CORRS’ CONSTRUCTION LAW UPDATE OCTOBER 2015 · We have included at the end of this Construction...

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CORRS’ CONSTRUCTION LAW UPDATE OCTOBER 2015

COMMONWEALTH .................................. 4Clarity on apportionable claims — Selig v Wealthsure Pty Ltd (2015) 320 ALR 47 .....4 Keywords: proportionate liability

Cook Building and Development Pty Limited v Citicorp International Limited [2015] FCA 703 ...........................................6 Keywords: orders for pre-trial discovery against foreign parties

Recent and proposed amendments to the International Arbitration Act 1974 (Cth) ...8 Keywords: international arbitration

NEW SOUTH WALES ............................ 10John Holland Pty Limited v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451, [2015] NSWSC 564 ..............................................10 Keywords: stays of arbitration

InfraShore Pty Ltd v Health Administration Corporation [2015] NSWSC 736 ..............12 Keywords: referral to arbitration

Caves Beachside Cuisine Pty Limited v Boydah Pty Limited [2015] NSWSC 1273 ............................................16 Keywords: agreements to negotiate

New South Wales Netball Association Ltd v Probuild Construction (Aust) Pty Ltd [2015] NSWSC 1339 .................................18 Keywords: challenges to security of payment adjudication determinations

QUEENSLAND ...................................... 20Saipem Australia Pty Ltd v GLNG Operations Pty Ltd (No 2) [2015] QSC 173 ....................................................20 Keywords: calling on security

Sunshine Coast Regional Council v Earthpro Pty Ltd [2015] QSC 168 ............22 Keywords: re-agitation of payment issues

BRB Modular Pty Ltd v AWX Constructions Pty Ltd [2015] QSC 218 ....24 Keywords: BCIPA; payment claims; statutory declarations

VICTORIA .............................................. 26Sugar Australia Pty Ltd v Lend Lease Services Pty Ltd [2015] VSCA 98 .............26 Keywords: calling on security

Commercial & Industrial Construction Group Pty Ltd v King Construction Group Pty Ltd [2015] VSC 426 .............................30 Keywords: security of payment; reference dates

Infrastructure Victoria Act 2015 (Vic) ......32 Keywords: Infrastructure Victoria

WESTERN AUSTRALIA ......................... 34Contract is king and time bars that bite: CMA Assets Pty Ltd v John Holland Pty Ltd [No 6] [2015] WASC 217 ....................34 Keywords: time bars and prevention principle

Too complex to get it right: Laing O’Rourke Australia Construction Pty Ltd v Samsung C&T Corporation [2015] WASC 237.............................................................40 Keywords: appeal from adjudications

Diploma Construction (WA) Pty Ltd v Best Bar Pty Ltd [No 2] [2015] WASC 230 .......42 Keywords: contractual records

Signed in a Snap: Claremont 24-7 Pty Ltd v Invox Pty Ltd [No 2] [2015] WASC 220, Email and Electronic Signatures ............44 Keywords: electronic signatures

AUSTRALIAN CAPITAL TERRITORY & SOUTH AUSTRALIA............................46

Adapt Constructions Pty Ltd v Whittaker [2015] ACTSC 188 .....................................46 Keywords: effect of nil liquidated damages

The sanctity of the architect’s certificate: Cirocco Constructions Pty Ltd v Clarke (No 2) [2015] SADC 107 ............................48 Keywords: set off; ABIC SW 2008

INTERNATIONAL DEVELOPMENTS ..... 50The end of the penalty doctrine in England? ...................................................50 Keywords: penalties

Aspect Contracts (Asbestos) Limited v Higgins Construction Plc [2015] UKSC 38 ....................................................52 Keywords: limitation periods and appeal from adjudications

Clear language trumps common sense in Arnold v Britton [2015] UKSC 36 .............54 Keywords: contractual interpretation

MT Højgaard A/S v E.ON Climate and Renewables UK [2015] EWCA Civ 407 ....58 Keywords: fitness for purpose

Bath and North East Somerset District Council v Mowlem plc (2004) [2015] 1 WLR 785 AB v CD [2015] 1 WLR 771 Ashton Manufacturing Pty Ltd v Express Sign Labs Pty Ltd [2015] FCA 975 ...................62 Keywords: how contractual limitations and exclusions of damages affect interlocutory injunctions

JOURNAL ARTICLES OF INTEREST ..... 66

CORRS THINKING ................................ 67

CONTENTS

The information contained in this publication is intended as an introduction only, and should not be relied upon in place of detailed legal advice. Some information has been obtained from external sources, and Corrs cannot guarantee the accuracy or currency of any such information.

The information contained in this publication was current as at October 2015.

This publication provides a concise review of, and commercially focussed commentary on, the major judicial and legislative developments affecting the construction and infrastructure industry in recent months.It is a useful resource to help in-house practitioners and commercial managers keep up-to-date with recent legal developments and current legal thinking.We hope that you find it interesting and stimulating.

OUR THINKINGCorrs regularly publishes thinking pieces which consider issues affecting various sectors of the domestic and global economies. We have included at the end of this Construction Law Update links to some of our recent thinking on issues affecting development in arbitral practice as well as the construction industry generally.

WELCOME TO THE LATEST EDITION OF CORRS’ CONSTRUCTION LAW UPDATE OCTOBER 2015

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CLARITY ON APPORTIONABLE CLAIMS — SELIG V WEALTHSURE PTY LTD (2015) 320 ALR 47

KEYWORDS: PROPORTIONATE LIABILITYKEY TAKEAWAYSThis decision clarifies the scope of “apportionable claims” under the Corporations Act (the Act). Where a plaintiff claims for the same loss or damage on different grounds, under s 1041h of the Act, the loss will be apportioned as though there is a single claim. This decision only concerns Division 2a of part 7.10 and will not necessarily apply to claims based on other sections of the Act.

COMMONWEALTHCORRS’ CONSTRUCTION LAW UPDATE

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The factsThe appellants invested in Neovest Limited (Neovest) on the advice of David Bertram (the second respondent), an authorised representative of Wealthsure Pty Ltd (the first respondent). Norton Capital also participated in the promotion of the investment. The Court described the venture as a “Ponzi scheme”.1 Neovest became insolvent. The appellants lost their investment and suffered consequential losses.

At first instance the appellants claimed that the first and second respondents contravened a number of statutory provisions, including section 1041H of the Corporations Act, which prohibits misleading or deceptive conduct.2 Lander J found the first, second, fifth and sixth respondents each liable to the appellants for the whole loss suffered. Further, Lander J held that Division 2A of the Act only applied where section 1041H had been contravened and not where there was a successful statutory or common law claim for that loss.3

The first and second respondents succeeded on these proportionate liability questions on appeal to the Full Court of the Federal Court.

Issues on appealThe primary issue on appeal to the High Court was whether Division 2A applied to all of the appellants’ successful causes of action, so that the loss suffered by the appellants should have been apportioned among the respondents.

The decisionApplication of Division 2A

The High Court held that the meaning of “apportionable claim” in section 1041L(1) was critical to determining the ambit of Division 2A. Their Honours held that while the loss or damage that the appellants alleged they had incurred was the same, the issue was whether Division 2A applied so that that loss had to be apportioned. The first hurdle to establishing an apportionable claim under this provision is that it be for damages claimed under section 1041I. Notably, their Honours pointed out that these damages must be claimed for a contravention of s 1041H.4

The High Court was critical of the Full Court’s decision to focus on section 1041L(2), to the detriment of section 1041L(1), in determining the construction of the term “apportionable claim”.5 The Full Court had identified two aspects of section 1041L(2) as important to an understanding of what constitutes an “apportionable claim”: (i) the requirement that the loss or damage the subject of the causes of action be the same; and (ii) the acknowledgement that there may be more than one cause of action and that they may be of different kinds. As a consequence, the Full Court was able to view each cause of action pleaded by the appellants as being an “apportionable claim”.

The High Court disagreed with this approach. Instead, it held, applying well-settled rules of construction, that the same meaning should be given to the word “claim” where it appears in sections 1041L(1) and 1041L(2).6 Rather, the purpose of section 1041L(2) is to explain that, regardless of the number of ways in which a plaintiff seeks to substantiate a claim for damages based on a contravention of section 1041H, so long as the loss or damage claimed is the same, apportionment is to be made on the basis that there is a single claim.7

In summary an “apportionable claim” for the purposes of Division 2A is a claim based on a contravention of section 1041H only and does not extend to claims based upon conduct of a different kind.8

http://www.austlii.edu.au/au/cases/cth/HCA/2015/18.html

1 At [1] (French CJ, Kiefel, Bell and Keane JJ)

2 Wealthsure Pty Ltd v Selig (2013) 94 ACSR 308

3 Wealthsure Pty Ltd v Selig (2013) 94 ACSR 308 at [1146]–[1147] (Lander J)


5 At [27]–[29] (French CJ, Kiefel, Bell and Keane JJ)






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COOK BUILDING AND DEVELOPMENT PTY LIMITED V CITICORP INTERNATIONAL LIMITED[2015] FCA 703

KEYWORDS: ORDERS FOR PRE-TRIAL DISCOVERY AGAINST FOREIGN PARTIESKEY TAKEAWAYSThe Federal Court of Australia may grant leave to a party seeking to serve an application for pre-trial discovery on a prospective respondent in a foreign jurisdiction.

The Court must consider, amongst other things, the proposed method of service and whether the party has a prima facie case for an order for pre-trial discovery.


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The factsCook Building and Development Pty Limited (Cook), entered into a contract with Jabiru Satellite Limited (Jabiru), a company within the NewSat Group, for the construction of an installation on a property in South Australia.

Cook asserted that it was owed $1.2 million under two progress payment claims.

Cook contended that Citicorp, who appointed receivers and managers to Jabiru, allowed Jabiru to enter into the contract with Cook without disclosing to Cook that the NewSat Group was in breach of covenants under its financing facilities. Cook claimed that Citicorp had breached a duty of care it owed Cook; or that Citicorp had engaged in misleading or deceptive conduct; or that Citicorp’s conduct was unconscionable.

Before commencing proceedings against Citicorp, Cook sought to ascertain the extent to which Citicorp knew, at the relevant time, that Cook was, or would be, performing work under the contract with Jabiru.

Citicorp does not have a registered office in Australia.

Cook brought an ex parte application for leave to serve an originating process on Citicorp in Hong Kong under rules 10.42 and 10.43 of the Federal Court Rules 2011 (Cth).

The decisionWhite J granted Cook leave. Cook’s application satisfied the requirements of rules 10.42 and 10.43 of the Federal Court Rules 2011 (Cth):

• the proposed method of service (personally or by post to Citicorp’s registered office) was authorised by both the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters and the relevant law of the People’s Republic of China (rule 10.43(3));

• the Court had jurisdiction to hear Cook’s claims against Citicorp, such as a breach of the Australian Consumer Law (rule 10.43(4)(a));

• an application for leave to serve an application for pre-action discovery is the kind of originating application that may be served outside Australia (rules 10.42 and 10.43(4)(b)); and

• Cook had a prima facie case for an order for pre-action discovery (rule 10.43(4)(c)).

No discretionary matters pointed against the grant of leave.

http://www.austlii.edu.au/au/cases/cth/FCA/2015/703.html



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RECENT AND PROPOSED AMENDMENTS TO THE INTERNATIONAL ARBITRATION ACT 1974 (CTH)

KEYWORDS: INTERNATIONAL ARBITRATIONKEY TAKEAWAYThe Civil Law and Justice Amendment Act 2015 amends the International Arbitration Act 1974 (Cth) (IAA) to clarify the retrospective application of section 21 of the IAA.

The Civil Law and Justice (Omnibus Amendments) Bill 2015 proposes further amendments including making confidentiality provisions apply on an opt-out basis and extending incapacity under section 8(5)(a) to the incapacity of either the award debtor or award creditor.


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Civil Law and Justice Legislation Amendment Act 2015Section 21, which was introduced in 2010, removed parties’ ability to opt-out of the UNICTRAL Model Law. It provided that if the Model Law applies to an arbitration, State or Territory law does not apply.

Section 21 has now been amended to clarify that it applies to arbitrations pursuant to arbitration agreements made before, on or after 6 July 2010.

Civil Law and Justice (Omnibus Amendments) Act 2015The Civil Law and Justice (Omnibus Amendments) Act 2015 has been passed by both houses of parliament and is awaiting Royal assent at the time of publication. The amendments to the IAA it will effect include the following.

1. Section 8(4) will be repealed. It currently provides that, for a foreign award to be enforced, it must be made in a New York Convention country or the party seeking to enforce the award must be domiciled or ordinarily resident in Australia or a Convention country. The repeal of section 8(4) will mean that a foreign award will be able to be enforced wherever it is made.

2. As it is currently drafted, section 8(5)(a) provides that one ground for refusing enforcement is that the award debtor was under some incapacity at the time when the arbitration agreement was made. Section 8(5)(a) will be amended to provide that the incapacity of either the award debtor or the award creditor may justify the refusal to enforce a foreign award.

Previously, the confidentiality provisions under the IAA applied on an opt-in basis (section 22(3)). The confidentiality provisions will be amended to apply on an opt-out basis.

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JOHN HOLLAND PTY LIMITED V KELLOGG BROWN & ROOT PTY LTD (2)[2015] NSWSC 451, [2015] NSWSC 564

KEYWORDS: STAYS OF ARBITRATION KEY TAKEAWAY• Even in the context of a broader dispute that could involve many parties, where there

is a dispute between two parties inter se, the court will strive to uphold an arbitration agreement between those parties.

• Where parties are referred to arbitration under the Commercial Arbitration Act, it will usually be appropriate for the proceeding to be stayed, not dismissed.

RECENT NEW SOUTH WALES

DECISIONS

CORRS’ CONSTRUCTION LAW UPDATE

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The factsThis case arose out of the Waratah train project in New South Wales. John Holland was engaged to design and construct the Auburn Maintenance Centre for the new trains. In turn, and relevantly, John Holland entered into two contracts:

• a consultancy agreement with KBR for design and documentation services relating to stormwater detention facilities; and

• an agreement with Atlantis to design, manufacture, supply and certify the stormwater detention facilities.

Aa modular tank system was installed under the car park. But subsidence was observed. John Holland commenced Supreme Court proceedings against both KBR and Atlantis for breach of contract, negligence, misleading conduct, and under contractual indemnities. But as both contracts contained arbitration agreements, each of KBR and Atlantis sought orders staying the proceedings against them.

The decisionIn relation to the KBR dispute, Hammerschlag J rejected an argument by John Holland that the dispute ought not be arbitrated because it could involve multiple parties. Hammerschlag J held that the parties ought to be held to their bargain (at [69], [87]). Even if other parties were involved in a broader dispute, there were disputes between John Holland and KBR that could be arbitrated (at [71]–[72]). Hammerschlag J noted that, while a court had a discretion under the old arbitration legislation to decline to refer the parties to arbitration if there was sufficient reason to take that course, that is not available under the new legislation (at [74], [86], [132]).

Hammerschlag J made orders referring the parties to arbitration, as required by the Commercial Arbitration Act 2010 (NSW). But Hammerschlag J noted that the Commercial Arbitration Act was silent about what was to occur with the proceedings. After a subsequent hearing, he considered that staying (and not dismissing) the proceeding so far as it involved KBR was preferable as:

• the arbitration agreement could subsequently become incapable of being performed (therefore requiring court proceedings);

• keeping the proceedings on foot could prevent a limitation period from expiring; and

• a stay would be a result under the International Arbitration Act 1974 (Cth) and given the uniformity of the legislation, congruent outcomes should be preferred where possible.

In relation to the Atlantis dispute, there were some stages in the dispute resolution clause that had not been completed (namely negotiation and expert determination): so the arbitration agreement was presently inoperative (at [186]–[191]). Hammerschlag J stayed the proceeding so far as it involved Atlantis.

http://www.austlii.edu.au/au/cases/nsw/NSWSC/2015/564.html






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INFRASHORE PTY LTD V HEALTH ADMINISTRATION CORPORATION[2015] NSWSC 736

KEYWORDS: REFERRAL TO ARBITRATIONKEY TAKEAWAYOne objective of the national revamp of the domestic commercial arbitration legislation has been to empower parties to agree on how their commercial disputes are to be resolved. The corollary of that shift is to limit the extent to which the courts can intervene, except where expressly provided by the legislation.

Where the decision concerns a choice between litigation and arbitration, discretionary considerations are no longer relevant, let alone determinative. The prescriptive nature of the enquiry under section 8(1) emphasises the objective construction of the parties’ agreement. Indeed, in determining whether the parties must be referred to arbitration under the Act this will be the courts’ focus.

As this decision illustrates, clarity of intention is essential in dispute procedures, particularly where one party to a contract might wish to avail itself of a right to arbitration. If a party wants to ensure that arbitration will prevail over other stated dispute resolution mechanisms, the contract should make this clear. Comprehensive terms governing the arbitration procedure may also assist in supporting the inference that arbitration was the parties’ preferred dispute resolution procedure.


DECISIONS


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The factsNote: Corrs acted for the plaintiff, InfraShore, in this proceeding.

InfraShore and the Health Administration Corporation were parties to a PPP Project Deed. The Deed included a detailed dispute resolution process that involved a multi-tiered process. That process involved the Project Coordination Group, a committee comprised of representatives from InfraShore and Health, agreeing to refer a dispute to arbitration, expert determination or “some other dispute resolution procedure”. If the PCG could not agree, or if the dispute was not referred within a certain time, the PCG could request a nominated arbitral body to select the process.

The PCG agreed to refer the dispute to expert determination. The procedure in clause 40.2(e) of the Project Deed provided:

“Any determination made by the expert will be binding on all parties unless referred to arbitration or legal proceedings within 10 Business Days after the relevant decision.”

On the day that the expert determination was issued, InfraShore commenced proceedings in the Supreme Court of New South Wales. Ten days later, Health sought to refer the dispute to arbitration and moved the Court for an order that the parties be referred to arbitration pursuant to section 8(1) of the Commercial Arbitration Act 2010 (NSW) (Act), which provides:

“A court before which an action is brought in a matter which is the subject of an arbitration agreement must, if a party so requests not later than when submitting the party’s first statement on the substance of the dispute, refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed.”

Health contended that clause 40.2(e) was an arbitration agreement under which each party had the right to refer the dispute to arbitration. Further, Health argued that the right of one party to refer the dispute to arbitration was not lost when the other party elected to commence legal proceedings.

InfraShore maintained that in the circumstances, and on the proper construction of the Project Deed, the dispute was not one which either party required to be arbitrated.

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The decisionCommercial arbitration legislation that operates in most Australian States and Territories has removed the courts’ discretion to allow a party to litigate in the face of an arbitration agreement that covers the dispute.

The parties conceded that the process in the Project Deed which allowed the PCG to refer disputes to arbitration or to have the dispute referred by a nominated arbitral body was an arbitration agreement within the meaning of section 7(1) of the Act.

The Court’s inquiry focussed on the second limb of section 8(1) and held that it is met where, at the time a party makes the relevant request, the rights or liabilities in controversy fall “within the ambit of controversies which the parties have agreed will be referred to arbitration.” Whether the Project Deed required the dispute under consideration to be referred to arbitration was a matter of contractual construction.

The Court held that there was no agreement for the referral of the present dispute to arbitration to which section 8(1) of the Act could attach.

First, the Court found that the ordinary meaning of the words in clause 40.2(e) did not confer on either party any right to require arbitration, nor did they give rise to such a right by necessary implication. Elsewhere in the dispute resolution clause, the Project Deed provided for two routes to arbitration (via the PCG or the nominated arbitral body). In the present case these routes were no longer available. The PCG had referred the dispute to expert determination and the procedure under clause 40.2 had been exhausted. Therefore, there was no other route by which either party could force arbitration.

Secondly, the Court held that clause 40.2(e) was simply a mechanism which gave the parties the option not to be bound by the expert determination. The expert determination would not be binding if the parties agreed to arbitrate or if a party commenced legal proceedings within 10 Business Days.

Thirdly, the Court observed that the comprehensive terms which were to govern the arbitration procedure and which were present in other sub-clauses in the Project Deed were absent from clause 40.2(e). The Court inferred that if the parties had contemplated forced arbitration, they would have legislated for that procedure, including a method for selecting the arbitrator. However, in the case of clause 40.2(e), they had clearly left this over for further agreement.

Fourthly, clause 40.2(e) also made no provision as to who prevailed if, as was the case, one party commenced legal proceedings and the other party subsequently sought to refer the dispute to arbitration. Health had argued that arbitration would prevail. However, the Court found that Health’s construction of clause 40.2(e) was unsatisfactory. It would mean that the clause would either have to operate on a first past the post basis with the party calling for arbitration beating the party opting for litigation, or, arbitration would have to prevail even if the other party had litigated first. Both would be unpalatable outcomes because the first encourages a race and the second has the unsatisfactory consequence that the party choosing litigation would have taken a step it was entitled to take at the time but then be penalised if the other party later chose to arbitrate. Such a construction would encourage “games of cat and mouse” or brinkmanship.’

Fifthly, the Court held that a matter telling against Health’s construction was that it would subject the parties to two compulsory alternative dispute resolution processes. The more commercial construction was one which contemplated only one ADR process, unless the parties agreed otherwise.

The Court also applied the fourth limb of section 8(1) finding, alternatively, that as far as the present dispute was concerned, the arbitration agreement was not operative.




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PAGE 16

CAVES BEACHSIDE CUISINE PTY LIMITED V BOYDAH PTY LIMITED [2015] NSWSC 1273

KEYWORDS: AGREEMENTS TO NEGOTIATEKEY TAKEAWAYIn commercial, arms’ length dealings, it is rare that an implied agreement to negotiate will be found, particularly where essential terms of the contract to be entered into are not settled. Similarly, it is unlikely that estoppel will apply during commercial negotiations.


DECISIONS


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The factsThe defendants in these proceedings set about developing a new hotel adjacent to the beach, which became Caves Beachside Hotel. In around 2005, the defendants asked Mr Hopper, owner of the plaintiff company (Cuisine), whether he would be interested in running the catering operations of the Hotel. Mr Hopper was subsequently involved in the design of the catering aspects of the Hotel and diverted staff and resources away from other undertakings in anticipation of operating at the Hotel. Cuisine began to provide the catering for the Hotel when it opened in 2009 and did so until July 2013, when the defendants terminated the arrangement with Cuisine. No formal agreement was ever reached on the final terms governing the parties’ relationship.

Cuisine commenced proceedings. Its primary claim was for breach of contract, being an implied agreement with the defendant that the parties would use good faith and their best endeavours to enable a lease or licence to be finalised granting Cuisine a lease term of up to 15 years. In breach of such agreement, Cuisine argued, the defendant did not negotiate in good faith or use its best endeavours to enable a lease or licence to be finalised and as a consequence Cuisine had suffered loss and damage. Cuisine also made arguments based on estoppel and misleading conduct.

The decisionKunc J concluded it was “difficult to conceive” of circumstances giving rise to an implied agreement to negotiate in good faith “because, in the absence of express words, all that is left is the parties’ conduct of negotiating” (at [95]). His Honour concluded that the contract case failed because, to the extent there was an agreement of a lease term of 15 years, all other terms were indeterminate and it would otherwise be an unenforceable agreement to agree (at [97]–[98]).

Kunc J followed the recent decision in Baldwin v Icon Energy Ltd [2015] QSC 12 in finding that an open-ended obligation to negotiate in good faith is not enforceable (as opposed to an obligation to negotiate about specific issues).

In relation to Cuisine’s estoppel case, Kunc J extracted the test from Walton Stores (Interstate) Ltd v Maher (1988) 164 CLR 397 that the assumption generated in the plaintiff must include that the defendant would not be free to withdraw from the expected legal relationship (at [148]). Kunc J noted:

“at least in the context of commercial parties dealing at arms’ length, that the “not free to withdraw” aspect of the test will rarely, if ever, be satisfied’, because that is ‘part and parcel of commercial negotiations’ ” (at [156]).

For the same reasons, the misleading conduct case failed (at [164]–[169]).

There is also a judicial finding that “Caves Beach is an attractive seaside spot south of Newcastle” (at [1]).




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NEW SOUTH WALES NETBALL ASSOCIATION LTD V PROBUILD CONSTRUCTION (AUST) PTY LTD[2015] NSWSC 1339

KEYWORDS: CHALLENGES TO SECURITY OF PAYMENT ADJUDICATION DETERMINATIONSKEY TAKEAWAYAn adjudicator’s determination based an invalid payment claim is a nullity at law. While the setting aside of the determination is discretionary, even an opportunistic change in position is unlikely to cause relief to be withheld.

Costs in responding to an invalid payment claim are unlikely to be recoverable. The delivery of an invalid payment claim is unlikely to amount to misleading conduct, or to support an estoppel. By way of comparison, it was agreed that Netball NSW’s costs in responding to a ~$10,000,000 payment claim were $99,563.80.


DECISIONS


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The factsProbuild agreed to construct a Netball Centre of Excellence at Sydney Olympic Park for the New South Wales Netball Association. Probuild made a payment claim (payment claim 24) for about $10,000,000. Netball NSW contended this payment claim was invalid (as it was the second payment claim in relation to a reference date), but an attempt to restrain the adjudication process failed: New South Wales Netball Association Ltd v Probuild Constructions (Aust) Pty Ltd [2015] NSWSC 408.

The adjudicator proceeded to make a determination. She determined a progress payment of about $125,000 (that is, less than 2% of the amount claimed). As a result, the commercial ground shifted: it was in Netball NSW’s interest to contend for the validity of the payment claim (and therefore the adjudicator’s determination), and in Probuild’s interest to contend for the invalidity of the payment claim (to preserve the potential to try again).

Netball NSW also claimed damages for misleading conduct under the Australian Consumer Law. It argued that, in serving payment claim 24, Probuild represented that it was entitled to issue the claim and that Netball NSW was required to respond to it to avoid Probuild enforcing it as a judgment under the Act. Netball NSW contended that this was misleading (as Probuild now contended that was wrong), and it suffered loss because of Probuild’s conduct (in the form of the costs of the adjudication process).

The decisionStevenson J held that the previous payment claim, payment claim 23, was valid (at [16]). It was common ground that payment claim 24 was otherwise a valid payment claim and in relation to the same reference date (at [8]). The adjudicator’s determination was therefore in excess of jurisdiction and a nullity (at [48]).

Two issues then arose: (1) whether, as a matter of discretion, the Court should withhold relief due to Probuild’s previous reliance on payment claim 24’s validity, and (2) whether Netball NSW could claim its costs of responding to payment claim 24 and the subsequent adjudication process as a result of Probuild’s misleading conduct.

Withholding relief as a matter of discretion

Stevenson J noted that while Probuild “sought to have it both ways: to approbate and reprobate” (at [40]), both parties opportunistically engaged in a volte face when it suited their interests (at [3], [39], [46]). Stevenson J accepted this was “a factor, indeed a powerful factor” in deciding whether to decline to grant the ordinary relief (at [45]).

Ultimately, Stevenson J decided not to withhold the relief, because (1) at law, it was no decision at all (at [47]–[50]); (2) another reference date would still arise and the status of the adjudication on payment claim 24 should be resolved before that reference date (at [51]–[52]); and (3) Probuild’s conduct, while opportunistic, did not involve acquiescence, delay, or abandonment, or bad faith (at [37]).

Costs of the adjudication process

By analogy with the position with pleadings, Stevenson J said that a statement in a payment claim (for example that it is a payment claim under the Act) is not a “representation” at law (at [58]–[59]). Probuild’s conduct was simply to claim an amount due, which was not misleading (at [56]–[57], [60]–[62]). Stevenson J held that service of a payment claim did not amount to a representation of the truth of the matters in it (at [63]).

In any event, Stevenson J concluded that Netball NSW did not respond to the adjudication application “because of” what was stated in it, but rather because it did not agree with what was stated in it and because of the exigencies imposed on it by the Act (at [65]). Therefore even if Probuild’s conduct was misleading, the damages claimed by Netball NSW did not follow.

An alternative argument based on equitable estoppel on the same facts was weakly raised, and failed for the same reasons (at [66]).

Costs of the proceedings

Stevenson J’s preliminary view was that, despite succeeding, Probuild ought to pay Netball NSW’s costs of the proceedings on the indemnity basis (at [68]). After receiving further submissions, he decided that there was no relevant basis for indemnity costs, but that “the fair result is that the chips should lie as they have fallen, and there should no order as to costs”: New South Wales Netball Association Ltd v Probuild Construction (Aust) Pty Ltd [2015] NSWSC 1401, [12].




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SAIPEM AUSTRALIA PTY LTD V GLNG OPERATIONS PTY LTD (NO 2) [2015] QSC 173

KEYWORDS: CALLING ON SECURITYKEY TAKEAWAYSection 67J of the Queensland Building and Construction Commission Act qualifies the use of a security provision rather than providing the source of a party’s entitlement to security.

Whether a performance guarantee acts to allocate risk has a decisive impact on the balance of convenience when seeking an interlocutory injunction.

RECENT QUEENSLAND

DECISIONS


PAGE 21

BackgroundIn 2011, Operations Pty Ltd (as agent for Santos GLNG Pty Ltd and others) (GLNG) engaged Saipem Australia Pty Ltd (Saipem) to construct a gas pipeline. Saipem was required to provide two bank guarantees (Performance Security).

• Under clause 5.5(a), GLNG could call on the Performance Security to recover any loss resulting from Saipem’s default under the contract or any debt due.

• Under clause 5.5(c), Saipem could not restrain GLNG from calling on the Performance Security (even if GLNG’s right to payment was in dispute).

On 18 December 2014, GLNG issued two delay notices in relation to Mechanical Completion and Practical Completion. GLNG claimed liquidated damages and demanded full payment by 9 January 2015. Reserving its right to call on the Performance Security if necessary, GLNG purported to give notice under section 67J of the Queensland Building and Construction Commission Act 1991 (Qld) (Act). That section provides:

“(1) The contracting party for a building contract may use a security or retention amount, in whole or in part, to obtain an amount owed under the contract, only if the contracting party has given notice in writing to the contracted party advising of the proposed use and of the amount owed.

(2) The notice must be given within 28 days after the contracting party becomes aware, or ought reasonably to have become aware, of the contracting party’s right to obtain the amount owed.

Saipem claimed an extension of the dates for Mechanical Completion and Practical Completion and referred these claims to dispute resolution. Saipem sought, among other things, a declaration that GLNG was not entitled to call on the Performance Security. By this application, Saipem sought an interlocutory injunction to restrain GLNG from having recourse to the Performance Security until the originating application was determined.

The parties’ argumentsSaipem argued that GLNG was not entitled to the Performance Security for three reasons.

1. GLNG’s right to the Performance Security under clause 5.5(a) only arose once a debt was due. Saipem considered the liquidated damages demanded by GLNG were not amounts due but merely amounts claimed, that an arbitrator would disallow.9

2. By virtue of section 67J of the Act, GLNG’s recourse to the Performance Security was limited to an “amount owed”, which Saipem contended meant a “debt due”, which Saipem disputed.10

3. GLNG failed to give timely notice as required by section 67J(2) of the Act.11

GLNG argued Saipem was not entitled to an interlocutory injunction because it had no legal or equitable claim that could form the basis of final relief as the disputes regarding extension of time were to be resolved through arbitration, rather than the Court.12

GLNG conceded there was a serious case to be tried and that Saipem may suffer reputational damage if GLNG called on the Performance Security. However, GLNG argued the reputational damage could easily be avoided if Saipem paid the sums demanded.

The decisionPhilip McMurdo J considered whether clause 5.5(a) or section 67J of the Act required a debt be due.13 His Honour reasoned that the source of entitlement to call on the security is the contract itself.14 Once a contractual right to call on security arises, section 67J is engaged to the extent that it qualifies the notice required to exercise that right.15 As such, section 67J is not the source of the entitlement and may only exclude a claim to the extent it does not comply with the notice requirements.16

McMurdo J considered that Saipem had a serious case in terms of contractual entitlement under clause 5.5(a) but that the relative strength of its argument could not be determined in the proceedings.17 His Honour then considered the comparative injury that would arise from granting or withholding the injunction; in particular, the impact of the risk allocation in clause 5.5(c).

Saipem argued that its rights were founded in the Act and any inconsistency between the Act and the contract had to be resolved in favour of the Act.18 McMurdo J rejected this claim.19

His Honour considered that clause 5.5(c) allocated the risk of financial detriment to Saipem in the event of a dispute, and that pending determination, GLNG was entitled to the security.20 McMurdo J reasoned that inconsistency only arose on non-compliance with section 67J.21

His Honour held that the balance of convenience favoured granting an injunction due to GLNG’s failure to comply with notice requirements.22 An injunction was granted until the originating application could be determined. McMurdo J agreed Saipem could avoid the risk of reputational damage by paying the amounts claimed. Accordingly, he granted a 14-day injunction to allow Saipem to make payment.23

http://www.austlii.edu.au/au/cases/qld/QSC/2015/173.html

See further the note in this update on the decision of Victorian Sugar Australia Pty Ltd v Lend Lease Services Pty Ltd [2015] VSCA 98.

9 At [18]10 At [20]11 At [21]12 At [25]13 At [31]14 At [32]15 At [33]16 At [33]

17 At [60]18 At [52]19 At [56]20 At [60]21 At [59]22 At [66]23 At [65]



PAGE 22

SUNSHINE COAST REGIONAL COUNCIL V EARTHPRO PTY LTD [2015] QSC 168

KEYWORDS: RE-AGITATION OF PAYMENT ISSUESKEY TAKEAWAYA claimant under the Building and Construction Industry Payments Act 2004 (Qld) (BCIP Act) cannot re-agitate issues that were essential to a previous adjudicator’s determination, even if the issues were previously cast in the context of a variation claim and later re-agitated as an extension of time claim.

If an adjudicator’s decision is affected by jurisdictional error, the new section 100(4) of the BCIP Act permits the affected part of the adjudicator’s decision to be severed, allowing the rest of the decision to stand. Section 100(4) operates retrospectively.

RECENT QUEENSLAND

DECISIONS


PAGE 23

The facts Sunshine Coast Regional Council (Council) engaged Earthpro Pty Ltd (Earthpro) to carry out earthworks at a landfill site. The contract was an amended form of AS2124-1992.24

The contract required practical completion by 3 June 2013 but this was extended. The Council terminated the contract on 26 March 2014. Earthpro had not reached practical completion. After termination, Earthpro served a payment claim seeking more than $3 million including prolongation costs. In response, the Council’s payment schedule recognised a liability of under $6,500.

In late August 2014, Earthpro brought an adjudication application. The adjudicator, Mr Spain, determined that the Council was required to pay Earthpro $1.4 million. Of this amount, approximately $1.081 million related to prolongation costs. On appeal, the Council argued that the adjudicator’s decision was void for jurisdictional error on three grounds:

• the adjudicator had exceeded his jurisdiction by deciding issues that had been determined by a prior adjudicator;

• it was denied natural justice; and

• the adjudicator failed to consider the Council’s case properly.

DecisionByrne J concluded that jurisdictional error was established in relation to the Council’s claim that the adjudicator had allowed Earthpro to re-agitate issues which formed the basis of “EOT 10”. The other two grounds were not made out.

Under EOT 10, Earthpro claimed that it was delayed due to handling sloppy alluvium and that it was open to the Superintendent to award an EOT to allow the alluvium to dry out before removal.

Earthpro maintained its claim for EOT 10 in reliance on several claimed facts that Earthpro had advanced in a previous adjudication as essential to its claim for a variation. In that adjudication, the adjudicator, Mr Uher, found against the assertions made by Earthpro.

Earthpro asserted that Mr Spain was not obliged to follow the previous adjudicator’s findings as:

• the latest claim was for an extension of time for practical completion, whereas the previous claim was for a contractual variation; and

• additional expert evidence and new arguments had been advanced.

Byrne J found that the new expert evidence did not overcome the fact that the “factual foundations underpinning the EOT claim were fundamental to the variation claim”.25 These common factual issues had already been determined by the first adjudicator.

In his Honour’s opinion, the BCIP Act inferentially precludes “re-agitation of the same issue where that issue was essential to a determination in an earlier adjudication”.26 Accordingly, the second adjudicator had exceeded his jurisdiction in allowing EOT 10.

Byrne J’s finding is in keeping with the decision of Philip McMurdo J in Caltex Refineries (Qld) Pty Ltd v Allstate Access (Australia) Pty Ltd27 (on which Byrne J relied) that there is a finality to an adjudicator’s decision in the sense that a claimant is precluded from pursuing a claim where the fundamental or cardinal matters have already been determined.

The second issue was whether section 100(4) of the BCIP Act applied to the proceedings. Section 100(4) took effect on 15 December 2014. The section commenced after the adjudication decision and the commencement of the application. Section 100(4) states:

“If, in any proceedings before a court in relation to any matter arising under a construction contract, the court finds that only a part of an adjudicator’s decision under part 3 is affected by jurisdictional error, the court may—

(a) identify the part affected by the error; and

(b) allow the part of the decision not affected by the error to remain binding on the parties to the proceeding.”

Byrne J observed in passing that the evident purpose of section 100(4) was to address the inconvenient consequences of the then current judicial rule that “jurisdictional error which affects one part of a decision will render the whole of [the decision] void”.28 His Honour noted that purpose did not assist here because the proceedings were commenced before the amending Act became operative.

Ultimately, Byrne J held that section 100(4) did apply and declared the adjudicator’s decision invalid to the extent it involved jurisdiction error in respect of EOT 10. In reaching this conclusion, his Honour found that the “transitional version” of the BCIP Act under section 116 of the BCIP Act applied.

Justice Byrne was guided by a “distinct textual indication”29 that section 100(4) applies to a proceeding started before the amending Act took force. His Honour concluded that because “[s]ection 100(4) can only be relevant to an application to the Court to have an Adjudication Decision declared void for jurisdictional error’”,30 it must therefore be an “outstanding matter” or section 116(5)(e) would make no sense.

http://archive.sclqld.org.au/qjudgment/2015/QSC15-168.pdf

24 Corrs acted for the Sunshine Coast Regional Council in this dispute

25 At [42]26 At [42]27 [2014] QSC 223 at [55]

28 BM Alliance Coal Operations Pty Ltd v BGC Contracting Pty Ltd [2012] QSC 145 at [58]



PAGE 24

BRB MODULAR PTY LTD V AWX CONSTRUCTIONS PTY LTD [2015] QSC 218

KEYWORDS: BCIPA; PAYMENT CLAIMS; STATUTORY DECLARATIONSKEY TAKEAWAYSConstruction contracts often require contractors to sign a statutory declaration affirming that all subcontractors have been paid. In a recent Queensland Supreme Court decision, Applegarth J found that non-compliance with the statutory declaration condition did not restrict a contractor’s statutory right to make a payment claim. The contractual requirement that the contractor provide a statutory declaration before it could make a progress claim was void under section 99 of the legislation.

RECENT QUEENSLAND

DECISIONS


PAGE 25

The facts BRB Modular Pty Ltd (BRB) engaged AWX Constructions Pty Ltd (AWX) to construct a camp and accommodation village at an LNG processing facility.

AWX was entitled to make a progress claim on the 28th day of each month, subject to conditions in the contract. One condition required AWX to sign a statutory declaration in the following form: “to the best of my knowledge, all sub-contractors and suppliers who have at any time been employed by [AWX] for work under the Subcontract have as at the date of this declaration been paid all moneys due and payable to them in respect of their employment in relation to that work.”

AWX submitted a payment claim under the contract and signed a statutory declaration, but the wording was qualified by the following words “other than those owed variations, payable to the head contractor.”

BRB contended that the pre-condition for making a payment claim had not been complied with, and therefore the payment claim was not valid under the Building and Construction Industry Payments Act 2004 (Qld) (Act).

The matter proceeded to adjudication. The adjudicator determined the contractual precondition for a statutory declaration was void because of section 99 of the Act, which provides:

• section 99(1): “the provisions of the Act have effect despite any provision to the contrary in any contract, agreement or arrangement.”

• section 99(2): “contractual provisions are void to the extent they are contrary to the Act or exclude, modify, restrict or otherwise change the effect of a provision of the Act.”

BRB applied to the Supreme Court seeking a declaration that the adjudication determination was void for jurisdictional error, and an injunction restraining AWX from giving effect to it.

The decision Applegarth J found that:

• the contractual requirement to make a statutory declaration impedes rather than facilitates the object of the Act,31 which is to ensure cash-flow between the claimant and the other party;32

• although the condition may encourage the payment of third parties, third parties are not the primary beneficiaries of the Act’s provisions, and the Act does not purport to regulate relations between a contractor and third parties;33

• there is a risk that an insolvent company that receives a progress payment may not be able to satisfy its creditors, but the Act shifts the risk of insolvency to the principal;34

• the condition was not unduly onerous,35 but the consequences of non-compliance were disproportionate and extreme;36

• as the subject matter of the statutory declaration did not relate directly to the proposed payment claim,37 the condition had no real utility in advancing the purpose of the Act;38

• the condition impeded payment to which AWX would otherwise have been statutorily entitled, without any corresponding benefit,39 thereby excluding, modifying, restricting or otherwise changing the effect of the Act;40 and

• this meant the condition was void under section 99 to the extent it affected rights and liabilities under the Act.41

ConclusionApplegarth J concluded that the adjudicator had jurisdiction to determine AWX’s payment claim.42 The contractual precondition BRB relied on to deny AWX a progress payment could not prevent AWX from making its payment claim.43

31 At [32]32 At [31]33 At [22]34 At [44]35 At [53]36 At [55]37 At [56]

38 At[70]39 At [61]40 At [62]41 At [62]42 At [69]43 At [69]

PAGE 26

SUGAR AUSTRALIA PTY LTD V LEND LEASE SERVICES PTY LTD[2015] VSCA 98

KEYWORDS: CALLING ON SECURITYKEY TAKEAWAYThe case reaffirms the established Australian common law principles that were previously summarised in the Clough decision, namely that a principal’s right of recourse to a contractor’s bank guarantee securing a genuine claim under a construction contract will not be restrained unless:

• the principal has fraudulently sought to have recourse against the bank guarantee;

• the principal has acted unconscionably under the Australian Consumer Law in seeking to have recourse to the bank guarantee; or

• the parties have contractually agreed that the principal will only be entitled to access the bank guarantee in particular circumstances, and the relevant circumstances fall outside that agreement.44

Significantly, the Court of Appeal made it clear that it is incumbent on courts in determining interim injunction applications such as this to interpret the provisions that deal with accessing bank guarantees or other security, rather than deferring any such decision to the trial of the underlying disputes. This is particularly required where the purpose of the security is to allocate risk between the parties while the underlying dispute is finally determined. Failure by courts to interpret the provisions will deny the parties of the principal benefit of those provisions.

RECENT VICTORIAN DECISIONS


PAGE 27

The factsIn 2007, Lend Lease Services Pty Ltd (Lend Lease) agreed to design, construct, supply and install a new refined sugar plant for Sugar Australia Pty Ltd (Sugar).45 It was agreed that Lend Lease would provide Sugar with security in the form of two unconditional bank guarantees for five percent of the contract sum.

Disputes arose during the works regarding the conduct of the principal’s representative: Lend Lease asserted that the principal’s representative had improperly suspended the work; Sugar asserted that Lend Lease had failed to comply with his directions. This resulted in both parties purporting to terminate the contract. Almost three years later, Sugar notified Lend Lease of its intention to cash the bank guarantees on the basis that it was entitled to recover amounts for completing the contract works and for rectifying defects. Lend Lease applied to the Victorian Supreme Court for an urgent interim injunction restraining Sugar from cashing the bank guarantees.

The Victorian Supreme Court (Vickery J) granted the injunction, which restrained Sugar from having recourse to the bank guarantees before the trial of the underlying disputes regarding the project, including Lend Lease’s liability for the cost of completing the works and for defects in the work.46

Sugar appealed to the Court of Appeal, which reversed the Supreme Court’s earlier decision and discharged the injunction. Therefore, Sugar was entitled to cash the bank guarantees without having to prove its underlying claims against Lend Lease.

FindingsThe underlying purpose of bank guarantees

The Court of Appeal discussed the underlying purpose of security, usually in the form of bank guarantees, in the construction industry. Specifically, security operated in one of two ways. First, it acted as security for a valid claim where there were likely to be difficulties in recovering from the defaulting party (for instance, if the defaulting party had gone into liquidation). Secondly, it acted as a risk allocation device, determining which party would be worse off pending resolution of an underlying dispute.47

A court must determine which of these purposes the parties intended (although it could of course be both). If the purpose of the bank guarantee is to allocate risk pending resolution of an underlying dispute, then limiting a party’s ability to cash the bank guarantees would deprive that party of the commercial bargain it made in the contract, thereby defeating the purpose of providing the bank guarantee.48

The performance bond provision

Part of the Supreme Court’s original reasoning in granting the injunction was that there was a serious question to be tried as to the construction of the security provision itself.48 The provision in question was based on standard form contract drafting but had been amended to import a requirement that the principal act “reasonably” in seeking to cash the bank guarantee. Given the limited evidence available to the Court and the short time available to make the determination, Vickery J determined that he was not able to come to a final view on the operation of the provision. Such a determination would have to wait until the trial of the matter, when sufficient evidence would be available.

The Court of Appeal rejected this finding. Vickery J’s failure to construe the recourse to security provision was an error in the exercise of judicial discretion. In the case of applications for interlocutory injunctions that restrained recourse to security, the Court should determine controversial issues of law if that determination is a necessary step in deciding whether an applicant is entitled to an injunction.50

If the security provision was intended to operate as a risk allocation device pending final determination of a dispute between the parties, then that intention must be fundamental to a consideration of the justice of an application made to restrain recourse to that bond pending final determination of the dispute.51 Failure to construe the provision, thus delaying the determination to the time the underlying dispute was resolved, would deprive the parties of the principal benefit of the provision that they bargained for.52

44 Ibid at [138], referring to the principles set out in Clough Engineering Ltd v ONGC (2008) ALR 458

45 Sugar Australia Pty Ltd v Lend Lease Services Pty Ltd [2015] VSCA 98

46 Sugar Australia Pty Ltd v Lend Lease Services Pty Ltd [2014] VSC 476 (Vickery J)

47 Sugar Australia Pty Ltd v Lend Lease Services Pty Ltd [2015] VSCA 98 at [21], referring to Fletcher Construction Australia Ltd v Varnsdorf Pty Ltd [1998] 3 VR 812 at 826–7 (Fletcher)

48 Ibid at [29]–[31] 49 Sugar Australia Pty Ltd v Lend Lease

Services Pty Ltd [2014] VSC 476 (Vickery J)

50 Sugar Australia Pty Ltd v Lend Lease Services Pty Ltd [2015] VSCA 98 at [53]–[54]

51 Ibid at [21]52 Ibid at [29]

PAGE 28

Importantly, the Court of Appeal acknowledged that the ordinary principles governing interlocutory injunctions applied to the present case notwithstanding the fact that these principles were being applied to “an unusual form of contract”.53 This was particularly so if the commercial purpose of the bank guarantee was to allocate risk pending final determination of the dispute. Granting an injunction under these circumstances would be going against the purpose of the provision, which would be a substantial injustice.

The need to construe the clause to access the evidence

One of the purposes of the security provision was to allocate risk pending resolution of an underlying dispute. The qualification imposed by the provision only required the principal to act reasonably in asserting an entitlement, not that the entitlement be judged objectively valid. The provision thus allocated to the contractor the risk that the principal’s claims might not ultimately be successful.54 Accordingly, the Court was required to construe the provision in order to give effect to the contract.55

The Court of Appeal held that the operation of the provision required that the principal act reasonably, in an objective sense, in making the claim the subject of the recourse, based on the facts and circumstances which it knew or ought to have known at the time concerning the validity of the claim.56 Further, claims were not limited to costs which had already been incurred, but included all damages or liabilities which may arise in the future as a consequence of the asserted breach.57

Having made that determination, the Court of Appeal was then able to assess whether there was a serious question to be tried as to whether the principal had complied with the provision in making the call on the bank guarantees. Based on the evidence submitted to the Supreme Court, the Court of Appeal found that there was a serious question to be tried as to whether the principal had acted reasonably in respect of some, but not all, of the amounts claimed in the recourse notice (which included amounts for costs to complete and to rectify defects). However, the amounts for which there was no serious question to be tried were greater than the amount for which Sugar sought to have recourse against the bank guarantees. Therefore there was no serious question to be tried as to whether the principal had acted reasonably in issuing the recourse notice.58

Balance of convenience

As to balance of convenience, Vickery J had determined that the balance of convenience favoured the granting of an injunction based, in part, on a finding that Lend Lease was likely to suffer reputational damage if the bank guarantees were cashed. Lend Lease had relied on two affidavits, one from the chief operating officer of Lend Lease Construction and Infrastructure and one from the group treasurer of Lend Lease, both stating that they considered a call on the bank guarantees would harm the reputation of Lend Lease.

The Court of Appeal rejected the argument that the issue of reputational damage was sufficient to tip the balance of convenience in Lend Lease’s favour.59 The matters deposed by the Lend Lease witnesses were substantially assertions, and there was doubt that the existence of the dispute would have any reputational impact on Lend Lease. Further, by agreeing to the security provisions in the contract, Lend Lease had assumed the risk that a call may be made on the bank guarantees (and presumably, any reputational damage that my go with such a call).

The Court of Appeal’s approach to balance of convenience issues is also likely it harder for contractors to resist calls on bank guarantees. The standard practice of submitting affidavits from the contractor’s senior officers asserting probable reputational damage is no longer likely to be sufficient to obtain an injunction. Detailed evidence of actual reputational damage likely to be suffered will be required. This evidence will need to be of sufficient weight to dislodge the assumption that by agreeing to the security provisions in the contract, the contractor took the risk of the bank guarantees being called pending final resolution of the underlying disputes, and any reputational damage that goes along with such a call.

http://www.austlii.edu.au/au/cases/vic/VSCA/2015/98.html

See further the note in this update on the decision of the Queensland Supreme Court in Saipem Australia Pty Ltd v GLNG Operations Pty Ltd (No 2) [2015] QSC 173.

53 Ibid at [31]54 Ibid at [37]–[38], [68] 55 Ibid at [65] 56 Ibid at [144]57 Ibid at [147]58 Ibid at [197]–[198], [230]59 Ibid at [233]



PAGE 29

PAGE 30

COMMERCIAL & INDUSTRIAL CONSTRUCTION GROUP PTY LTD V KING CONSTRUCTION GROUP PTY LTD[2015] VSC 426

KEYWORDS: SECURITY OF PAYMENT; REFERENCE DATESKEY TAKEAWAYA payment claim served in contravention of section 14(8) of the Building and Construction Industry Security of Payment Act 2002 (Vic) (Act) does not provide a basis for a valid adjudication under the Act.

The date work is performed under a contract is relevant to determining the correct reference date for a payment claim. It is, however, not the only factor for determining the validity of the payment claim.



PAGE 31

The factsCommercial & Industrial Construction Group Pty Ltd (the Plaintiff) in this case sought an order that an adjudication determination made under the Act be quashed or set aside because the relevant payment claim was invalid.

King Construction Group Pty Ltd (the Defendant) made the payment claim on 21 January 2015 (the 21 January Payment Claim), in respect of amounts it had previously claimed under the following invoices (the Earlier Invoices):

• 1203 dated 21 November 2014;

• 1206 dated 26 November 2014;

• 1211 dated 28 November 2014; and

• 1223 dated 23 December 2014.

The 21 January Payment Claim also included invoice 1226, for work performed but not claimed in previous payment claims (the Additional Invoice). The Defendant did not perform any further works for the Plaintiff after 17 December 2014. The Plaintiff had issued payment schedules in response to each of the earlier invoices for less money than the Defendant claimed.

The adjudicator’s determination

The adjudicator found that the 21 January Payment Claim was valid because the reference date, calculated in accordance with section 9(2)(b) of the Act, was 3 February 2015.

The adjudicator found that the 21 January Payment Claim did not breach section 14 (8), and that section 14(9) permitted it to include the unpaid amounts from the Earlier Invoices. This was said to be because there does not need to be a relationship between the reference date and when the work is carried out.60

The plaintiff’s claim

The plaintiff claimed the determination should be quashed because:

• the correct reference date of the 21 January Payment Claim was 5 January 2015, the same reference date as invoice 1223;

• the Defendant therefore served the 21 January Payment Claim in breach of section 14(8) of the Act, and that it was thus invalid; and

• the adjudicator’s acceptance of the 21 January Payment Claim was an error which invalidated his jurisdiction.

The Defendant’s claim

The Defendant submitted that the adjudicator was correct in finding that the 21 January Payment Claim was valid, and that its reference date was 3 February 2015. In relation to the Additional Invoice, the Defendant submitted that the Act, properly construed, permits claims for earlier work undertaken prior to the last reference date which have not been the subject of any previous claim.61

The Defendant relied on Fyntray Constructions Pty Ltd v Macind Drainage & Haulage Services Pty Ltd62 and Spankie v James Trowse Constructions Pty Ltd63 as authority for the proposition that there is no necessary relationship between the reference date and when the relevant work was carried out.64

FindingsWas there a valid payment claim?

Reference date: Vickery J held that the 21 January Payment Claim should be applied to the immediately preceding reference date, 5 January 2015.65 This was because no further work was performed under the contract between 17 December 2015 and 21 January 2015.66 As a result, the adjudicator erred in determining that the correct reference date was 3 February 2015.67

Breach of section 14(8): It is a breach of section 14(8) of the Act to serve more than one payment claim in respect of a reference date. Vickery J held that the 21 January Payment Claim was in respect of the same reference date as Invoice 1223 (served on 23 December 2014). His Honour concluded that both payment claims were in respect of the same reference date because no work was performed after 17 December 2014.68

Did the exception in 14(9) apply?

Section 14(9) of the Act provides that a claimant may include an amount that has been the subject of a previous claim if the amount remains unpaid.

Vickery J held that section 14(9) applied to the unpaid portions of the Earlier Invoices claimed as part of the 21 January Payment Claim, but not the Additional Invoice, as this related to work which had not been the subject of any previous payment claim.69

Result

His Honour quashed the adjudicator’s determination because a payment claim served in contravention of section 14(8) of the Act could not provide the jurisdictional basis for a valid adjudication.70

No new work: The plaintiff also submitted an additional ground that the 21 January Payment Claim was invalid because the Defendant carried out no further work between the previous reference date and the date of the 21 January Payment Claim. Although Vickery J was not required to determine this ground, he said that it could not succeed,71 because:

“the fact that an item of work could have been claimed as part of a payment claim served in respect of an earlier reference date, but was not, is not a bar to it being claimed in a later payment claim made in respect of a later reference date, provided that s 14(8) was not breached.”72

http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/vic/VSC/2015/426.html

60 At [37]61 At [57]62 [2002] NSWCA 23863 [2010] QCA 35564 At [58]65 At [72]66 At [70]

67 At [76]68 At [86]69 At [92]70 At [98]71 At [113]72 At [100]




PAGE 32

INFRASTRUCTURE VICTORIA ACT 2015 (VIC)

KEYWORDS: INFRASTRUCTURE VICTORIAKEY TAKEAWAYSThe Victorian government announced the new Infrastructure Victoria Bill 2015 (Vic) on 23 June 2015. The legislation received Royal Assent on 8 September 2015. It will establish Infrastructure Victoria, a statutory authority that will provide the government independent expert advice about Victoria’s infrastructure needs and priorities. It will also establish a new strategic infrastructure planning process in Victoria. Infrastructure Victoria is expected to be operational in late 2015.



PAGE 33

Infrastructure VictoriaThe Infrastructure Victoria Act 2015 (Vic) (Act) will establish Infrastructure Victoria, a statutory authority that will provide the government independent expert advice about Victoria’s infrastructure needs and priorities to support improved social, economic and environmental outcomes for the State.72

In the words of a media release by Premier Daniel Andrews, Infrastructure Victoria “will be tasked with ensuring Victoria’s immediate and long-term infrastructure needs are identified and prioritised based on objective, transparent analysis and evidence.” 73

Infrastructure planning processThe infrastructure planning process includes:

• the release and periodic update by Infrastructure Victoria (without government approval) of a 30-year infrastructure strategy following public consultation on a draft;

• a requirement for the Victorian government to respond formally to the strategy, setting out major projects, policies or reforms that it intends to pursue;

• a requirement for the Victorian government to prepare and release a five-year infrastructure plan in response to Infrastructure Victoria’s plan;

• an annual assessment by Infrastructure Victoria of the government’s specified priorities and progress on the five-year infrastructure plan; and

• formal recognition of the ongoing strategic infrastructure planning undertaken by departments and agencies (termed “sectoral infrastructure strategies”), including a supporting role for Infrastructure Victoria when requested.74

Independent expert advice and researchThe Act also provides that the relevant Minister may request written advice on infrastructure matters such as government or private sector proposals and intergovernmental submissions.75 Infrastructure Victoria will thus have a potential support role in assessing business cases for major infrastructure proposals.

Finally, Infrastructure Victoria will independently conduct and publish its own research on infrastructure issues such as improving the measurement of benefits, financing and funding models, and policy and reform issues for infrastructure projects.76

http://www.legislation.vic.gov.au/Domino/Web_Notes/LDMS/PubStatbook.nsf/51dea49770555ea6ca256da4001b90cd/BD607CD483D6B566CA257EBA0018B659/$FILE/15-038aa%20authorised.pdf

72 Section 7 73 Media release dated 23 June 2015

available at http://www.premier.vic.gov.au/building-better-infrastructure-for-jobs-and-growth

74 Section 875 Section 4476 Section 8







http://www.premier.vic.gov.au/building-better-infrastructure-for-jobs-and-growth



PAGE 34

CONTRACT IS KING AND TIME BARS THAT BITE: CMA ASSETS PTY LTD V JOHN HOLLAND PTY LTD [NO 6] [2015] WASC 217

KEYWORDS: TIME BARS AND PREVENTION PRINCIPLEKEY TAKEAWAYSThe Western Australian Supreme Court has upheld a strict time bar even where the contractor would otherwise have been entitled to an extension of time. The case serves as a reminder that clearly drafted time bars will bite if parties do not put their notices in on time.

The case also stands for the proposition that a clearly drafted extension of time regime may exclude the operation of the prevention principle (meaning that the contractor will take the risk of accelerating where no extension of time is granted).

RECENT WESTERN AUSTRALIAN

DECISIONS


PAGE 35

The factsIn 2005, BHP engaged the defendant (John Holland) to upgrade and extend a wharf at Finucane Island, Port Hedland. In part, John Holland was required to demolish and reconstruct Berth C. John Holland subcontracted the demolition of Berth C (and the associated berthing and mooring “dolphin” structures unconnected to the wharf) to the plaintiff, (CMA). The project also required John Holland to re-construct the wharf and deepen the adjacent berthing pocket.

John Holland planned the works so that CMA would move along the along the wharf demolishing and John Holland’s piling and construction crews would follow behind. It was to be a relatively straight forward linear construction project.

There was one complicating factor, namely the shiploader which BHP planned to keep on the wharf. As a result, John Holland planned to move it to the far end of the wharf, demolish the bulk of the wharf and build the new sections, then move the shiploader from the old section of the wharf to the new section, demolish the remaining old wharf and build the final section of new wharf. Thus, the movement of the shiploader was a significant interim milestone in the project.

However, the biggest problem John Holland and CMA encountered was that the dolphins were more difficult to demolish than CMA had anticipated.

Originally, CMA had planned to secure a heavy lift barge, send divers to the bottom of the ocean to cut the piles at the sea bed and then lift each dolphin (and its piles) out of the water and carry out the demolition work on land. CMA was unable to secure the heavy lift barge, so an alternative method was adopted:

1. CMA would completely demolish (by explosive means) the dolphin headstocks so that 100% demolition with “extremely good fragmentation” was achieved;

2. in the blasting process, the fragments would fall to the floor of the ocean; and

3. John Holland would then be responsible for removing the fragments from the ocean floor using the excavator barge it had secured to undertake the berth pocket deepening works.

Difficulties emerged. First, CMA’s blasting subcontractor was not able to achieve 100% demolition with extremely good fragmentation so that what fell to the floor of the ocean was not, as planned, small fragments of dolphin headstock, but rather large blocks of concrete and reinforcing. Many blocks weighed more than 20 tonnes. The result of this was that the debris removal operation was far more complicated and expensive than either John Holland or CMA had planned.

The second difficulty was that the reinforcing in some of the berthing dolphins was different from the plans that had been provided to CMA, making the drilling required to prepare the dolphins for blasting more time consuming and expensive than planned. CMA fell into delay as against the subcontract milestones but did not submit notices of delay as that subcontract required.

Disputes arose as to who should bear the unexpected costs associated with the debris removal works and the delays. John Holland also fell into dispute with BHP. That dispute (which was wider ranging than the dispute with CMA) settled in April 2008.

In March 2008, CMA commenced proceedings against John Holland, claiming the balance owing under the subcontract and amounts for disputed variations and delay claims. John Holland denied the majority of the claims and counterclaimed to recover amounts it expended in recovering and conveying demolition debris, and for disruption of its own works.

Many of the disputes were settled in the lead up to the trial, subject to John Holland’s right to set off the amounts counterclaimed. As a consequence the decision is largely focussed on the counterclaim that CMA disputed (Mostly on factual grounds but also on the basis that John Holland’s had been compensated for any loss by the settlement with BHP).

The decisionCMA’s claims

CMA’s contested claims were:

1. its claim for additional work to demolish berthing dolphins BD1, BD2 and BD6 (Variation 79); and

2. a series of extension of time and consequent delay costs claims.

CMA’s variation claim

The dispute about claim for additional work was largely factual and the Court found for CMA finding that the relevant drawings

“did not accurately describe the structures to be demolished, in a manner that directly affected the demolition methodology proposed by CMA and not rejected by John Holland.” 77

77 At [240]

PAGE 36

In making that finding, Allanson J rejected John Holland’s defence, which was premised on a clause in the subcontract by which John Holland expressly did not warrant the accuracy of any information provided to CMA on the basis that the drawings were incorporated into the terms of the subcontract and therefore something more than information made available to CMA.78

CMA’s delay claims

CMA claimed that:

1. it had been delayed by the variation works associated with Variation 79 (between 25 October 2006 and 13 December 2006);

2. John Holland had delayed it by delaying the move of the shiploader (between 29 January 2007 and 10 May 2007);

3. it was denied access to part of the site (the transfer station), causing it to be delayed (between 13 February 2007 and 10 April 2007; and

4. it was denied access to part of the site (MD4A), causing it to be delayed (between 21 March 2007 and 2 June 2007).

The contractual framework

The terms of the subcontract regarding extensions of time and delay damages were reasonably typical for a subcontract in a project such as this. In short, CMA was required to notify John Holland (in accordance with “harsh”78 time limits) in order to be entitled to an extension of time.

The language of the relevant clause80 stated that CMA may claim for an extension of time it if “is or will be delayed”.81 The Court held that that language (in the broader context of the relevant clause) required a prospective delay analysis to determine the extent of any entitlement to an extension of time.82 The subcontract further required that that prospective analysis be undertaken by reference to the approved construction programme and whether at the time the claimed delay event took place CMA was on schedule (or was being delayed by its own prior delays).83

A consequence of finding that an entitlement to an extension of time was governed by a prospective delay analysis was that the Court could adopt a relatively unsophisticated approach to the overlapping nature of the delay periods claimed by CMA. In short, the Court held that, in the context of the particular subcontract, the entitlement to any extension of time was to be determined at the moment that the delay event begins to operate, so that

“Where a subsequent delay event begins to operate concurrently, it is only taken to affect the critical path from when the event earlier in time ceases to be effective.” 84

CMA’s was delayed by the late movement of the shiploader

There was no dispute between the parties that the movement of the ship loader was delayed, nor that as between John Holland and CMA, that delay was John Holland’s responsibility. However, John Holland claimed that the debris removal operation (which was, as a matter of contract, CMA’s responsibility85) was an over-riding fact that defeated CMA’s delay claim.86 The Court did not accept that argument because of:

1. firstly, the Court’s finding that the entitlement to an extension of time was to be determined prospectively at the moment the delay event commenced operating; and

2. secondly, the fact that while the debris removal was CMA’s obligation, it was not a programmed activity and as such could not be analysed when determining whether CMA was behind schedule by reference to the approved construction programme, as required by the relevant clause.87

Thus, the Court found that, as a matter of fact, CMA was delayed in its works by the late movement of the shiploader.

John Holland had also raised an argument that even if CMA had been delayed by the late movement of the shiploader, that made no real difference because CMA never had sufficient resources on site to undertake all of its works (relevantly, the demolition of the wharf and transfer station at the same time) had the shiploader been moved on time. The Court rejected that argument because, as a matter of prospective analysis, the entitlement to an extension of time arose due to the shiploader delay before CMA had the opportunity to conduct the two work areas concurrently.88

CMA’s failure to notify

Despite finding that John Holland had delayed CMA, the Court upheld John Holland’s argument that CMA’s extension of time claim should nonetheless be denied on the basis of the “harsh” time bars in the subcontract. The relevant clause was clearly drafted so that compliance with the time bar (in this case 7 days) was a pre-condition to any entitlement to an extension of time. As a matter of fact, CMA did not submit a notice within the required time. Thus, John Holland denied the claim on that basis. CMA sought to argue that the time bar should not apply for a variety of reasons, including that at the time it

78 At [245]79 At [375]80 Relevant portions are extracted at

[255]–[269]81 At [324]82 At [323]83 At [333]

84 At [326]85 At [616]86 At [345]87 At [346]88 At [350]

PAGE 37

did not know how long the delay would persist; that the time bar should only “bite” for the time before it actually notified John Holland; and that there was an estoppel by conduct such that strict adherence to the notification regime was not required.

The Court rejected all of these arguments. As to the construction of the clause, the Court stated:

“There is also no doubt that a strict application of cl 10.12 is harsh. But I am not satisfied that it is without purpose and absurd, so that an alternative construction must be given, notwithstanding the apparently clear words”. 89

Thus, the Court found that John Holland was entitled to reject the extension of time claims and consequent delay costs claims.

CMA’s remaining delay claims

A similar analysis applied to the delay claims arising out of the delayed access to MD4A and the additional works associated with Variation 79. In each case the Court found that as a matter of fact CMA had been delayed by a cause which would entitle it to an extension of time,90 but that a failure to notify in accordance with the clear words of the subcontract meant that John Holland was entitled to reject the claims.91

John Holland’s discretion to extend time

CMA made the (common) argument that notwithstanding CMA’s failure to submit notices on time John Holland ought to have exercised unilateral power to extend time and thereby “cure” the failure to notify in accordance with the clear terms of the subcontract. The Court rejected that argument. In doing so it relied on the language in the relevant clause that stated that John Holland could “in its absolute discretion and without affecting any rights or attracting obligations” extend the Date for Completion.92 The Court held that the effect of that language was that the discretion to extend time was truly unfettered and that in the face of such clear drafting there was no need to consider implied obligations to act reasonably or in good faith.

John Holland’s counterclaims

John Holland’s counterclaim was primarily for the costs associated with removing the blasting debris from the sea floor and transferring it to the shore. John Holland also made a claim for disruption to its piling works occasioned by the presence of debris on the sea floor, and a claim for liquidated damages.

John Holland put its counterclaim on a number of alternative bases, namely:93

1. that there was an agreed variation to the terms of the subcontract about the mechanism by which the parties would share the costs of debris removal and transport;

2. if there was no variation, in quantum meruit;

3. as damages for a breach of the subcontract; and

4. as a debt arising under the provision of the subcontract allowing John Holland to perform obligations under the subcontract that CMA had not performed.

John Holland also pressed a claim for misleading or deceptive conduct in relation to part of its loss.

CMA breached the Subcontract

The Court rejected John Holland’s variation and quantum meruit claims.

As to the variation claims, the Court’s rejection was based on an analysis of the correspondence which revealed that as a matter of fact no agreement on cost sharing had ever been made between the parties.94

As to the restitutionary claims, the Court held that given the contractual framework left no room for such a claim. The Court was particularly persuaded to this conclusion by the presence in the Subcontract of clause 17.5 in which the parties expressly agreed:

“the circumstances in which John Holland may perform an obligation the CMA was obliged to perform under the Subcontract, and its entitlement in debt for the costs, expenses and damages it has occurred in doing so.” 95

However, the Court did find, by a construction of the scope of work, an obligation on CMA to remove debris from the sea bed, which obligation CMA had breached, causing John Holland to suffer loss and damage.96 The Court also found that John Holland was entitled to claim a debt under clause 17.5.97

Misleading or deceptive conduct

John Holland claimed that part of its loss related to damage sustained to the dredging barge, the Hippopotes, was also caused by CMA’s misleading or deceptive conduct. The relevant conduct was CMA’s description (at a meeting in March 2007) of the size of the debris on the sea floor in early 2007 and the capacity of the Hippopotes to remove it.98 The Court upheld this claim on the facts..99

89 At [375]90 At [389], [411]91 At [394], [416]92 At [430]93 At [452]94 At [590]

95 At [596]96 At [616]97 At [624]98 At [625]–[628]99 At [666]

PAGE 38

An agreement in relation to specific vessels

John Holland claimed that part of its loss related to the hire of specific debris removal vessels (the Westsea barges) was also claimable under the terms of a separate agreement captured in a letter sent on 5 June 2007.100 The evidence was that the letter recorded the agreement following prior correspondence on the topic.101 The Court examined how the letter came into existence and the parties’ conduct following the letter being exchanged and concluded that the parties’ subsequent conduct was consistent with an agreement being made.102

The damages that flowed from each of the specific findings (that is, in relation to misleading or deceptive conduct, and the letter agreement in relation to the Westsea barges) were broadly co-extensive with the wider finding that CMA breached the terms of the subcontract and that John Holland was entitled to claim a debt under clause 17.5.103

John Holland’s disruption claim

John Holland claimed it was disrupted in the progress of its piling operation by the presence of debris on the sea floor. The Court accepted that there had been some disruption to the operation but, given it had only been provided with very general evidence of the disruption, could make no finding as to the quantification of that disruption.104

Liquidated damages and the prevention principle

Because the Court upheld John Holland’s rejection of CMA’s extension of time claims, it followed that John Holland was entitled to liquidated damages associated with the CMA’s delay to completing the debris removal works. CMA defended this claim on the basis of the prevention principle, arguing that the delays were not caused by CMA’s breaches so it would be wrong for John Holland, in effect, to profit from its own wrongs.

However, the Court, again, relied on the clear words in the Subcontract which stated that if CMA failed to comply with the notice provisions it would have:

“no entitlement to an extension of time and any principle of law or equity which might render the Date for Practical Completion unenforceable shall not apply.” 105

The Court held that provision was effective at excluding the operation of the prevention principle, relying on McLure P’s earlier characterisation of the prevention principle as a “particular manifestation of the obligation to cooperate implied as a matter of law in all contracts.”106 Although it is not stated in the judgment, this finding may have significant impacts within the construction industry as it confirms that a clearly worded contract may exclude the operation of the prevention principle with the consequence that contractors signing up to such terms effectively run the risk of acceleration in circumstances where no extension of time is available regardless of the actual cause of the delay.107

The Head Contract claims

As a reasonably general argument against John Holland’s counterclaims, CMA argued that any loss which John Holland had sustained ought to be reduced to account for the settlement John Holland had secured with BHP in so far as that settlement related to the claims in issue between John Holland and CMA. The Court did not reject this as a possible means of defending the action.108 However, on the facts, it found that CMA had not been able to prove that any amount of the settlement between BHP and John Holland was referrable to the claims between John Holland and CMA. Thus, this avenue of defence to the counterclaim failed.109 It follows from this finding that head contractors are well advised to structure settlements with principals so that there is no clear itemisation of the claims in the settlement deed, especially in circumstances where there are claims from “down the line” as well.

ConclusionWhile the decision is lengthy (it stretches to 903 paragraphs), the most interesting aspects for construction industry participants are:

1. the willingness of the Court to uphold a clearly drafted time bar;

2. the commentary about the possibility of excluding the prevention principle; and

3. the impact that the structure of the settlement with BHP had on CMA’s claims against John Holland.

The clear message that emerges is that courts will give effect to a clearly worded contract even where that effect is “harsh”. Put more shortly, the Contract is King!

http://www.austlii.edu.au/au/cases/wa/WASC/2015/217.html

100 At [683]101 At [693]102 At [709]103 At [668], [711]104 At [850], [855]105 At [865]106 Spiers Earthworks Pty Ltd v Landtec

Projects Corporation Pty Ltd [No 2] (2012) 287 ALR 360 at [47], cited at [865]

107 See, eg, SMK Cabinets v Hili Modern Electrics Pty Ltd [1984] VR 391, 394–5 (Brooking J)

108 Cf Clark v Macourt (2013) 253 CLR 1109 At [899]



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PAGE 40

TOO COMPLEX TO GET IT RIGHT: LAING O’ROURKE AUSTRALIA CONSTRUCTION PTY LTD V SAMSUNG C&T CORPORATION [2015] WASC 237

KEYWORDS: APPEAL FROM ADJUDICATIONSKEY TAKEAWAYThis case is of interest to lawyers and adjudicators alike, yet it is difficult to identify how contractors or principals should modify their behaviour as a result of it. Nonetheless, the case should give industry participants comfort that adjudication determinations made otherwise than in accordance with proper legal principles will be quashed on application for judicial review.

The case also creates the conceptual space for principals to argue that particular circumstances are too complex for the adjudicator to make a determination in the time available. How adjudicators will receive that argument remains to be seen.


DECISIONS


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The factsThe defendant (Samsung) subcontracted the plaintiff (LORAC) to undertake the Port Landside SMP and E&I Works at the Roy Hill project. In January 2015 LORAC issued a progress claim under the subcontract. Samsung then exercised its contractual entitlement to terminate the subcontract for convenience. A dispute arose.

The parties signed an “Interim Deed” which required Samsung to pay LORAC termination payments including an “on account” amount of $45 million. Samsung paid that amount. Importantly, the other termination costs payable under the Interim Deed were subject to two qualifications, namely, Samsung’s right to set-off and, secondly, that the total amount of those payments could not exceed the subcontract sum as adjusted in accordance with the subcontract.

In February 2015 LORAC issued a second claim in respect of works it had performed prior to Samsung’s termination of the subcontract. Samsung did not pay and LORAC applied for adjudication of both the January progress claim and the February claim under the Construction Contracts Act 2004 (WA) (Act). The adjudicator determined both applications in favour of LORAC, requiring Samsung to pay LORAC a combined (additional) amount of about $44.1 million.

LORAC sought the Supreme Court’s leave to register the determinations as judgments. In response, Samsung applied for judicial review of each determination, seeking to quash the determinations with writs of certiorari. Mitchell J heard LORAC’s and Samsung’s applications together.

DiscussionCertiorari

Mitchell J quashed both determinations because the adjudicator committed a jurisdictional error in failing to resolve the payment disputes by reference to the terms of the parties’ contract, thereby misapprehending the nature of his adjudicative function.110

In coming to that conclusion, Mitchell J found that that if the adjudicator is asked to embark upon a long and complicated contractual construction exercise or to enquire as to what the actual terms of the parties’ contract are or some other legal problem he or she is not able to resolve in the time available, then the adjudicator should summarily dismiss the adjudication application without determining its merits under s 31(2)(a)(iv) of the Act on the ground that the matter is too complex.111

More interesting are Mitchell J’s comments surrounding this conclusion. Mitchell J suggests that whether an adjudicator should dismiss an application under s 31(2)(a)(iv) of the Act depends on that particular adjudicator’s ability to resolve the issues put before him or her within the time for which the Act provides. This implies that adjudicators who do not have legal training should dismiss applications that turn on difficult questions of contractual construction more readily than adjudicators who have a background as experienced legal practitioners.

Enforcement

Consequently, LORAC’s applications for leave to enforce the determinations were dismissed. However, the Court (in obiter) indicated that it would have refused leave under section 43 of the Act to register the determinations as the payments which were the subject of the determinations had already been made under the Interim Deed.112

This result, which is undoubtedly correct, is at odds with the decision by Keen DCJ in Kuredale Pty Ltd v John Holland Pty Ltd [2015] WADC 61 where Keen DCJ held that an overpayment under a construction contract does not constitute a “sufficient reason” for a court to decline to grant leave under section 43 of the Act.

ConclusionThis decision is the latest in a string of decisions where the Supreme Court113 has emphasised the importance of adjudicators making determinations according to correct ordinary legal principles, notwithstanding the speed of the process. It might be argued that Mitchell J’s decision in this case stands for the proposition that in cases where the quantum in dispute is large or the primary issue is one of complicated contractual construction and the adjudicator is not legally trained, the adjudicator must dismiss for reasons of complexity under s 31(2)(a)(iv) of the Act. Whether that is so remains to be seen.


110 At [248] 111 At [225]112 At [274]–[279]113 See Red Ink Homes Pty Ltd v Court

[2013] WASC 52; Delmere Holdings Pty Ltd v Green [2015] WASC 148



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DIPLOMA CONSTRUCTION (WA) PTY LTD V BEST BAR PTY LTD [NO 2] [2015] WASC 230

KEYWORDS: CONTRACTUAL RECORDSKEY TAKEAWAYThe recent Supreme Court decision in Diploma Construction (WA) Pty Ltd v Best Bar Pty Ltd [No 2] [2015] WASC 230 serves as a useful reminder of the importance of good record keeping, especially as to the terms of your contract!


DECISIONS


PAGE 43

The factsThe dispute was a traditional “war of forms” concerning the supply of reinforcing bars by the defendant (Best Bar) for a number of projects being undertaken by the plaintiff (Diploma) in 2007 and 2008.

Diploma sued Best Bar seeking compensation for overpayments it alleged it had made on three projects undertaken in 2007. By counterclaim, Best Bar claimed damages associated with alleged underpayments for the supply of reinforcing bars on three projects undertaken in 2008. The core of the dispute was a fundamental disagreement as to the terms on which they had agreed to do business.

The Court traced the parties’ relationship to 15 March 2007, when Best Bar provided Diploma an estimate associated with a specific order of reinforcing bar as well as an application for credit form. The evidence was that Diploma never signed the application for credit form and expressly rejected some of the terms. However, that did not stop Diploma from ordering, or Best Bar from supplying, reinforcing bars. As a matter of fact, the court found that there was a general pattern for ordering reinforcing bar adopted by the parties where Best Bar would provide an estimate on a form which included a term that “this quotation is subject to Best Bar terms and conditions” 114

Best Bar alleged that the terms and conditions were those set out in the Application for Credit which, relevantly, included a term stating

“No subsequent correspondence or document, including any order by the Purchaser will modify or vary these Terms and Conditions unless such

variation is expressly accepted or acknowledged in writing by Supplier or otherwise permitted pursuant to the Terms and Conditions” 115

Following receipt of an estimate, Diploma would place an order using its “standard” purchase order. There were two similar (but different) standard forms in evidence but the Court was not presented with evidence about why one was used instead of the other.116 In each case the purchase order contained a term which sought to oust any other terms put forward by Best Bar, namely:

“No terms stated by the Vendors in making a quotation or accepting or acknowledging this Order which differ from the terms of tis Order shall be binding upon the Purchaser or shall be deemed to form any part of the agreement between Vendor and Purchaser.” 117

There was no document containing terms and conditions that was signed (or even acknowledged as being binding) by both parties. The argument about the terms of the contract(s) focused on whether the contract was subject to price escalation. The relevant clause (pressed by Best Bar) was contained in the Application for Credit form.

DiscussionDiploma’s argument was, in essence, that by supplying reinforcing bars in accordance with the order (without expressly rejecting the terms of the purchase order), Best Bar should be taken to have accepted the terms.118 The Court rejected that argument on the basis of the facts known to the parties, relevantly:

1. There was no course of dealing between the parties prior to 2007.

2. Best Bar had set out its terms and conditions in the Application for Credit, stated its intention to contract only on those terms and repeated that position in each estimate form.

3. The terms themselves sought to oust subsequent correspondence.

4. The dealings between the parties included supply of steel but also of a substantial credit facility.

The Court thus held that at the time each order was placed, Diploma was aware of Best Bar’s intention to trade only on its terms and Best Bar had done nothing to indicate a departure from that position.118 Consequently, the Court inferred an offer and acceptance of terms.120 It followed from that conclusion that Best Bar was entitled to claim escalation in accordance with the clause in the application for credit agreement.

ConclusionLike many construction cases this was a “simple case with difficult facts.”121 But it needn’t have been so. Much of the judgment is directed towards contests on the evidence about correspondence and meetings. Reading between the lines, it is apparent that neither party kept very comprehensive records nor, indeed, sought to administer the contract that it sought to enforce on the other side. For example, the Application for Credit form was returned to Best Bar unsigned and with handwritten annotations but no further action was taken (by either side) to close out the issue. There is no indication in the judgment why that was so but it is plain that this is a case where, if the parties had invested time in getting their terms of trade agreed at the outset, then a lengthy dispute (running for seven years from 2008 to 2015) could, perhaps, have been avoided.


114 At [21] 115 At [30] 116 At [19]117 At [14]118 At [153]119 At [154]–[155]120 At [146]. See also Currie v Currie [2013]

WASC 428 at [19] (Allanson J); Lighting By Design (Aust) Pty Ltd v Cannington Nominees Pty Ltd (2008) 35 WAR 520

at [21]–[23] (Pullin JA), [89]–[90] (Buss JA) and [203]–[205] (Le Miere J); RJ Baker Nominees Pty Ltd v Parsons Management Group Pty Ltd [2010] WASCA 128 at [92] and [97] (Newnes JA); Fazio v Fazio [2012] WASCA 72 at [188] and [195] (Murphy JA)

121 See, eg, Baulderstone Hornibrook Ltd v Qantas Airways Ltd [2003] FCA 174 at [1] (Finkelstein J)



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SIGNED IN A SNAP: CLAREMONT 24-7 PTY LTD V INVOX PTY LTD[NO 2] [2015] WASC 220, EMAIL AND ELECTRONIC SIGNATURES

KEYWORDS: ELECTRONIC SIGNATURESKEY TAKEAWAYThe recent Supreme Court decision in Claremont 24-7 Pty Ltd v Invox Pty Ltd confirms that the Electronic Transactions Act 2011 (WA) operates so that an email signature will be sufficient to meet the formal requirements associated with creating interests in land.

The case is of interest to construction professionals as it is a further indication of the Court’s preparedness to see through the distinction between formal and informal correspondence and look to the substance of the transaction.


DECISIONS


PAGE 45

The factsThe dispute concerned the lease over premises in Claremont, Perth, owned by the defendant, Invox Pty Ltd (Invox).

First agreement to lease

In May 2013, Invox and the plaintiff, Claremont 24-7 Pty Ltd (Claremont 24-7), reached agreement for the lease of the premises which Claremont 24-7 planned to operate as a gym trading as a franchisee in the “Snap Fitness” franchise. The agreement for lease was conditional on Claremont 24-7 obtaining council approval for its planned operations. This approval was not granted and accordingly the agreement for lease came to an end.

Second agreement to lease

In September 2014, Claremont 24-7 made a new offer to Invox to lease the premises. Protracted negotiations ensued. Claremont 24-7 sought to secure agreement as to the terms of the proposed lease and Claremont 24-7’s exclusivity under the agreement for lease before a council meeting (scheduled for 9 December 2014) at which Claremont 24-7’s development application was to be considered for approval.

On 5 December 2014, discussions took place between officers of Claremont 24-7 and Invox over the phone and via email. The parties exchanged versions of the proposed lease. Those discussions culminated in Mr Patel, on behalf of Claremont 24-7, sending an email attaching the terms of a lease in an offer to lease (which had been prepared in a Snap Fitness form) to Mr Cheah, on behalf of Invox and Invox’s managing agent, a Mr Santa Maria. The offer to lease had been signed on behalf of Claremont 24-7.

Mr Cheah then sent an email to Invox’s agent, copying Mr Patel. That email attached the same terms and stated:

“[the] enclosed terms in the Offer by Snap Fitness is acceptable to both parties. Could you kindly capture the terms inside Alpha Properties standard format offer that was used previously and expeditiously provide Offer and new Disclosure Statement to Amar Patel for his perusal and execution.” 122

The email concluded “sincerely James Cheah”.123

Following this there were a series of communications between the parties, over a reasonably protracted period, about the transfer of the terms from one form to the other.

Events culminated on 31 December 2014 when Invox, through its agent, stated to Claremont 24-7 that it had agreed to lease the premises to another party and would “not pursue your proposal further.”

Claremont 24-7 sought an injunction preventing Invox from entering into any lease with a third party.

The arguments

Invox defended the injunction on a number of bases. However, the crux of the dispute was a typical Masters v Cameron124 analysis of whether the facts supported the existence of a binding agreement as at 5 December 2014. The judge found that at that date there was a binding agreement (in the Snap Fitness Form) that would be replaced when it was put into Invox’s preferred form.125

Invox argued that even if an agreement for lease was in place, it was unenforceable because Invox had not actually signed it and, on the basis of either section 34 of the Property Law Act 1969 (WA) or section 4 of the Statute of Frauds 1677 (UK)126 (the Acts). Each of the Acts requires an instrument in writing and a signature in order to create an interest in land.

In response, Claremont 24-7 argued that section 10 of the Electronic Transactions Act 2011 (WA) (ET Act) operated to overcome the lack of a wet signature by Invox on the Snap Fitness Form.

The Court’s decision

The Court agreed with Claremont 24-7’s analysis and found that:

• the requirement under the Acts for an instrument in writing was satisfied by the Snap Fitness Form;

• each of the Acts required a signature to which section 10(1) of the ET Act applied; and

• the facts (relevantly the use of an email signature, the words “yours sincerely” by Invox’s representative and the evident urgency of the situation given the impending council meeting) were such that the requirements of section 10(1) of the ET Act were met.

ConclusionThis case is the first example in Western Australia of section 10 of the ET Act being applied to overcome the lack of a wet signature on a document. Cases from other jurisdictions indicate that an email will not always meet the requirements of the relevant legislation.127

However, the case is indicative of a pragmatic approach by Parliament (and consequently the courts) to the realities of commercial transactions. For construction professionals, it is a further warning that the distinction between formal and informal correspondence is of diminishing importance: so remember, be careful when clicking “send”.


122 At [22]123 At [83]124 (1954) 91 CLR 353125 At [54]126 See Law Reform Act (Statute of Frauds)

1962 (WA) s 2

127 See, eg, Russells v McCardel [2014] VSC 287; J Pereira Femandes SA v Mehta [2006] 2 All ER 891; cf Stuart v Hishon [2013] NSWSC 766; Stellard Pty Ltd v North Queensland Fuel Pty Ltd [2015] QSC 119



PAGE 46

ADAPT CONSTRUCTIONS PTY LTD V WHITTAKER[2015] ACTSC 188

KEYWORDS: EFFECT OF NIL LIQUIDATED DAMAGESKEY TAKEAWAYEven if a contract states that no (“zero” or “nil’” liquidated damages are payable to a party for a delay, that party may still be entitled to claim common law damages, subject to the intention of the parties. This case provides an example of where a “zero” liquidated damages clause did not prevent the principal from recovering general damages for delay.

RECENT AUSTRALIAN CAPITAL TERRITORY & SOUTH AUSTRALIAN

DECISIONS


PAGE 47

The factsThe dispute concerned a standard form building contract that provided that if the builder did not complete the house by the date contracted, liquidated damages would be payable at the rate specified. A space was left blank in the contract for the rate of the liquidated damages to be inserted, with a note stating “(if nothing stated, Zero)” (at [67]–[68]). The house was not completed by the date for practical completion as specified and the proprietors sought about $50,000 in general damages from the builder for the delay (at [7]).

The dispute was referred to arbitration. Relevantly, the arbitrator concluded that the parties’ failure to enter a figure in the schedule resulted in the liquidated damages clause being “inoperable”, but permitted him to assess general damages based on ordinary principles (at [70]). The arbitrator awarded about $40,000 damages payable by the builder to the owner for late completion (at [11]).

The builder sought leave to appeal under the Commercial Arbitration Act 1986 (ACT): the Australian Capital Territory has not (yet) enacted the new uniform domestic arbitration legislation. The builder alleged that the award general damages for late completion was an error of law manifest on the face of the award (at [71]).

The builder argued that the arbitrator erred in law by awarding damages for late completion to the principal in the absence of a liquidated damages clause in the building contract. The principal submitted that the effect of a “zero” value in the liquidated damages clause is that the parties have agreed to limit themselves to a fixed sum under the contract, and in effect it was an exclusion of the owner’s rights to seek any damages for delay (at [25], [41]).

The decisionBurns J examined the series of cases which had considered similar situations, including Temloc Ltd v Errill Properties Ltd (1987) 39 BLR 30, Baese Pty Ltd v RA Bracken Building Pty Ltd (1990) 6 BCL 137 and J-Corp Pty Ltd v Mladenis [2009] WASCA 157. He distilled four principles from the cases (at [79]):

“The principles which I distil from these cases are:

a. the requirement in each case is to ascertain the intention of the parties to the agreement concerning damages for delay;

b. in ascertaining that intention, consideration may be given not only to the language of the agreement, but also to the surrounding circumstances known to the parties and the apparent purpose and object of the transaction. Temloc was a case where evidence was received of surrounding circumstances, being evidence of a course of dealings between the parties to the agreement which confirmed that the intention of the parties was that damages for late completion would not be available;

c. the vesting of a discretion in the proprietor to exercise a contractual right to claim liquidated damages may indicate that the parties did not intend the contractual right to liquidated damages to be the exclusive remedy for delay; conversely, a mandatory clause, in the sense of compelling the builder to pay regardless of any demand for payment by the principal, may indicate that the clause is intended to provide an exclusive remedy; and

d. in construing a contract which, on its face, provides for no liquidated damages for breach, an intention to exclude a right to common law damages must be expressed in clear and unambiguous terms.”

Burns J concluded that the arbitrator’s decision, which was consistent with Buss JA’s approach in J-Corp, did not display a manifest error of law on the face of the award, nor, indeed, was there strong evidence of any error (at [80]).

http://www.austlii.edu.au/au/cases/act/ACTSC/2015/188.html



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THE SANCTITY OF THE ARCHITECT’S CERTIFICATE: CIROCCO CONSTRUCTIONS PTY LTD V CLARKE(NO 2) [2015] SADC 107

KEYWORDS: SET OFF; ABIC SW 2008KEY TAKEAWAYThe standard form ABIC SW-2008 “Simple Works Contract” does not give the owner an express right of set off. This case confirms that there is no common law or equitable right for the owner to set off against progress claims unless there are express words or a clear implication to the contrary. Under the Simple Works Contract, if the owner believes there is unremedied defective work, the owner must not withhold payments certified by the architect and instead must promptly raise a dispute.

This case also highlights the importance of strict compliance with contractual processes. Here, a claim for the release of security was invalid as it was not issued separately with its own tax invoice, as the contract required.

RECENT AUSTRALIAN CAPITAL TERRITORY & SOUTH AUSTRALIAN

DECISIONS


PAGE 49

The factsIn 2012, Clarke engaged a builder, Cirocco Constructions Pty Ltd (Cirocco), to build a new residence and renovate an old church hall for $2.117 million. Clarke and Cirocco executed a contract (Contract) based on the ABIC SW-2008 developed jointly by the Australian Institute of Architects and Master Builders Australia.

Under the Simple Works Contract, an “architect” administers the contract, inspects the works, issues progress payment certificates and issues a certificate of practical completion. The architect must act independently when exercising its function as an assessor or certifier. Under the Contract, the architect issued:

• on 3 September 2014, progress certificate 11 for $58,875 ($52,925 was for the return of security);

• on 3 November 2014, progress certificate 12 for $99,484.79; and

• on 1 December 2014, the certificate of practical completion, which occurred on 31 July 2014.

Clarke had previously paid all progress certificates in full, but rejected these two certificates because the work was not undertaken in a proper and workmanlike manner and defects remained un-remedied. Clarke did not dispute the certificate within 20 working days, as the Contract required.

Cirocco then sought summary judgment. Clarke resisted on the basis that the work was not of an acceptable standard and that she did not want to pay for unsubstantiated prime costs, provisional sums, unapproved variations, or long-unremedied defective work.

The decisionJudge Tilmouth first determined whether section 37 of the Building Work Contractors Act 1995 (SA) (BWC Act), which contains wide remedial powers for the correction and enforcement of deficient building work, displaced the common law remedies available under the Contract. His Honour found that section 37 did not displace the common law remedies as the BWC Act did not include the strong words needed to displace established common law rights.

His Honour confirmed the long-established principle that one must examine the terms of the contract to determine whether the building contractor is entitled to the progress payments without deduction if a dispute about defective work arises.

His Honour began by citing Lord Reid in Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd,128 who allowed a right of set-off as “no provision ousted the right of set-off in respect of unliquidated cross-claims”. Lord Reid held that there was no presumption that an architect’s certificate must be paid at once without waiting for set-off claims to be determined.

His Honour considered Algons Engineering Pty Ltd v Abigroup Contractors Pty Ltd,129 in which Rolfe J stated that where a right to set off is established, it will constitute a defence, but dismissed the defendant’s claim of an equitable right of set off because:

• there would be no injustice by requiring the parties to abide by the terms of their contract, which excluded the right to set off until a later time; and

• the defendant could later rely on that equitable right of set off in adjusting the parties’ financial rights and obligations.

Judge Tilmouth found that the current situation was no different from that in Algons Engineering. Therefore, Clarke’s equitable right of set off would fall for later determination. Cirocco was entitled to the certified payments, which would not be subject to any set off, regardless of whether Clarke had issued a notice of dispute.

This decision confirms the statement by Ian Bailey and Matthew Bell in their textbook Construction Law in Australia that “under the ABIC contracts, the principal is probably not entitled to set off against the certificate”,130 citing John Holland Construction and Engineering Pty Ltd v Majorca Projects Pty Ltd. 131

It is critical, of course, to pay proper attention to the contractual terms. Under the related but differently drafted ABIC MW-2008 (Major Works Contract), clauses M12–M13 allow the owner to set off for liquidated damages only.

Judge Tilmouth also had to consider whether the architect’s progress certificates complied with the contract. The important question is whether the valuation complies with the terms of the contract, not whether there was an error in discretionary judgment. In relation to progress certificate 11, his Honour found that there was a reasonable basis for defending the application for summary judgment as the certificate was invalid because the Contract required a separate certificate or tax invoice to be issued for the release of security.

Clarke argued that progress certificate 12 was invalid because the architect made an error in calculation. Judge Tilmouth found this does not make the certificate invalid, and is instead to be dealt with under the contract’s dispute mechanism.

http://www.austlii.edu.au/au/cases/sa/SADC/2015/107.html

128 [1974] AC 689129 (1997) 14 BCL 215130 (Lawbook Co,3rd ed, 2011) at 241131 (1996) 13 BCL 235. This case concerned

a JCC contract with similar payment terms



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THE END OF THE PENALTY DOCTRINE IN ENGLAND?

KEYWORDS: PENALTIES

INTERNATIONAL DEVELOPMENTSCORRS’ CONSTRUCTION LAW UPDATE

PAGE 51

The High Court’s decision in Andrews v Australia and New Zealand Banking Group Ltd (2012) 247 CLR 205 changed the approach to the law of penalties in Australia. In exciting news, there may be big changes for the law of penalties in England and Wales too.

On 21, 22, and 23 July 2015, the United Kingdom Supreme Court heard argument in two cases, Cavendish Square Holding BV v Makdessi and Beavis v ParkingEye Ltd, which squarely raise the future of the law of penalties in England.

Joanna Smith QC, the leading counsel for the appellants in the Cavendish appeal put her marker in the ground early on. Less than five minutes into her oral argument, she said:

“We are submitting that the logical conclusion to draw from our arguments is that the doctrine of penalties should be overruled; that the doctrine … should go.”

Video recording of the six sessions of oral argument, as well as the decisions below, is available on the United Kingdom Supreme Court’s website:

https://www.supremecourt.uk/cases/uksc-2013-0280.html






PAGE 52

ASPECT CONTRACTS (ASBESTOS) LIMITED V HIGGINS CONSTRUCTION PLC [2015] UKSC 38

KEYWORDS: LIMITATION PERIODS AND APPEAL FROM ADJUDICATIONS KEY TAKEAWAYThis is the first decision of the Supreme Court of the United Kingdom on a construction adjudication.

An unsuccessful party in an adjudication under the Housing Grants, Construction and Regeneration Act 1996 (UK) (the Act) can bring a claim to have the adjudication decision challenged within six years of the unsuccessful party making payment. This limitation period begins to run from the date the unsuccessful party makes a payment to the successful party pursuant to the adjudication.


PAGE 53

The factsIn March 2004, Higgins Construction Plc (Higgins) contracted with Aspect Contracts (Asbestos) Limited (Aspect) for Aspect to conduct an asbestos survey on blocks of maisonettes that Higgins was considering for development (the Contract). It was undisputed that the Contract was a “construction contract” under the Act. Aspect conducted the survey and provided a report on 27 April 2004.

The development went forward and in early 2005 Higgins alleged that it had found asbestos material not previously identified in the Aspect report. As a result, a dispute arose between Higgins and Aspect regarding the unidentified asbestos material.

Ultimately, Higgins referred the dispute to adjudication, claiming over £800,000 in damages, plus interest. Higgins could refer the dispute to adjudication because of sections 108 and 114 of the Act, which implied a term into the Contract providing for a process of adjudication.

Higgins succeeded during the adjudication and was awarded £490,627 plus interest.

Importantly, the implied adjudication clause provided that:

“the decision of the adjudicator is binding until the dispute is finally determined by legal proceedings, by arbitration ... or by agreement”.

The parties did not agree to consider the adjudication final and Higgins did not commence any action to recover the £331,855 balance of its claim or otherwise finally determine the dispute.

The limitation period for any claim Higgins had regarding the dispute had expired in early 2011. However, on 3 April 2012, Aspect commenced proceedings

for recovery of the amount paid to Higgins on the basis that no payment was due on the merits of the original dispute. Higgins counterclaimed for the £331,855 balance of its original claim.

Aspect’s claim

Aspect rested its claim either on the presence of an implied term or on the doctrine of restitution. The relevant term that Aspect submitted was implied was one entitling it to repayment:

“in the event that a dispute between the parties was referred to adjudication pursuant to the Scheme and one party paid money to the other in compliance with the adjudicator’s decision made pursuant to the scheme, that party remained entitled to have the decision finally determined by legal proceedings and, if or to the extent that the dispute as finally determined in its favour, to have the money repaid to it.” 132

At first instance, Akenhead J rejected Aspect’s claim that there was an implied term for repayment on the basis that it was not reasonable, equitable or necessary to give business efficacy to the contract, nor was there a policy reason to override this decision.133 His Honour also rejected Aspect’s claim that it had a separate cause of action in restitution.134 The Court of Appeal reversed Akenhead J’s decision, holding that the contract did contain the implied term as submitted by Aspect. Aspect did not pursue its restitutionary claims on appeal.135

Higgins was granted permission to appeal to the Supreme Court of the United Kingdom and submissions were invited on the basis of both restitution and the implied term.136

Findings The Supreme Court considered that the main issue was whether Aspect was able to “disturb” an adjudicator’s decision by bringing proceedings after the limitation period for Higgins under the original contract, in tort and contract, had lapsed.137 Lord Mance held that this hinged on whether Aspect could bring a claim to recover the sum it had provisionally paid under that adjudication determination.138 That is, Aspect must be able to establish that the sum originally paid was not due in the original dispute. His Lordship expressed Aspect’s position as being that there were rights and liabilities not identified in the adjudication decision that entitled it to payment, and that these arose by way of an implied term or restitution.139

However, the Court expressed the implied term slightly differently, as:

“a directly enforceable right to recover any overpayment to which the adjudicator’s decision can be shown to have led, once there has been a final determination of the dispute.” 140

What limitation period applied to Aspect’s claim?

As Aspect’s claims arose independently as a result of the adjudication payment and was only for repayment of it, the Court held that the relevant limitation period for such a claim started to run from the date of the payment to Higgins.141 The Court also held that this allowed Aspect to pursue determination of the parties’ original rights and liabilities for the purpose of determining whether any over-payment had occurred.142

The Court refused, however, Higgins’s counterclaim on the basis that it was time barred. Higgins’s claim did not relate to the adjudication payment and as such its limitation period ran from the original claim, not the date of payment.143

http://www.bailii.org/uk/cases/UKSC/2015/38.html

132 At [7]133 Aspect Contracts (Asbestos) Ltd v

Higgins Construction Plc [2013] EWHC 1322 at [45] (Akenhead J)

134 Aspect Contracts (Asbestos) Ltd v Higgins Construction Plc [2013] EWHC 1322 at [48] (Akenhead J)

135 At [9]136 At [10]

137 At [16]138 At [16]139 At [17]140 At [23]141 At [21]–[22] and [25]142 At [31]–[32]143 At [33]



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CLEAR LANGUAGE TRUMPS COMMON SENSE IN ARNOLD V BRITTON[2015] UKSC 36

KEYWORDS: CONTRACTUAL INTERPRETATIONKEY TAKEAWAYThis decision serves as a reminder that parties to a commercial agreement will be held to the clear language of their written bargain, rather than an interpretation that makes commercial common sense. Courts will not impute an alternative meaning if this would undermine the clear language of a contract. In Arnold v Britton, the parties were therefore confined to the terms of the agreement, even though the ramifications were unjust.


PAGE 55

The factsThe Appellants in Arnold v Britton were tenants of 25 holiday chalets in the Respondent landlord’s leisure park. A dispute arose concerning a service charge provision of the contract. Clause 3(2) required the Appellants:

“to pay ... a proportionate part of the expenses ... incurred ... and the yearly sum of Ninety Pounds and value added tax (if any) for the first three years of the term hereby granted increasing thereafter by Ten Pounds per Hundred for every subsequent three year period or part thereof.”

The Respondent contended that clause 3(2) had the effect of providing for a fixed annual charge of £90 for the first year of the term, with a yearly increase of 10% on a compound basis. The Appellants argued that this interpretation resulted in an absurdly high service charge.

A literal reading of the clause shows a tension, between requiring the payment of a “proportionate part” of expenses for maintenance renewal and the payment of a fixed sum, increased by fixed proportions. The Appellants contended that the service charge clause required the lessee to pay a “fair proportion” of the costs, “subject to” the maximum of £90 in the first year of the term, and increases every year by 10% on a compound basis. The Appellants argued that the clause was ambiguous and only a “proportionate part” should be paid, thus, in effect, adding the words “up to” before the words “the yearly sum of Ninety Pounds.”

In the alternative, the Appellants argued that the clause’s effect was limited by clause 4(8), which required the obligations in all leases to be “as similar as the circumstances permit.” The charge should, on this argument, not be higher than that of previous 70 leases entered into for similar holiday chalets, which had a slightly different and less controversial service charge provision.

The decisionThe Supreme Court dismissed the appeal by a majority of four to one, finding that the natural meaning of the two parts of the service clause provision was clear.

In delivering the lead speech, Lord Neuberger stated that the Court must identify the intentions between the parties by reference to what “a reasonable person having all the background knowledge ... would have understood them to be using the language in the contract” [at 15]. In doing so, his Lordship emphasised several factors relevant to the appeal.

• Reliance on commercial common sense should not be invoked to undermine the importance of the natural language of the provision. The court cannot embark on an exercise of searching for ambiguities in order to depart from the natural meaning. While commercial common sense is important, the court should be slow to reject the natural meaning of a provision, simply because it seems imprudent.

• Commercial common sense should not be invoked retrospectively. When interpreting a contractual provision, one can only take into account facts or circumstances which existed at the time the contract was made, and which were known or reasonably available to both parties.

• In some cases, an event will subsequently occur which was plainly not intended by the parties, judging from the language of the contract. In such cases, if the alternative intention is clear, the court will give effect to it.

• While reference was made to service charge clauses being construed “restrictively”, there is no indication they are subject to special rules.

The majority found that even though the Appellants would be paying £550,000 by 2072, it was not inconceivable that this was intended. The court should not invent a lack of clarity in order to depart from the natural meaning. Lord Neuberger emphasised that people entered into all sorts of contracts on the basis of reasons that no professional would consider prudent [at 37].

Lord Carnwath’s dissenting speech highlighted that the intention was for all leases to be on similar terms, based on clause 4(8). Further, his Lordship emphasised the commercial purpose of clause 3(2), being purely for the recovery of maintenance costs. Lord Carnwath found that there was no grammatical connection between the two parts of clause 3(2) and found the parts were mutually inconsistent [at 125]. He therefore concluded that the clause resulted in commercial nonsense and was ambiguous. Interestingly, the Respondent recognised the unsatisfactory situation in which the Appellants found themselves, and was prepared to agree to appropriate amendments to the leases.

PAGE 56

Australian contractual interpretationThe High Court articulated the Australian approach in Australian Broadcasting Commission v Australasian Performing Right Association Ltd.144 In this case, the Association claimed that a provision on licence payments had been miscalculated under the agreement, and did not reflect the parties’ intention. It also argued that the term “rate applicable” in the provision was ambiguous. Applying the provision as it stood led to extremely low licence payments.

The majority, Barwick CJ and Stephen J, held that the language of the provision calculating the licence fee was plain and unambiguous. While the amount calculated by the current provision did not produce commendable results, it was not the role of the court to attribute an intention which did not reflect the express words.

Justice Gibbs agreed on the law but not on the facts, finding a lack of grammatical exactitude in the provision. Justice Gibbs held that if the words used are unambiguous, the court must give effect to them, even if the result may appear capricious or unreasonable, despite the suspicion that the parties intended something different. If the language is, however, open to two constructions, the interpretation that avoids unreasonable or unjust consequences should be preferred even if another construction may be more obvious [at 109]. Further, Gibbs J held it is permissible to depart from the ordinary meaning of words of one provision as far as is necessary to avoid an inconsistency with the rest of the agreement.

Gibbs J’s judgment has since been approved and applied in a range of cases including Bytan Pty Ltd v BB Australia Pty Ltd145 and the recent case of Fitzroy River Corporation Ltd v Buru Energy Ltd.146

Arnold v Britton is a significant example of contractual interpretation that highlights the courts’ preference for strict linguistic interpretation. The decision thus reiterates the vital importance of certainty in drafting.


144 (1973) 129 CLR 99145 [2012] VSCA 223146 [2015] WASC 143



PAGE 57

PAGE 58

MT HØJGAARD A/S V E.ON CLIMATE AND RENEWABLES UK [2015] EWCA CIV 407

KEYWORDS: FITNESS FOR PURPOSEKEY TAKEAWAYThis case highlights the difficulties that can arise where different design obligations are spread across various arguably inconsistent contract documents.

The issue at the heart of this case is who should pay rectification costs where:

• the contractor has complied with an established, but incorrect, international design standard; and

• compliance with the standard means that the contractor cannot satisfy the 20-year fitness for purpose warranty.

The Court was asked to interpret the effect of this specific fitness for purpose warranty, in conjunction with more general warranty provisions. The Court of Appeal overturned the trial Judge’s decision, holding that the contractor was not under a “fitness for purpose” obligation and had met the more general requirements of reasonable skill and care by complying with the standard, regardless of the error.

Construction contracts commonly include express undertakings in regards to design or suitability. The implications which flow from these can generate disputes when the contract also contains obligations to perform work in accordance with certain standards. This case considers the effect of such a provision, which stipulated design in accordance with an established, international standard that was subsequently found to be flawed.


PAGE 59

The factsE.ON engaged MTH to design, fabricate and install the foundations for 60 wind turbine generators in Scotland. The Contract required MTH, amongst other things, to carry out the Works with due care and skill and to ensure they were “fit for purpose”. Importantly, the “fitness for purpose” requirement was to be determined in accordance with the Specification (also referred to as the Technical Requirements) using “Good Industry Practice”, which was defined as the skill to be reasonably expected of an experienced contractor, in a manner consistent with international standards. The Technical Requirements were found within a separate document, the Employer’s Requirements schedule. They obliged MTH to comply with the internationally recognised design standard, J101, and included a requirement that the foundation structures “ensure a lifetime of 20 years in every aspect without replacement”.

Each turbine foundation required a monopile and transition piece held in place by a grouted connection with or without shear keys. MTH’s subcontractor designed the grouted connection in accordance with international standard J101. Unfortunately, MTH and the subcontractor did not know this standard contained a fundamental error which resulted in the Works being defective. The transition piece began to slide from the monopile. The turbine foundations accordingly required immediate remedial work shortly after completion. The dispute centred on which party was liable for the €26.25 million costs.

MTH and E.ON’s claims

Both parties agreed that the contract obliged MHT to design the works with due care and diligence so that each item would be fit for purpose. The disagreement centred on whether the general obligations, when read with the specific requirements, imposed a strict obligation for the turbines to have a lifetime function of 20 years. MTH submitted that its obligation to exercise good practice and compliance with J101 was achieved, regardless of J101’s error and the consequential defects in the turbine foundations. E.ON argued MTH took full responsibility for the design and that its obligations to achieve “fitness for purpose” and a design life of 20 years were not qualified.

FindingsTrial — poor contractor!

The Technology and Construction Court (TCC) found that MTH was liable to E.ON for breach of contract. It held that the design of the foundations was not fit for purpose, as the Works failed to achieve a minimum lifespan of 20 years.147

Edwards-Stuart J focused on the terms of the contract to reason that although MTH was expressly obliged to design in accordance with the J101 standard, it also assumed responsibility for the overall design of the turbines. This in turn required that they would have an operational life of 20 years. Therefore, as a matter of drafting, his Honour found that these two obligations were clearly separate and could not have been intended to qualify each other.

His Honour referred to several Canadian decisions in which the Canadian Supreme Court rejected contractors’ claim for payment on the basis that the contractors had failed to comply with an express contractual obligation to construct works capable of performing the function intended, even if the works carried out were in accordance with the general specifications.148

Edwards-Stuart J interpreted the J101 standard as an “owner’s specification” to find that an express warranty for “fitness of purpose” by the contractor can trump the obligation to comply with a specification, even if it contains an error.149 By finding that the 20-year lifespan was to be read with the other terms of the contract, E.ON was entitled to rely upon that warranty, and MTH was responsible for costs of rectification. MTH appealed the decision.

Court of Appeal — a win for the contractor!

The Court of Appeal reversed the decision of the TCC to find that the “fitness for purpose” clause and 20-year design life, in the wider context of the contract, were not to be construed strictly.

The Court started by considering the Employer’s Requirements schedule which stated that the design foundations “shall ensure a lifetime of 20 years in every respect without planned replacement”. The Court found that this alone may constitute a warranty that the foundations would function for 20 years. However, in this Contract, all of the other provisions in the same schedule referred to a “design life” of 20 years, which did not guarantee that the foundations would be operationally functional for 20 years.

147 MT Højgaard a/s v E.ON Climate and Renewables UK Robin Rigg East Ltd [2014] EWHC 1088 (TCC)

148 The Steel Company of Canada Ltd V Willand Management Ltd [1966] SCR 746

149 MT Højgaard a/s v E.ON Climate and Renewables UK Robin Rigg East Ltd [2014] EWHC 1088 (TCC) at 74 (Edwards-Stuart J)

PAGE 60

The Court of Appeal then focused on the hierarchy of various contractual documents, finding the contractual conditions took overall priority, and the schedule came fourth in precedence. The leading judgment of Jackson LJ noted that the Technical Requirements could, by reference to the other relevant provisions in the contract, require a 20 year functioning lifespan. However, the Technical Requirements were inconsistent with contractual conditions which sit above them in the hierarchy. The Court was “not to be led astray by that inconsistency”. 150

Jackson LJ also cited with approval a judgment of Lord Clarke of the Supreme Court, who observed “if there are two possible interpretations of a provision, the court is entitled to prefer the construction which is consistent with business common sense” 151

Hence, the problem for E.ON was that the Court found that a reasonable person in the position of the parties would know that the normal standard required that the design of offshore wind farms comply with J101. That compliance was expected, but not guaranteed, to achieve a life of 20 years. The inconsistency between the obligations to achieve a 20-year operational life and the other contractual provisions were to be read strictly.

Comments

The UK Court of Appeal decision shows considerable sympathy for the contractor. The error in J101 was clearly significant in the Court’s interpretation of the contract.

This case also demonstrates the difficulties that arise where absolute obligations co-exist alongside obligations qualified to the standard of reasonable skill and care. The judgment is the latest in a string of cases considering this interplay (see also MW High Tech Projects v Haase Environmental Consulting).152 While this most recent judgment stressed that each case must be decided on the wording of the contract in question, parties must be cautious when drafting provisions imposing potentially inconsistent strict and general obligations.

Court of Appeal:

http://www.bailii.org/ew/cases/EWCA/Civ/2015/407.html

Technology and Construction Court (Trial):

http://www.bailii.org/ew/cases/EWHC/TCC/2014/1088.html

150 MT Højgaard A/S V E.ON Climate and Renewables UK [2015] EWCA Civ 407 at 104 (Jackson LJ)

151 Rainy Sky SA v Kookmin Bank [2011] UKSC 50; [2011] 1 WLR 2900. After the present case was decided, the Supreme Court of the United Kingdom revisited the extent to which a court may prefer a “commercial common sense” and has, by contrast, emphasised the importance of linguistic meaning. See the note on Arnold and Britton [2015] UKSC 36 above

152 MW High Tech Projects v Haase Environmental Consulting [2015] EWHC 152 (TCC)





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PAGE 62

BATH AND NORTH EAST SOMERSET DISTRICT COUNCIL V MOWLEM PLC(2004) [2015] 1 WLR 785 AB V CD [2015] 1 WLR 771ASHTON MANUFACTURING PTY LTD V EXPRESS SIGN LABS PTY LTD[2015] FCA 975

KEYWORDS: HOW CONTRACTUAL LIMITATIONS AND EXCLUSIONS OF DAMAGES AFFECT INTERLOCUTORY INJUNCTIONSKEY TAKEAWAYThese three decisions153 all deal with an issue that arises when seeking interlocutory injunctions: will damages be an adequate remedy? While this is not a separate factor for Australian courts to consider (see Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57, 81–84 [65]–[72] (Gummow and Hayne JJ; Gleeson CJ and Crennan J agreeing at 68 [19]), it is used as part of determining the balance of convenience.

The upshot of the English cases is (per Underhill LJ in AB v CD [2015] 1 WLR 771, 783 [28]): “The primary commercial expectation must be that the parties will perform their obligations. The expectations created (indeed given contractual force) by an exclusion or limitation clause are expectations about what damages will be recoverable in the event of breach; but that is not the same thing.” This is consistent with the trend of High Court of Australia decisions, including Zhu v Treasurer (New South Wales) (2004) 218 CLR 530 and Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272, which reject the notion of economic breach of contract.


PAGE 63

The decisionsBath and North East Somerset District Council v Mowlem plc [2015] 1 WLR 785 is a construction case. It has been reported (as a note) over 10 years after the date of the decision (20 February 2004). The primary judge had granted the Council an injunction restraining Mowlem plc (the head contractor) from denying subcontractors access to the relevant site for testing, purportedly in accordance with the contract. It was accepted there was a serious question to be tried about whether the contract authorised this testing (at 788–789 [7]). Mance LJ (with whom Brooke LJ and Park J agreed) noted that “the decisive issue is … whether … an injunction should be granted as a matter of convenience” (at 789 [8]).

The Council contended that damages would not be an adequate remedy because, if the injunction was not granted, there would be “an indefinite stalemate” between the Council and the head contractor, causing delay, the loss from which would exceed the amount of liquidated damages agreed in the contract (at [9]).

This argument found favour in the Court of Appeal. Mance LJ said (at 793–794 [15]–[16], emphasis in original):

“The council accepts—indeed it asserts—that it would be bound in any claim for damages by its contractual agreement regarding liquidated and ascertained damages. The council is not seeking to avoid that agreement, but to rely on it. It is the reason why the council seeks an injunction, and why the council submits that interlocutory injunctive relief is appropriate. Mowlem is not entitled to breach its contract. The agreement on liquidated and ascertained damages is not an agreed price to permit Mowlem to do so, and it does not preclude the court granting any other relief that may be appropriate. In my view, the council’s case is right in principle.

I would only add that the fact that difficulty of quantification is an acknowledged basis for treating damages as an inadequate remedy means that the court recognises, when deciding whether to grant an interlocutory injunction, that it can be unjust to leave a party to a claim to damages which the court would if necessary have to quantify. The court may in other words be sufficiently lacking in confidence about its own ability fairly and adequately to quantify damages after the event to prefer to grant an injunction. The court ought not to discourage parties from agreeing liquidated and ascertained damages. But it ought to recognise that the assessment of

the totality of any likely loss before the event is an even more rough and ready and difficult exercise than after the event; and that such an assessment may prove in the event not to give rise to adequate compensation, so that to leave a party to a claim in damages may mean that it will suffer loss which the grant of an interlocutory injunction would completely avoid.”

In terms that may apply to many public infrastructure projects, Mance LJ also held (at 795 [21]):

“Independently of this conclusion, I also consider that it is open to the council on the facts of this case to rely on the likelihood that delay would cause further loss which would be felt by the general public, through the negative effect of delay on economic regeneration (loss of extra visitors, loss of additional trade for local hotels and restaurants, loss of additional car parking revenue and general loss of “spend” in the local economy) and through general loss of public confidence in the council (with consequential negative implications for further council projects). These items represent the type of unquantifiable, and in substantial measure, irrecoverable damage to public interests that may well be suffered if a Millennium project undertaken by a public authority moves (as Mr Cavanagh puts it) from the status of ‘Eden’ to ‘Dome’.”


153 The English decisions were recently noted by Young AJA in (2015) 89 Australian Law Journal 379 at 379–380



PAGE 64

The decision in Bath v Mowlem was applied in AB v CD [2015] 1 WLR 771. (The parties’ names were anonymised because the dispute was under an agreement with an arbitration clause and arbitration proceedings were commenced: at [2].)

In that case, the agreement between the parties excluded consequential loss, including loss of profits (at 774 [5], 775 [10]). The applicant sought an interlocutory injunction requiring the respondent to continue to perform its obligations under the agreement (at 773 [2]), the breach of which would have caused the applicant loss of profit which would not be recoverable because of the exclusion clause.

Underhill LJ (with whom Ryder and Laws LJJ agreed) considered that Bath v Mowlem was both binding and right in principle (at 782 [24]). In his short concurring reasons, Laws LJ held (at 785 [33]):

“Where a party to a contract stipulates that if he breaches his obligations his liability will be limited or the damages he must pay will be capped, that is a circumstance which in justice tends to favour the grant of an injunction to prohibit the breach in the first place.”

Underhill LJ also noted that the court must still undertake a balancing exercise despite an exclusion or limitation clause (at 784 [30]):

“[Counsel for the respondent] argued that it could not be right that in every case where the victim of a threatened breach of contract sought an interim injunction he could rely on the existence of an exclusion or limitation clause to claim that damages would not be an adequate remedy. I think that that overstates the consequences of the case which I have accepted. A claimant will still have to show that if the threatened breach occurs there is (at least) a substantial risk that he will suffer loss that would otherwise be recoverable but for which he will (or at least may) be prevented from recovering in full, or at all, by the provision in question. If he does, then certainly it will not be sufficient for the defendant to say that the restriction in question was agreed; and to that extent the claimant will indeed have established that his remedy in damages may not be adequate. But that only opens the door to the exercise of the court’s discretion; and in the exercise of that discretion the fact that the restriction in question was agreed may, depending on the circumstances of the case, be a relevant consideration—as may the scale of any shortfall and the degree of risk of it occurring.”


Ashton Manufacturing Pty Ltd v Express Sign Labs Pty Ltd [2015] FCA 975 was a dispute between two parties “both involved in enterprises concerning the wrapping of coffins” (at [1]). The issue was whether certain representations made by one of the parties, including whether they had “AFL approval for Club themed wraps” were misleading.

Edelman J ultimately did not grant an interlocutory injunction because the evidence before him did not establish a prima facie case. But he noted that the potential difficulty of assessing damages would have been a relevant factor, though it seems the other way (at [12]–[15]):

“In [the plaintiff’s solicitor’s] affidavit he says that that [the plaintiff] is likely to suffer ‘irreparable damage to its commercial operations and goodwill’. …

I accept that in relation to the two representations in issue loss would be difficult to assess (in particular loss of future custom based upon these representations). In a case like this, like cases involving restraint of trade, there can be some inadequacy in damages because of (i) the difficulties in establishing causation between any loss of business with customers and any actions of a respondent, and (ii) the difficulty of the calculation of the quantum of any damage arising from loss of business …



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These concerns about assessing damages should not be overstated. There are many cases where proof of quantum of damages can be difficult, and cases involving claims for loss of a chance of obtaining, or retaining, customers often involve these assessments.

Overall, even if I had been satisfied that there was a prima facie case, the weakness of any prima facie case would mean that the difficulty of assessment of possible loss would not be sufficient to restrain Express Sign Labs from making the two representations it seeks to make as part of its continuing business.”




PAGE 66

J W Carter and Wayne Courtney, ‘Implied Terms in Contracts: Australian Law’ (2015) 43 Australian Business Law Review 246Keywords: implied terms in contracts

Key takeaways

This article by two of the leading contract law academics in Australia summarises the current Australian and English approaches to the implication of terms in contracts, and takes the view that the Australian approach is preferable.

David Bailey, ‘International Commercial Arbitration — A Critique’ (2015) 43 Australian Business Law Review 344Keywords: practical issues and experiences with arbitration

Key takeaways

This article, by one of the counsel for Castel Electronics Pty Ltd (the party with the benefit of the arbitral awards that were challenged in numerous ways by TCL Air Conditioner (Zhongshan) Co Ltd), describes what is said to be an unsatisfactory experience with international commercial arbitration. It provides a different, personal perspective of what he describes as “an unfortunate example of the worst features of international commercial arbitration”.

Javad Asghari, Kristian Cywicki, and Wayne Jocic, ‘Enforcement of Adjudication Determinations’ (2015) 31 Building and Construction Law Journal 208Keywords: enforcement of security of payment determinations

Key takeaways

This article, two of the three co-authors of which are associated with Corrs, contains a good outline of the current state of the law about enforcing adjudicator’s determinations. Though it is mostly focussed on the West Coast Model legislation, the general comments about the extent to which an adjudicator’s determination supports a statutory demand are also likely to apply in East Coast Model jurisdictions.

Robert Boadle, ‘Conscience and Unjust Enrichment’ (2015) 89 Australian Law Journal 641Keywords: unjust enrichment and change of position

Key takeaways

Quantum meruit and unjust enrichment claims not infrequently arise in the construction context. This article examines some of the principle and theoretical underpinnings of unjust enrichment claims, and focuses on the operation of the change of position defence.

Albert Monichino QC, ‘Termination for Convenience: Good Faith and Other Possible Restrictions’ (2015) 31 Building and Construction Law Journal 68Keywords: termination for convenience

Key takeaways

This article covers some of the potential restrictions on contractual provisions entitling a party to terminate a contract for its convenience, including an implied duty of good faith with examination of relevant cases. There is also a lengthy section about the penalty doctrine.

Justice Clyde Croft, ‘Providing Clarity to Judicial Support of Arbitration’ (2015) 89 Australian Law Journal 143Keywords: arbitration and the courts

Key takeaways

In this short article, Croft J describes and extols the benefit of the Supreme Court of Victoria’s Arbitration Rules and Commercial Arbitration Practice Note.

JOURNAL ARTICLES OF INTEREST

PAGE 67

Email negotiations - Beware, you might already be bound!

Liquidated damages post Andrews - A double-edged sword

The WTO Agreement on Government Procurement: A world of opportunity or a threat to local business?

Regional China rises: Australian businesses should venture beyond Shanghai and Shenzhen to ride the Project of the Century

Don’t believe the Andrews hype - Service credits are unlikely to be penalties

Better together: Can multi-asset PPPs help governments deliver priority infrastructure projects?

LINKS TO OUR RECENT THINKING

CORRS THINKING PIECES

http://www.corrs.com.au/thinking/insights/email-negotiations-beware-you-might-already-be-bound/




http://www.corrs.com.au/thinking/insights/what-you-should-know-about-reasonable-endeavours-after-verve/

http://www.corrs.com.au/thinking/insights/liquidated-damages-post-andrews-a-double-edged-sword/





http://www.corrs.com.au/thinking/insights/the-wto-agreement-on-government-procurement-a-world-of-opportunity-or-a-threat-to-local-business/








http://www.corrs.com.au/thinking/insights/grand-theft-backhoe-ppsa-contractor-insolvency-and-priority-over-construction-equipment-and-materials/

http://www.corrs.com.au/thinking/insights/regional-china-rises-australian-businesses-should-venture-beyond-shanghai-and-shenzhen-to-ride-the-project-of-the-century/








http://www.corrs.com.au/thinking/insights/from-down-under-the-inverted-bid-model-new-procurement-bidding-models-for-infrastructure-projects/

http://www.corrs.com.au/thinking/insights/dont-believe-the-andrews-hype-service-credits-are-unlikely-to-be-penalties/





http://www.corrs.com.au/thinking/insights/how-to-avoid-disputes-on-large-construction-projects/

http://www.corrs.com.au/thinking/insights/better-together-can-multi-asset-ppps-help-governments-deliver-priority-infrastructure-projects/







PAGE 68

ROD DANNPARTNERTel +61 7 3228 9434 [email protected] Construction/Infrastructure Lawyer of the Year Best Lawyers 2013-2016Best Lawyer – Alternative Dispute Resolution, Litigation and Regulatory Best Lawyers Peer Review, 2013-2016

PETER SCHENKPARTNERTel +61 7 3228 9869 [email protected] Construction/Infrastructure Lawyer of the Year Best Lawyers 2015-2016Leading Lawyer – Construction Chambers Global Guide, 2009-2016Best Lawyer – Mining Best Lawyers Peer Review, 2015Listed Expert Euromoney PLC’s Guide to World’s Leading Construction Lawyers, 2013

ANDREW MCCORMACKPARTNERTel +61 7 3228 9860 [email protected] Lawyer – Construction/Infrastructure Best Lawyers Peer Review, 2015-2016

FRANCES WILLIAMSPARTNERTel +61 7 3228 9332 [email protected] Lawyer – Construction/Infrastructure Best Lawyers Peer Review, 2012-2016Best Lawyer – Litigation Best Lawyers Peer Review, 2012 & 2016Best Lawyer – Alternative Dispute Resolution Best Lawyers Peer Review, 2016

MATTHEW MUIRPARTNERTel +61 7 3228 9816 [email protected][Matt] provided valuable support, strategic advice, insight and good humour in a troublesome case.Steps ahead of the opposition, commercially, legally and tactically—proves a winning formula.

CONTACTS BRISBANE

PAGE 69

JOSEPH BARBAROPARTNERTel +61 3 9672 3052 [email protected] Lawyer – Water Best Lawyers Peer Review, 2014-2016Builds a strong relationship with the client and delivers SA Water

ANDREW STEPHENSONPARTNERTel +61 3 9672 3358 [email protected] Best Lawyer – International Arbitration Best Lawyers Peer Review, 2015-2016Best Lawyer - Construction/Infrastructure & Litigation Best Lawyers Peer Review, 2008-2016Leading Lawyer - Construction Chambers Asia Pacific Guide, 2011-2015

BEN DAVIDSONPARTNERTel +61 3 9672 3500 [email protected] Lawyer – Construction/Infrastructure Chambers Global Guide, 2012-2016Best Lawyers – Construction and Infrastructure Best Lawyers Peer Review, 2013-2016

JOHN WALTERPARTNERTel +61 3 9672 3501 [email protected] Project Finance & Development Lawyer of the Year Best Lawyers Peer Review, 2011Best Lawyer – Construction Infrastructure, Project Finance & Development and Water Best Lawyers Peer Review, 2009–2016Leading Lawyer – Projects & Government Chambers Global Guide, 2010-2016

DAVID WARRENPARTNERTel +61 3 9672 3504 [email protected] Lawyer – Construction & Projects Chambers Global Guide, 2009–2016Best Lawyer – Construction/ Infrastructure and Project Finance & Development Best Lawyers Peer Review, 2010–2016

CONTACTS MELBOURNE

PAGE 70

MICHAEL EARWAKERPARTNERTel +61 2 9210 6309 [email protected] Best Lawyer - Construction/Infrastructure & Litigation Best Lawyers Peer Review, 2008-2016

SIMON ASHWORTHPARTNERTel +61 2 9210 6538 [email protected] Lawyer – Project Finance and Development Best Lawyers Peer Review, 2015–2016

ROBERT REGANPARTNERTel +61 2 9210 6620 [email protected] Lawyer – Construction Infrastructure Best Lawyers Peer Review, 2009–2016Leading Building & Construction Lawyer Australasian Legal Business Guide to Building & Construction Law

SHAUN BAILEYPARTNERTel +61 2 9210 6948 [email protected] high calibre, specialist practitioner.

ANDREW CHEWPARTNERTel +61 2 9210 6607 [email protected] Expert – Construction International Who’s Who Legal of Construction Lawyers, 2012 & 2015Leading Lawyer – Construction Chambers Global Guide, 2012 & 2015Best Lawyer – Construction/Infrastructure Best Lawyers Peer Review, 2014–2016

CONTACTS SYDNEY

PAGE 71

SPENCER FLAYPARTNERTel +61 8 9460 1738 [email protected] Lawyer - Construction/Infrastructure Best Lawyers Peer Review, 2013-2016Leading Lawyer - Construction (WA) Doyle’s Guide to the Australian Legal Profession, 2012-2014

SARAH LEONARDPARTNERTel +61 8 9460 1693 [email protected] Lawyer - Construction/Infrastructure Best Lawyers Peer Review, 2012 - 2016

CHRIS RYDERPARTNERTel +61 8 9460 [email protected] Construction Infrastructure Lawyer of the Year Best Lawyers Peer Review, 2013Leading Lawyer - Construction Chambers Global Guide, 2008-2016Best Lawyer - Construction Infrastructure Best Lawyers Peer Review, 2009-2016

CONTACTS PERTH

WWW.CORRS.COM.AU

SYDNEY8 Chifley8-12 Chifley SquareSydney NSW 2000

Tel +61 2 9210 6500Fax +61 2 9210 6611

MELBOURNE567 Collins567 Collins StreetMelbourne VIC 3000

Tel +61 3 9672 3000Fax +61 3 9672 3010

BRISBANEONE ONE ONE Eagle Street 111 Eagle StreetBrisbane QLD 4000

Tel +61 7 3228 9333Fax +61 7 3228 9444

PERTHWoodside Plaza240 St George’s TerracePerth WA 6000

Tel +61 8 9460 1666Fax +61 8 9460 1667

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