Welcome to The Critical Path, HWL Ebsworth Lawyers’ Melbourne Construction & 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.
COVID-19 compliance blitz and vaccine mandate for construction sites
Paul Graham, Kai-Yang Goh and Joshua Hanegbi.
Construction shutdown update: Except for urgent and essential work to protect health and safety, or work required to shut down construction sites safely, all construction sites in areas under lockdown (metropolitan Melbourne, City of Ballarat, City of Greater Geelong, Surf Coast Shire and Mitchell Shire) must close for two weeks from Tuesday 21 September, subject to lockdown restrictions easing. COVID-19 disaster payments are available for workers. The effect of the below site and vaccination requirements will be made clear in coming days.
On Saturday 18 September 2021, the directions containing the new COVID-19 industry obligations for the construction sector were published. The Victorian Government also commenced a ‘four-week blitz’ on 13 September 2021 to ensure compliance with the restrictions by construction workers and site operators. The Government has indicated that it will have a ‘zero tolerance’ approach to non-compliance and may issue fines or prohibition notices.
Subject to limited exceptions for critical work, site operators must not allow Melbourne-based construction workers to work at regional construction sites or allow regional-based workers to work at Melbourne construction sites. All operators must use worker shift bubbles with separate break times, break areas and entrances/exits to the site and must have a COVID Marshal on site at all times to monitor compliance. Operators must not permit workers to eat or drink together indoors at construction sites.
Finally, from Friday 24 September 2021, operators must ensure that any person performing work at their construction site have either received at least one dose of a COVID-19 vaccine or have made a booking to receive a dose by Saturday 2 October 2021. By 24 September 2021, operators must have a record of each worker’s vaccination status and refuse site entry to anyone without the required vaccination status, again subject to limited exceptions. Construction workers will have priority access to COVID-19 vaccines at major vaccination centres accordingly.
Further information can be found on the Victorian Coronavirus website.
Welcoming back electronic execution of documents and virtual company meetings
Theo Kalyvas, Julie Charles and George Yiannis.
Under the Corporations Act 2001 (Cth) company documents must be executed by all parties physically signing the same hard copy document, and constraints are imposed on companies using alternative technologies to conduct meetings under the Corporations Act.
As of 14 August 2021, the Treasury Laws Amendment (2021 Measures No. 1) Act 2021 (Cth) allows companies to (once again) use electronic means until 31 March 2022 to execute documents, hold meetings, provide notices relating to meetings and keep minutes, ensuring continuity of operations during the period of restrictions imposed by Government as a result of the COVID-19 pandemic.
Our team of construction and infrastructure lawyers have significant expertise to assist you to understand your specific obligations under the Act when using electronic means to execute documents and for virtual meetings.
Click here to view the article.
Infrastructure Victoria and Infrastructure Australia release new infrastructure plans
Marko Misko, Julie Charles and Kai-Yang Goh.
The recently published infrastructure strategies issued by the state and federal independent infrastructure advisory bodies, Infrastructure Victoria and Infrastructure Australia, provide a roadmap for infrastructure reform following broad consultation with industry, academia and government, with some consistent themes. Our First Nations People, climate change and the pandemic all feature heavily in the fundamental principles driving the recommendations, while the need for adaptability and resilience in this time of uncertainty is a common theme.
The Victorian Infrastructure Strategy 2021-2041 (Victorian 30 year strategy) is the second since its establishment in 2015, and provides 94 recommendations, with 53 policy changes and reforms, and 41 infrastructure capital investment projects with a combined total capital cost of $100 billion over 30 years. 90% of the 137 recommendations issued in the last strategy have now been implemented, so we anticipate a similar approach will be adopted by Parliament upon consideration of the current recommendations. (See link to whole report https://www.infrastructurevictoria.com.au/victorias-infrastructure-strategy-2021-2051-home/.)
The 2021 Australian Infrastructure Plan is the second plan issued by Infrastructure Australia, and responds to 180 infrastructure challenges and opportunities identified by the 2019 Australian Infrastructure Audit issued by Infrastructure Australia, and considers the impacts of the COVID-19 pandemic identified in the Infrastructure Beyond COVID-19 Report. The 2021 Plan provides a reform pathway with 29 recommendations with a 15-year roadmap which can respond to anticipated changing trends and potential global shocks and stressors, to build a stronger and more secure Australia. (See link to whole report https://www.infrastructureaustralia.gov.au/publications/2021-australian-infrastructure-plan.)
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‘Pay now argue later’ purpose of the Act trumps payment induced by cyber fraud
Paul Graham, Brian Rom and Jane Ku.
The County Court decision on 28 July 2021 of Emery t/as Yarra Valley Commercial v J. Hutchinson Pty Ltd1 concerned J. Hutchinson Pty Ltd (Hutchinson), a builder, who had engaged Yarra Valley Commercial (YVC), a subcontractor, to supply and install joinery works at an apartment complex in South Melbourne. YVC served a payment claim and after Hutchinson failed to pay the scheduled amount, YVC sought judgment under s17(2) of the Building and Construction Industry Security of Payment Act 2002 (Vic) (Act).
The case raises two issues of interest:
- whether a misleading and deceptive conduct claim under the ACL arising from a cyber-fraud incident undermined the court’s jurisdiction in an application for judgment under s17(2) of the Act; and
- whether service using a cloud-based document exchange platform constitutes service under the Act.
Burchell J rejected the respondent’s defences. As to the first point, Her Honour held that the misleading and deceptive conduct allegation based on a cyber-fraud incident arose under the contract and was not a jurisdictional issue. It, therefore, had to be disregarded under s17(4)(b)(ii) of the Act. On the second point, despite the contract not explicitly providing for service via a platform such as MYOB, Her Honour found the document was validly served at the time of receipt by Hutchinson (i.e. when it accessed the file and downloaded the invoice).
Click here to view the article.
Payment claims with excluded amounts must be adjudicated
Paul Graham, Brian Rom and Jane Ku.
The recent County Court decision of Herbert & Mason Pty Ltd v O’Brien Group Australia Pty Ltd2 (19 May 2021) (Herbert & Mason) highlights the importance in Victoria of a carefully drafted payment claim under the Building and Construction Industry Security of Payment Act 2000 (Vic) (Act) in circumstances where no payment schedule is served and judgment is sought under s 16(2)(a)(i) of the Act.
The case concerned an application by an architect and interior designer, Herbert & Mason Pty Ltd (H&M) for judgment under s16(2)(a)(i) of the Act against the principal, O’Brien Group Australia Pty Ltd (O’Brien), who had failed to serve payment schedules in response to H&M’s payment claims.
In light of the Court of Appeal’s decision on 5 March 2021 in Yuanda Vic Pty Ltd v Façade Designs International Pty Ltd3 (Yuanda), Judicial Registrar Burchell held that judgment would not be granted under that section since it could not be satisfied, on the face of the payment claims, that the claimed variations met the requirements for first and second class variations in s 10A of the Act.
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A reminder of clear and precise contractual construction
Theo Kalyvas, Julie Charles, George Yiannis and Joshua Hanegbi.
In Jabbcorp (NSW) Pty Ltd v Strathfield Golf Club,4 the NSW Supreme Court of Appeal considered the meaning of ‘Excluded Works’ under an amended AS4902-2000 design and construct contract. Despite the contract having a guaranteed maximum price, the builder sought extra payment for works which seemed to simultaneously fall under the intended scope of the contract and also constitute Excluded Works.
The Court undertook a detailed grammatical and linguistic analysis of the Excluded Works clause, focusing on its natural meaning and its consistency with the contract. In a decision turning on its facts, the Court denied the builder’s claim for extra payment, concluding that the relevant works were not Excluded Works. The Excluded Works were ‘contingent and future’ and could not include works that the builder was already obliged to perform.
This case emphasised the importance of precise drafting and the need for parties to clearly establish the scope of works under a construction contract.
Click here to view the article.
When do you have a right to have recourse to a bank guarantee?
Theo Kalyvas and Tara Nelson.
The Tasmanian Supreme Court in Hansen Yuncken Pty Ltd v Parliament Square Hobart Landowner Pty Ltd [2021] TASSC 7 considered whether the Principal had a right to recourse an unconditional bank guarantee where the Contract did not contain an express provision to call on the bank guarantee. The Court held that the Principal was entitled to have recourse to the bank guarantee.
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VCAT delays and under-resourcing foreshadow overhaul of domestic building dispute proceedings
Paul Graham, Brian Rom and Kai-Yang Goh.
So extensive are the delays now in the Victorian Civil and Administrative Tribunal (VCAT) due to the effects of staff shortages and the pandemic that the County Court recently held in Impresa Construction Pty Ltd v Oxford Building Group Pty Ltd5 that VCAT should no longer be chiefly responsible for resolving domestic building disputes and could be bypassed in favour of other Victorian courts while conditions persisted.
The finding was made in the context of an application under section 57(2)(a) of the Domestic Building Contracts Act 1995 (Vic) (Act) to stay proceedings commenced in the County Court. Under that section, an action in respect of a domestic building dispute commenced in the Magistrates’, County or Supreme Court must be stayed if it “could be heard by VCAT”. These words were deemed to be a precondition to the right to stay. The Court held that the precondition was not met if it could not be said that a matter was capable of being heard in a practical sense, that is within a reasonable timeframe.
Although the Court found that section 52(2)(a) of the Act was, in any event, not engaged as the action was not a domestic building dispute, the decision sends a strong signal that until such time VCAT overcomes its difficulties, it remains open to parties to resist a stay on the same basis. This is likely to encourage parties to commence domestic building disputes in the courts rather than VCAT without fear of being stayed. This raises a number of costs and strategic issues that need to borne in mind.
The decision also clarifies that disputes arising out of a contract between a builder and a sub-contractor are not domestic building disputes for the purposes of the Act.
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1[2021] VCC 1019
2[2021] VCC 620.
3[2021] VSCA 44.
4[2021] NSWCA 154.
5[2021] VCC 1146.
