The Critical Path – Melbourne Construction & Infrastructure newsletter November 2021

24 November 2021

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.

Winning the battle and losing the war – liability for legal costs despite a successful claim

This article was written by Leighton Moon, Partner, Brian Rom, Special Counsel and Eleanor Ng, Solicitor.

In the recent decision on 15 October 2021 of Demiri v Zalzly (Costs) (Building and Property) [2021] VCAT 1196, the Victorian Civil and Administrative Tribunal (VCAT) held that although an owner had validly terminated the building contract, he was liable for the builder’s legal costs on an indemnity basis as he had:

  1. in the earlier substantive proceedings, failed to prove that his costs to complete the works exceeded the builder’s claim for works performed prior to termination; and
  2. withheld information that would have materially reduced the scope of the dispute.

The upshot was that the owner had to bear its own legal costs and a substantial proportion of the builder’s legal costs. As the case ran for three years and involved experts, a 6-day hearing on the merits and a costs hearing on the papers, these costs would likely have been substantially more than the $85,548.00 that the owner could have paid the builder at the outset to dispose of the matter.

The outcome is a sobering reminder that parties should carefully consider the true value of their provable claims before embarking on litigation and that VCAT will not shy away from imposing indemnity costs where a party’s conduct during the proceedings warrants it.

HWL Ebsworth Lawyers has expertise in advising builders and owners of their rights and obligations in a building dispute. Please contact Leighton Moon or Paul Graham of our Construction and Infrastructure team with any enquiries.

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Superintendent – independent or agent?

This article was written by Leighton Moon, Partner, and Eleanor Ng, Solicitor. 

In Lacen Belder Pty Ltd v Leather Living (Vic) Pty Ltd (Building and Property) [2021] VCAT 1128, the Civil and Administrative Tribunal of Victoria (the Tribunal) held that even though a contract provides that the superintendent is to carry out its functions as agent of a principal rather than as an independent assessor, the superintendent must still conduct itself reasonably and in accordance with the contract.

If a superintendent merely adopts the principal’s preferred valuation, any resulting certificate by that superintendent will be invalid.

HWL Ebsworth Lawyers has expertise in drafting building contracts and advising developers, builders and superintendents of their rights and obligations under a building contract. Please contact Leighton Moon of our Construction and Infrastructure team with any enquiries.

Click here to view the article.

Who is in the business of building residences?

This article was written by Alan Chiang, Partner, and Tara Nelson, Associate.

In Saath Pty Ltd v Seascape Constructions Pty Ltd1 (Saath), the Victoria Supreme Court quashed an adjudication decision because the plaintiff was not in the business of building residences for the purpose of section 7(2)(b) of the Building and Construction Industry Security of Payment Act 2002 (Vic) (Act) and, therefore, the Adjudicator did not have jurisdiction to determine the adjudication application.

The Act does not apply to a construction contract, which is a domestic building contract within the meaning of the Domestic Building Contract Act 1995 (Vic) (DBA), other than a contract where the building owner is in the business of building residences and the construction contract is entered into in the course of, or in connection with, that business.2

The decision of Saath identified key principles from other cases that have considered what it means to be “in the business of”. As the plaintiff was not undertaking the project for the purpose of making a profit, and instead was incorporated for the purpose of building four units for the directors’ families, Justice Stynes held that they were not in the business of building residences.

HWL Ebsworth Lawyers has expertise in dealing with domestic building contract and security of payment disputes. Please contact Tara Nelson or Alan Chiang of our Construction and Infrastructure team with any enquiries.

Click here to view the article.

Are liquidated damages excluded under the SOPA?

This article was written by Alan Chiang, Partner, and Tara Nelson, Associate.

Following recent case law, it appeared that claimants in an Adjudication could not recoup liquidated damages levied in a previous accounting period as it would be considered a claim for an excluded amount under section 10B of the Building and Construction Industry Security of Payment Act 2002 (Vic) (Act).3

However, the Supreme Court of Victoria has now further clarified this position in the decision of Goldwind Australia Pty Ltd v ALE Heavylift (Australia) Pty Ltd4 whereby the Court held that:

  1. failure to adjudicate an earlier payment claim for work done does not prevent a claimant from recovering payment for that work in a later progress payment; and
  2. a subsequent payment claim claiming work done, which may include an amount previously levied for liquidated damages, is not a claim for excluded amounts under section 10B of the Act.

HWL Ebsworth Lawyers has expertise in security of payment claims. Please contact Tara Nelson or Alan Chiang of our Construction and Infrastructure team with any enquiries.

Click here to view the article.


1[2021] VSC 358.
2Section 7(2)(b) of the Act.
3See Shape Australia Pty Ltd v The Nuance Group (Australia) Pty Ltd [2018] VSC 808 (‘Shape‘); VCON v Oliver Hume & Anor [2020] VSC 767.
4
[2021] VSC 625.

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