Construction Law Updates

When the principal delays the work

No. 1403 – 26 September 2014

The principal sometimes delays a construction project and in doing so breaches the building contract. If the contract terms allow the principal to then deduct liquidated damages from the contractor’s final payment because the project runs late, is this legal? The answer may depend on whether the contractor asked for an extension of time and on where the work is being done. Read our Update on the prevention principle and time bar clauses.

Ignoring a Payment Claim

No. 1404 – 5 September 2014

The NT Supreme Court has very recently clarified how the Construction Contract (Security of Payments) Act operates when a payment claim is ignored. In the similar legislation applicable in SA and the Eastern States, contractors have to promptly respond to a payment claim with a payment schedule to avoid liability for the full amount of the claim. The NT and WA adopted a less stringent regime and it has not been clear what liability arises when a payment claim is ignored. That situation has now changed.

Time bar clauses – might they be void?

No. 1402 – 22 August 2014

Commercial construction contracts often include time bar clauses, requiring the contractor to give prompt notice of any possible delay to practical completion.

Failure to give notice within the time allowed is sometimes relied on to deny the contractor an extension of time. In this Update we discuss recent developments that may cast doubt on the validity of some time bar clauses.

When can you rely on the subcontractor?

No. 1401 – 15 August 2014

In this Update we look at the liability of subcontractors for poor workmanship and whether the head contractor is required to closely monitor their workmanship to avoid liability for negligent work.

Mining or Construction?

No. 1307 – 15 November 2013

In this Update we look at the difficulties that can arise when a contract governing work in the mining industry includes the performance of both construction work and mining work and a disputed payment claim is then referred to adjudication.

Adjudication Anyone?

No. 1305 – 17 September 2013

Update 1305 reports on Romaldi Constructions’ ongoing battle with its subcontractor over an adjudication.
Romaldi applied to the District Court after its subcontractor obtained a determination from an adjudicator that it should pay money to the subcontractor. The District Court made orders that Romaldi did not have to pay the money to the subcontractor and instead could pay it into Court. The Court was then going to decide who should get the money. The subcontractor appealed to the Supreme Court and Justice Anderson has recently handed down the decision we report on.
Justice Anderson’s decision has wide implications for subcontractors and head contractors as to the power of the new adjudication regime and in effect restores faith in the new regime. We have recently learned that Romaldi has appealed the decision of Justice Blue to the Full Court of the Supreme Court of South Australia.

Unjust and Biased?

No. 1306 – 29 August 2013

Construction Law Update 1306 is the first in a series of Updates on recent Court decisions likely to impact on the operation of South Australia’s new adjudication legislation. Fenwick Elliott Grace acted for Built Environs in the first Supreme Court challenge to an adjudicator’s determination on the basis of a breach of natural justice, bias and other grounds. Justice Blue has carefully examined the Protectavale case and found that cumulative progress claims are permissible where the contract allows for them. The Court’s decision shows that consultants with links to nominating authorities must look for potential conflicts of interest when they advise clients.

When is expert evidence inadmissible?

No. 1304 – 14 August 2013

Construction Law Update 1304 reports on how expert evidence is to be presented at trial. Generally, evidence at trial must be given by persons who saw or heard what happened and their opinions are not accepted by the Court. An exception to this rule is made when the Court allows an expert witness to give evidence. However, in order to fall within the exception, the expert’s report and evidence must comply with the rules of Court. Update 1304 looks at some recent cases where expert evidence has been disallowed due to failures to comply with the rules.

Calling on the guarantee

No. 1303 – 28 June 2013

In our current Update No. 1303, we report on a recent Federal Court decision dealing with the limited bases upon which a Court will prevent a principal from calling on a bank guarantee in the context of a construction contract.

Consequential loss: a new approach

No. 1302 – 20 May 2013

This Update reports on a further aspect of the recent Alstom decision dealing with the refurbishment of Playford B power station in South Australia. We have previously reported on the nature of the subcontract and on the obligation of a head contractor to provide a detailed works program to the subcontractor. In this Update, we discuss a new approach to the classification of compensation for breaches of contract.

Keeping subbies in the dark

No. 1301 – 10 April 2013

This Update reports on a further aspect of the recent Alstom decision dealing with the refurbishment of Playford B power station in South Australia. We previously reported in Update 1201 on the nature of the subcontract. This Update deals with the extent of the obligation of a head contractor to provide a detailed works program to the subcontractor.

Contractual roundabout

No. 1202 – 2 October 2012

This Update reports on a recent NSW Court of Appeal decision dealing with payment for construction work performed without a contract.

Courts have often adopted the view that work performed by a builder for an owner in the absence of a contract enriches the owner. It is often said that it would be unfair or unjust for the owner to retain the benefit without paying the builder. Principles of fairness and equity can then be applied by the Court to require the owner to pay the builder a fair amount for the benefit they have received.

However, the position is not clear cut. For example, if the owner did not request the work to be done, or reasonably thought that the work was being performed at no charge, the builder will be unlikely to succeed in making a claim. Update 1202 discusses the construction of a roundabout and the refusal of one of the parties to pay for the cost, even though the roundabout was essential to both parties as it was a condition of development approvals for their respective neighbouring properties. The case raises an interesting issue as to whether reliance by the builder on receiving payment for the work is an essential element to ensure recovery.

Power contract failure

No. 1201 – 21 June 2012

Alstom v Yokogawa involved a dispute over a $33 million subcontract to refurbish the electrical control system of the Playford B power station in South Australia. Many legal issues that frequently arise in construction disputes are canvassed in the decision. In this Update we look only at the issue of whether incorporating all of the terms of the head contract into the subcontract and then making specific amendments to selected terms and definitions was enough to make the subcontract “back to back”. “Back to back” contracts attempt to pass the head contractor’s risk down the line to the subcontractor.

Referring to Adjudication

No. 1106 – 15 November 2011

Adjudicators are given considerable power under the law to make determinations as to how much money is due for progress payments and the dates upon which payment should be made. When an adjudicator makes an error, the aggrieved party is likely to try to find what is called a ‘jurisdictional error’ to enable them to have the adjudicator’s decision overturned
by a court.

The Payment Schedule

No. 1105 – 1 November 2011

This Update discusses the necessary content of a Payment Schedule, the document that must be sent within 15 days in response to a Payment Claim, unless intending to pay in full.

The Payment Claim

No. 1104 – 29 October 2011

10 December 2011 marks a watershed moment in South Australia for the construction industry. On that day, the Building and Construction Industry Security of Payment Act 2009 (SA) comes into effect. This is the first in a series of updates that will deal with the new legislation.

Superman with two hats

No 1102 – 25 October 2011

Wunda Projects Pty Ltd v Kyren Pty Ltd discusses the difficulties created for a principal employing a Superintendent who is also involved in the management of the project.

Title fight

No. 1103 – 1 June 2011

Since the introduction of the Torrens title system, the certificate of title held by the owner of land has been considered as the final evidence of the owner’s rights to their land. There are limited exceptions set out in the Real Property Act 1886 (“the Act”) but most purchasers of land would consider that the title they obtain from the land agent can be relied upon without further investigation.

Radioactive good faith

No. 1101 – 1 February 2011

In Strzelecki Holdings Pty Ltd v Cable Sands Pty Ltd the West Australian Court of Appeal has clarified the current meaning of negotiating in “good faith”. It is not uncommon for parties considering entering into a significant commercial enterprise to initially agree a Memorandum of Understanding (“MOU”) on the basis that the MOU attempts to lock in the deal before they agree on all the terms.

Buyer Beware

No. 1005 – 1 October 2010

In a recent decision of the Supreme Court of South Australia, the Court was asked to decide whether the builder would be liable to the subsequent owner even if the defects complained about would have been apparent at the time of purchase from the original owner.