December 2, 2022
Welcome to the December edition of Projects and Construction Monthly.
This edition addresses:
- the Christmas and New Year shutdown period;
- recent updates in major projects; and
- LPC Lawyers’ current article series.
2022 is coming to a close
As we approach the Christmas and New Year shutdown period, it signals the end of another big year for Australian infrastructure with the nation’s infrastructure boom not showing signs of slowing down. As expected, the federal government recommitted Labour to its pre-election infrastructure promises. The 2022-2023 Budget contained a $9.6 billion infrastructure boost for predominantly rail and road projects nationally. It is certainly something for all industry participants to get excited about.
While the year begins to wind down, those involved in ongoing construction projects should be reminded that contractual deadlines do not stop. As all contracts will vary, it is important that industry participants are aware of the contractual provisions relating to the blackout period over the Christmas/New Year break.
Some key considerations:
- Delays and extensions of time (EOTs) – If you are currently experiencing delays or expecting them over the Christmas period, ensure you provide notice as per the contractual timeframes. It is common in construction contracts that the Christmas shutdown period can only be claimed as a delay if ongoing works during the Christmas break were not reasonably foreseen when signing the contract.
- The definition of ‘Days’ under the contract – This definition can vary for example between “days”, “business days” or “working days”.
A recent case in the District Court of Queensland – Allencon Pty Ltd v Palmgrove Holdings Pty Ltd [2022] QDC 90 – highlights the significance of the ‘Christmas blackout period’ defined in the Building Industry Fairness (Security of Payment) Act 2017 (BIF Act).
On the facts, Palmgrove Holdings Pty Ltd (Palmgrove) was required to deliver a payment certificate within 21 days of receiving a payment claim.
Allencon Pty Ltd (Allencon) delivered a payment claim on 24 December 2021 and Palmgrove issued a payment certificate on 28 January 2022 and only paid part of the claim. Allencon brought an application against Palmgrove on the basis that the payment certificate was issued out of time and were therefore entitled to the full amount in the payment claim.
The key conflict was rooted in the differing definitions of the word ‘day’ under the contract and under the BIF Act. Importantly, ‘day’ was defined under the contract as a calendar day whereas under the BIF Act, it is defined as a business day and does not include dates from 22 December to 10 January. The presiding judge Burnett DCJ found that:
- the contract limited the operation of the BIF Act;
- the earliest date for delivery of a payment schedule was 28 January 2022; and
- therefore dismissed Alencon’s argument that Palmgrove was in default.
Read the full case here.
For this Christmas/New Year period, the blackout period under the BIF Act will run from Thursday 22 December 2022 to Tuesday 10 January 2023 (inclusive). This means that those days are not considered a business day under the BIF Act and all parties should therefore consider their deadlines relating to payments accordingly.
Recent updates in major projects
Mount Lindesay Highway upgrade milestone
Motorists can now travel on the new southbound lanes and Norris Creek bridge which marks a significant milestone for the project.
The entire scope of the works includes widening the highway from two to four lanes, new northbound and southbound bridges, safety upgrades and fauna connectivity and protection.
The $75 million upgrade was funded equally by the Federal and Queensland governments and is due for completion in late 2022.
Betterment funding for Queensland infrastructure repairs
Regional and rural communities will benefit from $20 million in funding to repair damaged assets after the 2020-2021 disaster season.
Federal Minister for Emergency Management, Senator Murray Watt stated the funding is not only about repair, but improvement to damaged regional communities.
“This is all about building back better than it was, so that infrastructure is stronger and more resilient in case another natural disaster hits,” Watt said.
Thirty-nine projects have been approved across 21 councils with funding coming from both Federal and Queensland governments.
Drought resilience investment for Southern Downs region
The Queensland Government has committed $19.34 million to provide drought contingency water supply to the Southern Downs region. The package includes the following activities:
- early construction works to augment local supplies;
- investigative activities for the Toowoomba to Warwick pipeline; and
- investigations into new water supplies and opportunities.
Seqwater has completed its investigation into the pipeline and is now preparing for the delivery phase of the project. This month, the Southern Downs and Toowoomba Regional Councils voted in favour of proceeding with the pipeline.
LPC Lawyers ‘Terminated’ Series
LPC Lawyers is currently mid-way through the publication of a four-part series on all things relevant to the termination of a construction contract. Termination of a contract is a serious step which must be considered carefully to ensure it is performed correctly. Erroneous termination of a contract could be considered repudiation which expresses that you no longer intend to perform your contractual obligations. Importantly, this article series will explore the different ways you may terminate including:
Part 1 – Substantial Breach
The first part focuses on the avenues parties can take if the other party commits a substantial breach of the contract. Read more here.
Part 2 – Repudiation
The second part explores termination of a contract through repudiation when one party demonstrates they no longer intend or are unable to perform their contractual duties. Read more here.
Part 3 – Frustration
The third part considers when no party is at fault and performance becomes impossible or radically different to what the parties considered due to unforeseen circumstances. Read more here.
Part 4 – Agreement & Convenience
The fourth part concludes the series and discusses termination by agreement and convenience. Stay tuned for part four of this series.