Construction Law Updates

The rise and rise of contract

Update No. 2003 – 9 November 2020

Disputes about variation claims are a common source of construction disputes. In this Update we examine a recent decision of the District Court of South Australia highlighting the need for parties to read and carefully follow the terms of their contract when variations arise.

Delivery by hyperlink

No. 2002 – 29 September 2020

Electronic communication has become the new normal, particularly since the arrival of COVID-19. The legal profession has been slow to accept the new normal, but recent months have accelerated that progress.

In this Update we examine a recent South Australian Supreme Court case dealing with the effectiveness of electronic communication in the context of the strict requirements of the Building and Construction Industry Security of Payment Act 2009 (SA).

Mann bites quantum meruit

No. 2001 – 23 January 2020

Introduction  The recent High Court decision in Mann v Paterson[1] will raise as many questions as the answers it provides.   Background  Mr & Mrs Mann (“Mann“) owned land in Blackburn, Melbourne. They entered into a contract with Paterson Constructions Pty Ltd (“Paterson“) to build two double storey apartments (“Units“). The contract sum was $971,000 and the […]

It’s called a contract

No. 1905 – 21 October 2019

Construction Law Update No. 1905 discusses a recent decision of the Full Court of the Supreme Court of South Australia and shows the ripple effect that can emanate from disgruntled clients and a relatively modest home renovation that went awry. The case demonstrates how a lack of attention to the terms of the contract can result in a long and costly dispute.

The builder’s right to fix

No. 1904 – 2 September 2019

Introduction When a dispute over defective building work turns ugly, the owner is sometimes tempted to refuse the builder the opportunity of returning to rectify the defects.  There are risks in this course.  This Update considers a recent NSW Supreme Court decision on the topic. [1] If an owner engages a new builder to carry […]

Guide to the Building and Construction Industry Security of Payment Act (2009) SA

14 August 2019

Fenwick Elliott Grace has recently written a new “Guide to the Building and Construction Industry Security of Payment Act 2009 (“Act”)” and can be downloaded for free. 

Boom and bust

No. 1903 – 14 August 2019

Introduction In the last few months, several South Australian residential building companies have collapsed, leaving behind a trail of debts. Behind every collapse is concealed the pain of the suppliers and subbies. The devastating financial impact is likely to be felt for years to come.  None of this is new.  For decades, builders have come […]

The Delaminating Disaster

No. 1901 – 13 May 2019

Introduction The 28 February 2019 decision as to liability for the Lacrosse Tower fires of November 2014 will send shockwaves through the construction industry.[1] The fire was caused by a discarded cigarette butt that ultimately ignited Aluminium Composite Panelling (“ACP”) on the façade of the 21 storey apartment block.  The industry has been waiting with […]

Getting the contract out of the bottom drawer

No. 1901 – 1 April 2019

Introduction  This Update considers the law relating to Superintendents.  It raises an interesting question as to whether the conduct of a party who fails to follow the contract can have the flow on effect of varying their rights under the contract.   Superintendents  Many commercial construction contracts provide for the Principal to appoint a Superintendent.  The Superintendent has duties akin to those of an umpire who is to ensure the Contractor and the Principal play fair when constructing the […]

Mistake? What mistake?

No. 1801 – 16 March 2018

In this update we report on two important decisions published by the High Court of Australia in relation to the application of security of payment laws.

Unfair contract terms – extension to small business

No. 1602 – 12 August 2016

This update details changes to ‘unfair contracts’ legislation that will come into effect on 12 November 2016, and the likely impact of those changes to the construction industry.

Issuing payment claims – timing and recent developments

No. 1601 – 4 February 2016

In this Update we look at timing considerations when deciding to issue a payment claim.

A pre-condition to a valid payment claim issued under the Security of Payment legislation is that it must be issued at a time when a right to issue has arisen.

The issue of timing is surprisingly complex and, given that a failure to satisfy this pre-condition can result in an adjudicator dismissing the claim without any assessment of the substantive merits, we have prepared this update to provide some clarity on the question of timing, and in doing so have referenced and described some key relevant recent cases.

The right to fix defective work

No. 1509 – 27 October 2015

In Update 1509 we examine the balancing act between the builder’s right to rectify its defective work and the owner’s right to insist on the rectification work being done in a particular way. In general, when defective work is found on a completed build, the builder has a right to go back and rectify.

However, this is a right that can be lost by the builder’s conduct, such as a persistent refusal to admit the scale of the problem. Equally, owners can jeopardise their right to claim compensation for work done by others if they unreasonably insist on unnecessary work.

The NSW Supreme Court has recently set out the guiding principles that inform the decisions to be made by parties in this situation.

“One shot” to adjudicate

No. 1507 – 27 August 2015

Adjudication of payment disputes has become commonplace under the Security of Payment legislation now in force across Australia. Sometimes contractors make an error when applying for adjudication and realise that the adjudication will end badly if they continue. In those circumstances, what does the contractor do? Should the contractor withdraw the application or restart the whole process?

A recent decision of the Court of Appeal of the Northern Territory makes clear the position under the Act as it applies to the Territory.

Statutory declarations and payment claims

No. 1506 – 27 August 2015

Introduction The commercial construction industry is familiar with the contractual requirement to provide a statutory declaration with progress claims.  Most construction contracts require contractors to certify they have paid all the money due to their subcontractors and suppliers in relation to the work they are claiming for before they are entitled to the progress claim. […]

Buying from an owner builder

No. 1505 – 24 July 2015

This Update examines the liability of owner builders when they sell their residence following substantial renovations. This decision from the NSW Court of Appeal may be of particular interest given the current popularity of reality TV shows about home renovations. In this case the purchasers of the renovated property suffered massive losses due to substantial hidden defects. Although the purchasers were initially awarded over $1 million at trial, ultimately they were unable to recover any funds. Read on to find out more.

Terminating the engagement

No.1504 – 5 June 2015

A recent NSW Supreme Court decision in Southern Han Breakfast Point Pty Limited v Lewence Construction Pty Limited [2015] NSWSC 502 examines whether an adjudicator has the power to make a determination that the builder is owed a further progress payment under the AS4000-1997 contract after the work has been taken out of its hands.

This decision is likely to have persuasive influence in SA and other States that mirror the NSW legislation and may provide a strategic advantage to principals.

A new Draft Standard – AS11000

No.1503 – 12 May 2015

Standards Australia has released a draft version of AS11000 intended to merge and replace the suites of contracts related to AS2124:1992 and AS4000:1997.  The draft was put together with input from a number of organisations including Austroads, the Australian Procurement and Construction Council, the Australian Institute of Architects, the Civil Contractors Federation of Australia, the […]

Dropbox for service?

No. 1502 – 16 March 2015

This Update deals with the service of documents by electronic methods in the construction industry. While Courts are slowly moving towards the adoption of electronic systems for their own purposes, it appears that systems such as Dropbox or Aconex are not acceptable to the Court when it comes to ensuring that documents have been formally served on another party. While electronic service is convenient, it remains important that the other party has “received” the document.