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ARTICLE · 03 MARCH 2017

Project Trust Accounts: Protecting sub-contractors

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Project Bank Accounts ("PBAs") have been touted as a better way to secure contractors' right to be paid for their work.

AustraliaReal Estate and Construction
Murray Thornhill
Murray Thornhill
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It is widely held that subcontractors are vulnerable to not being paid for the work they do. So much so, that legislatures around Australia have made special laws in to try and secure subcontractors' payment rights.

WA's security of payment laws, which provide for rapid adjudication of construction pay disputes, appear in the Construction Contracts Act 2004.

However, the recent Forge Group collapse reminds us that adjudicators' determinations cannot be enforced against insolvent principals or head contractors: Hammersley Iron Pty Ltd v James [2015] WASC 10.

A principal's/head contractor's insolvency may give the contractor a right to claim for the "fair value" or quantum meruit of work done up to the date of insolvency. However, these sorts of claims are fraught with difficulty, including:

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