satisfaction) that the Builder (at the time of making the application) has no outstanding building service debt .
Notification of New Directors
Under the new regulations, builders operating as a body corporate (Pty Ltd company) will have an additional obligation to promptly inform the Board in writing of any new directors appointed.
This written notification must be submitted within 7 days of the appointment of the directors. Non-compliance with this requirement may result in the company facing penalties of up to $5,000.
The Board holds the authority to scrutinize the directors' history, particularly regarding any track record of insolvency. If the Board identifies concerns in this regard, they retain the power to restrict the appointment of the director.
To initiate this process, the Board will issue a "show cause" notice to the company, giving them the opportunity to provide reasons as to why the Board should not proceed with the removal of the director. These measures aim to enhance transparency and accountability within the construction industry.