Welcome to The Critical Path, HWL Ebsworth Lawyer’s Melbourne Construction & Infrastructure newsletter featuring all the latest developments in construction law, to help you stay on the critical path!
As always, we hope you enjoy this issue of The Critical Path and that it finds some use in your endeavours.
Changes to critical infrastructure laws may mean more onerous reporting obligations to your sector
The Security of Critical Infrastructure Act 2018 (Cth) (the SCIA Act) establishes a framework for risk management relating to ‘critical infrastructure assets’ (CIA).
In response to increased cyber security threats, the Security Legislation Amendment (Critical Infrastructure) Bill 2020 (Cth) (the Draft Bill) has been introduced and is currently before Parliament. If passed, the Draft Bill will make some significant amendments to the SCIA Act, including expanding the SCIA Act’s coverage to a further 11 sectors (including communications, defence, energy and transport), introducing more onerous reporting obligations on entities and increasing powers of the Federal Government to ‘step in’ when a cyber-security incident has occurred or is imminent.
Failing to comply with the new obligations may attract civil penalties of between $11,100 and $44,400 per breach.
HWL Ebsworth Lawyers has expertise in advising on matters regarding critical infrastructure and defence. Please contact Marko Misko or Toby Mittelman of our Construction and Infrastructure team to discuss any aspect of the above.
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Recovery from builders of domestic building progress payments over the statutory limit
In Stephens v Cameron [2021] VSCA 208, the Victorian Supreme Court of Appeal considered the implications of a builder retaining more than the statutory limit on progress payments set out in section 40(2) of the Domestic Building Contract Act 1995 (Vic). Despite section 40(5) stating that a Court may order a builder refund to the owner some or all of the amount retained, the Court held that breach of section 40(2) does not create a standalone right of recovery for owners.
However, the Court found that the unlawful retention of moneys can form the basis of an owner’s claim in restitution for unjust enrichment of a builder who has been paid more than the statutory limit. The success of such an action will depend on whether builders can raise any relevant defences, which was not considered by the Court in this case.
Section 40 may also prevent the builder from raising a claim for quantum meruit (payment of a reasonable value for work performed) or a defence that the owner received fair consideration for the payments made.
HWL Ebsworth Lawyers has expertise in building and construction disputes. Please contact Paul Graham or Alan Chiang of our Construction and Infrastructure team with any enquiries.
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Does the disclosure of documents to superintendents, independent certifiers or agents constitute the waiver of privilege?
Often during a construction project, a third party (Recipient), such as a superintendent, is engaged by one party (Client) to carry out both independent functions, such as certification, and also functions as an agent of the Client. In such circumstances, the disclosure of confidential information (Information) by the Client to the Recipient will not waive the Client’s legal professional privilege over the Information provided the Recipient was acting in its capacity as agent of the Client (and not independent certifier) at the time the Information was shared.
These circumstances were recently considered in the Supreme Court of Western Australia in Built Environs WA Pty Ltd v Perth Airport Pty Ltd [No 5]1 where the Court held that the recipient of documents from the Client was not acting in its independent capacity but rather as the Client’s agent, and as such, remained subject to the confidentiality conditions of its engagement with the Client and subject to legal professional privilege.
HWL Ebsworth Lawyers has expertise in acting for principals and/or contractors when dealing with third party agents or contract administrators as well as advising on interlocutory litigious issues such as discovery and privilege. Please contact Leighton Moon of our Construction and Infrastructure team with any enquiries.
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Principals beware of waiving time bars in the contract
This case serves as a reminder about the care principals need to take when administering contracts to make sure they do not inadvertently waive time bars or other protections in the contract. A contractor may rely on the principal waiving notice requirements for old claims, to recover new claims where those notice requirements were not followed. This can arise even if the principal had notified the contractor that it again requires notices for all new claims despite the previous waiver.
These circumstances were recently considered in the NSW District Court in Valmont Interiors Pty Ltd v Giorgio Armani Australia Pty Ltd (No 2)2, where the Court held that the contractor was entitled to be paid regardless of not having complied with the notice requirements under the contract.
If the principal, by its conduct, represents to the contractor that the principal will not enforce the notice requirements and/or time bars in the contract, then the principal may have waived its rights to rely on such provisions in the contract and therefore may be estopped from relying on them in the future. This would then allow a contractor to “bank up” claims and make claims at the end of the project for events that happened many months prior.
To avoid this risk, the principal must make it clear on unequivocal terms to the contractor that they must comply with the relevant notice requirements and/or time bars in the contract. HWL Ebsworth Lawyers has expertise in acting for principals and/or contractors when dealing with waiver and estoppels issues. Please contact Leighton Moon of our Construction and Infrastructure team with any enquiries.
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1 [2021] WASC 237
2 [2021] NSWCA 93
