The Critical Path – C&I Newsletter, April 2026
Market Insights
DEEP DIVE: DISPUTE RESOLUTION UNDER THE REVISED AS 4000:2025 GENERAL CONDITIONS OF CONTRACT
In this article, we take a deep dive into one of the most substantive changes to the new AS 4000:2025 General Conditions of Contract – the customisable dispute resolution regime. We also provide a practical ‘how to’ guide for completing the new Items in Annexure Part A depending on which dispute resolution option(s) is selected.
This article was written by Kate Morrow, Partner and Caitlin Newland, Associate.
WHEN IS IT (UN)REASONABLE TO DEMOLISH AND REBUILD DEFECTIVE WORKS?
Generally, a wronged party is entitled to be paid by the wrongdoer the costs required to rectify building work that does not conform with the contract providing it can prove that the rectification method is reasonable. The question of whether a rectification method is reasonable has caused great debate. The eight‑factor test set out in Stone v Chappel has become the key framework, which has since been applied in two 2025 cases,85 Princess and Stanley. In both cases, the courts declined to award full rectification costs because the proposed works were disproportionate or unsupported by evidence and instead awarded nominal damages. These decisions highlight that rectification costs are no longer a given.
This article was written by Leighton Moon, Partner, Tara Nelson, Special Counsel, and Ariandne Paras, Associate.
COMBUSTIBLE CLADDING, CONTRACTUAL RISK AND COMPLIANCE: WHY THE STAR RECOVERED ONLY $285K FROM A $4M CLAIM
A recent New South Wales Supreme Court decision, The Star Entertainment Sydney Properties Pty Ltd v Buildcorp Group Pty Ltd, highlights how contractual drafting can shape the allocation of risk and responsibility in cladding disputes, including those involving alleged Building Code of Australia breaches and fitness‑for‑purpose obligations. Although The Star sought almost $4 million, it recovered only $285,662, with the Court adopting a project‑by‑project analysis that significantly limited the builder’s exposure. The judgment highlights that liability will turn on the allocation of risk and not assumptions about design obligations, issues concerning fitness for purpose or industry practice.
This article was written by Jane Wild, Partner, Jacques Lourens, Special Counsel, and Tom Dickinson, Solicitor.
PASS THROUGH CLAIMS OR DISPUTES AND ‘PAY WHEN PAID’ AND CONTRACTING OUT UNDER THE SECURITY OF PAYMENT LEGISLATION
A recent Victorian Supreme Court decision, Built Pty Ltd v Victorian Correctional Partnership Pty Ltd, has confirmed the operation of a ‘pass through’ provision in a subcontract for works at the Metropolitan Remand Centre, after Built Pty Ltd challenged its effect under the Security of Payment Act. The Court held that Built’s extension of time, variation and delay‑related claims were “Linked Claims,” meaning associated disputes had to be resolved upstream under the head contract before any downstream entitlement arose. Built’s argument that the clause was an unlawful ‘pay when paid’ provision failed, with the Court finding the challenge hypothetical because no payment claim was on foot. The judgment is an important reminder that pass‑through mechanisms must be carefully drafted to balance commercial risk allocation without offending Security of Payment protections.
This article was written by Theo Kalyvas, Partner, and Jashrin Whitehead, Associate.
CONCERNED ABOUT DAMAGE TO YOUR FINANCIAL REPUTATION FOLLOWING A PRINCIPAL’S CALL ON SECURITY? CONSIDER CASHING IT IN.
A recent Supreme Court of Victoria decision has significant implications for security provided under construction contracts. In L.U. Simon Builders Pty Ltd v Cardigan Commercial Pty Ltd (No 2), the Court held that the wording of the bank guarantee provided under an AS 4902 contract was such that a term could be implied allowing a contractor to discharge the guarantee by paying its cash equivalent directly to the principal. The ruling offers contractors a valuable opportunity to avoid the severe financial and reputational consequences of a call on security. Principals who want to rely on the leverage associated with a call on security will need to consider amending their contracts and bank guarantee forms to prevent this outcome.
This article was written by Brian Rom, Partner, Fin Neaves, Senior Associate and Angus Sholl, Solicitor.
VICTORIA’S DEVELOPER BOND SCHEME: WHAT DEVELOPERS, FINANCIERS AND PURCHASERS NEED TO KNOW
Victorian developers of certain residential apartment projects will soon be subject to a new bond scheme requiring them to lodge a 2% bond before an occupancy permit can be obtained. This article provides a clear snapshot of how the scheme will operate in practice, outlining its key features, processes and timing requirements, and offering guidance on the practical implications for developers, purchasers and financiers.
This article was written by Alan Chiang, Partner, and Eleanor Ng, Associate.
HOW A “COLLABORATIVE” CONTRACT BECAME A $1 BILLION COST DISPUTE
Using the Queensland Court of Appeal case of Santos v Fluor as the backdrop, this article highlights the perils of failing to properly test and align contractual mechanisms with the commercial deal and is an example of how collaborative incentivised target cost contracts can unravel after payment on account has been made and completion has occurred. Well advised contract planning and drafting is key to ensure that the contract says what it should, cost claims are defensible and payments are not prone to clawback after completion.
This article was written by Angela Armstrong, Partner, Evanna Kamal, Senior Associate and Mitchell Smith, Solicitor.
Subscribe for publications + events
HWLE regularly publishes articles and newsletters to keep our clients up to date on the latest legal developments and what this means for your business. To receive these updates via email, please complete the subscription form and indicate which areas of law you would like to receive information on.
* indicates required fields