The Critical Path – Melbourne C&I Newsletter July 2023 

19 July 2023

Welcome to The Critical Path, HWL Ebsworth Lawyers’ Melbourne Construction and Infrastructure newsletter featuring 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.

Damages for ‘loss of profit’ or ‘expectation’ damages

This article was written by Paul Graham, Partner, Chris Kipouridis, Associate, and Sophie Pinkus, Solicitor. 

The case of 123 259 932 Pty Ltd v Cessnock City Council [2023] NSWCA 21 (123 v Cessnock) serves as a timely reminder that expectation damages can be awarded for non-performance by a Principal. 123 v Cessnock also deals with the important presumptions of McRae v Commonwealth Disposals Commission (1951) 84 CLR 377 and Commonwealth v Amann Aviation.

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Have you got the correct contracting party name on your payment claim?

This article was written by Paul Graham, Partner, Tara Nelson, Senior Associate and Nick Jarrett, Solicitor.

In the recent County Court decision of APS Industrial Services Pty Ltd v Adcon Contracting Pty Ltd [2023] VCC 400, the Court dismissed the applicant’s application for judgment on the basis that the payment claims did not correctly identify the contracting party to the construction contract.

As a result, the respondent was not liable to make payment under the construction contract and/or the Building and Construction Industry Security of Payment Act 2002 (Vic) (SOPA).

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Separable or staged – there is a difference!

This article was written by Colin Harris, Partner and Ramya Putta, Solicitor. 

Parkview Constructions Pty Ltd v Futuroscop Enterprises Pty Ltd [2023] NSWSC 178 concerns an AS4902-2000 based design and construct contract where the date for practical completion was disputed in respect of a hotel and carpark.

This case serves as an important reminder that:

  • unless a contract explicitly separates the work under the contract into separable portions, a superintendent will lack authority to grant a certificate of practical completion for part of the works; and
  • there is no ability to issue a ‘conditional’ certificate of practical completion absent an express contractual power.

​Separable or staged – there is a difference!

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Is your cost escalation clause enforceable?

This article was written by Colin Harris, Partner and Kelly Brook, Associate. 

In Perera v Bold Properties (QLD) Pty Ltd [2023] QDC 99, the District Court of Queensland found a special condition of a domestic building contract that entitled a builder to increase the contract price was void for uncertainty.

This decision serves as a timely reminder to ensure that escalation provisions operate with certainty, applying a clear formula for calculating any price adjustment, while ensuring such provisions comply with other legislative protections afforded to domestic building contracts. Additionally, the decision illustrates the necessity to consider the implications of unfair contract terms in developing such mechanisms.

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Brains vs Bricks – The Importance of Intellectual Property in Construction

This article was written by Luke Dale, Partner and Alexia Daminato, Law Graduate.

Advancements in technology have had a profound impact on almost every industry in Australia, with the construction sector being no exception. Traders rely heavily upon innovation and originality to distinguish themselves in a highly competitive market. Intellectual property (IP) has become one of the industry’s critical assets in protecting a trader’s competitive edge and attracting investment. But how specifically do Australia’s IP regimes interact with the building and construction industry? Let’s take a closer look.

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Rights of Homeowners of a Builder goes into liquidation. What is the next move?

This article was written by Leighton Moon, Partner, Tara Nelson, Senior Associate and Jashrin Whitehead, Solicitor.

Inflation, labour shortages and supply chain delays are some of the key issues significantly affecting builders, leading to an increase in companies entering into liquidation. Consequently, this has led to countless homeowners experiencing significant grief in circumstances where their builder has gone insolvent.

Given the above, it is important homeowners know what to do if their builder becomes insolvent, disappears, or dies.

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Design and building practitioners act 2020 (NSW): how to improve your expert evidence

This article was written by Leighton Moon, Partner, Patricia Oman, Senior Associate, and Sophie Pinkus, Solicitor.

In one of the few decisions to consider the DBP Act, the NSW Supreme Court in Oxford (NSW) Pty Ltd v KR Properties Global Pty Ltd trading as AK Properties Group ABN 62 971 068 965 (No 2) [2023] NSWSC 680 (No 2) [2023] NSWSC 680 (21 June 2023) and Oxford (NSW) Pty Ltd v KR Properties Global Pty Ltd trading as AK Properties Group ABN 62 971 068 965 [2023] NSWSC 343 (06 April 2023) (collectively, the Oxford decisions) confirm experts must comply strictly with the requirements of the DBP Act and specifically identify the relevant risk to be managed or the precautions that should have been taken as to each defective item in order to establish a claim for breach of duty of care under s.37 of the DBP Act.

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New Aim Pty Ltd v Leung [2023] FCAFC 67

This article was written by Theo Kalyvas, Partner, Brian Rom, Special Counsel and Oli Keats, Solicitor.

Is it ever permissible to assist an expert draft their report and, if so, how far is too far?

As the case of New Aim Pty Ltd v Leung [2023] FCAFC 67 (New Aim) shows, solicitor involvement in the drafting process can be fraught with risk. While some involvement is often necessary and permitted to ensure the report answers the questions posed and is in admissible form, a line is crossed when solicitors seek to influence the expert’s opinion.

In New Aim, the Federal Court of Appeal (FCA) overturned a first instance decision by the primary judge, who found that the line had been crossed. The FCA upheld the fundamental rule that lawyers should never interfere with an expert’s opinion but found in this instance that while parts of the report were prepared through a “collaborative” process between lawyer and expect, the expert’s opinions remained her own. The court also disagreed with the primary judge’s finding that a letter of instruction dated the day before the report was issued (a relatively common practice) was misleading.

This is an important decision for lawyers engaging experts in all forms of proceedings.

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Misleading and deceptive conduct – Achilles heel to the security of payment regimes?

This article was written by Kate Morrow, Partner, Michael Harris, Senior Associate and Benjamin Moran, Law Graduate.

A misleading and deceptive conduct defence can be successful in defeating an application for summary judgment under the Building and Construction Industry Security of Payment Act 1999 (NSW) (Act) and potentially other analogous security of payment legislation enacted in other states and territories in Australia. This marks a step away from the legislative intent behind the security of payment schemes, which is fundamentally intended to be a ‘pay now, argue later’ regime.

The implication is that a summary judgment under section 16(2)(a)(i) of the Act (also available under equivalent security for payment legislation in other States and Territories) may become less available in respect of recovering payment. This could make an adjudication application under section 16(2)(a)(ii) a more appealing option to enforce payment rights in certain circumstances. The decision also acts as another reminder that a claimant’s statutory declaration regarding the status of payments must be true and accurate, and completed with due consideration.

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