June 28, 2024
In crane overhang disputes, there are various mechanisms available to the parties to resolve conflicts and ensure smooth project progression. Among these, the most commercially viable option is often the execution of a deed.
A deed is a formal agreement between the parties usually as a mechanism to either discharge or transfer rights and obligations from one party to the other. In the context of crane disputes, the deed is commonly used to give the contractor a right to use the airspace above the adjoining land for crane overhang.
Why enter into a deed
Entering into a deed to resolve crane overhang or ground anchor issues is often a more efficient and cost-effective approach than applying to court. This mechanism allows both parties to negotiate terms that address their respective concerns and contingencies. This tailored approach is a more commercial option as it saves in both time and legal costs, and gives the parties greater control over the outcome, while preserving an amicable relationship.
Notwithstanding this, there are a much larger range of considerations that need to be made by each party, when negotiating the terms of the agreement.
Key Deed Considerations
Prior to entering into a deed, it is recommended that all parties obtain independent legal advice as there are a number of factors that must be considered and negotiated to ensure that party is adequately protected.
The terms and/or areas that are subject to negotiation are:
- Term: The duration of the licence for access should be limited to a specific timeframe, with a contingency allowing for delays. Typically, the builder will propose a timeframe required for access based on their anticipated construction program. If the builder requires an option to extend the timeframe, the adjoining owner should ensure that its consent is required and an expiry date (whereby the licence cannot under any circumstance be extended beyond that point) is in place.
- Crane specifications: the deed should also specify:
- type and size of the crane;
- method of installation;
- anchorage information (where anchorage points will be located, whether any part will be anchored on or under the neighbouring property);
- extent of the encroachment into the neighbouring property;
- whether the crane will weathervane or be slew locked at the end of each day;
- estimated weight of any loads and whether loads will be carried over the neighbouring property;
- acceptable operation hours;
- allowable levels of dust and debris;
- allowable levels of noise;
- maintenance, repair and removal of the crane;
- Indemnity: the deed should contain an obligation on the contractor to indemnify the adjoining owner against loss and damage (to property or people) caused by the developer or its breach of the deed. As a contractor, you would want to ensure that any consequential loss is excluded;
- Reinstatement of land: should the contractor cause any damage to the neighbouring property or its land, the deed should also impose the requirement for the contractor (at its cost) to reinstate the property/land to the condition which existed prior to the commencement of the works (which may be demonstrated via dilapidation reports);
- Insurance: contractors should ensure (and owners should satisfy themselves) that the contractor and crane supplier effect and maintain, for the duration of the licence, appropriate insurances (at a minimum public liability insurance) with adequate cover to protect against damage from a crane or its use. The adjoining owner should request that they are noted as an ‘insured person’ on the policy and request copies of their certificates of currency prior to entering into the deed.
- Reimbursement of expenses: whether the owner is to be reimbursed for any fees payable to consultants to obtain expert advice in connection with the licence (e.g. legal or engineering advice).
- Compensation: adjoining owners are usually entitled to compensation in consideration of entering into the deed (as discussed below); and
- Novation: Finally, contractors should ensure that a sufficient novation clause is included which prevents the neighbouring owner from disposing of, or transferring its interest in the land to another person unless they obtain an executed deed of accession confirming the new owner will be bound by the terms of the deed.
On this basis, where it is anticipated that an access licence deed may be required it is critical that the contractor initiates negotiations at an early stage in the project to maintain a strong bargaining position. Contractors need to take proactive measures to prevent a scenario where they are facing undue pressures and time constraints against their construction program, which could result in an unfavourable outcome for them (i.e., they are forced to entertain compromises whether in the form of onerous obligations or compensation to ensure an outcome is reached in order to avoid delays and jeopardise their ability to reach practical completion).
Compensation
It is typical that in consideration of the adjoining owner entering into a licence deed to provide the contractor access to their property, the contractor provides monetary compensation (by way of a licence fee). There is no hard and fast rule when determining the quantum of that compensation, and there is minimal case law on this issue (as most instances the terms of the licence deed are settled out of court). Rather, the agreed amount is to be determined by the parties and will vary depending on the specific circumstances of the arrangement, including:
- the duration of the overhang: longer durations typically warrant higher compensation;
- encroachment: how far the crane will encroach over the neighbouring property;
- impact on the adjoining land, including loss of enjoyment, use or income derived from the land;
- the extent of imposition/disruption; and
- fees incurred in connection with the agreement.
Both parties should use the above factors as a guide to work towards a fair and reasonable figure to settle the terms of the deed and reach an expeditious resolution. Where an agreement cannot be reached and settlement by way of a deed becomes frustrated, contractors can apply to the courts for a statutory right of use over the adjoining land. We will explore this option in greater depth next week in the final instalment of the series.
Lamont Project & Construction Lawyers
The Lamont Project & Construction Lawyers team has extensive knowledge regarding the process and drafting of a settlement deed in respect of crane overhang disputes. With this knowledge and expertise, Lamont Project & Construction Lawyers can provide the required support and advise on projects with respect to disputes arising from tower crane usage.
If you would like to discuss any matters raised in this article as it relates to your specific circumstances, please contact Lamont Project & Construction Lawyers.
The content of this article is for information purposes only and does not discuss every important topic or matter of law, and it is not to be relied upon as legal advice. Specialist advice should be sought regarding your specific circumstances.
Contact: Peter Lamont or Kathryn Easton
Email: [email protected] or [email protected]
Phone: (07) 3248 8500
Address: Suite 2, Level 2, 349 Coronation Drive, Milton Qld 4064
Postal Address: PO Box 1133, Milton Qld 4064