February 2, 2024
Welcome to the February edition of Projects & Construction Monthly.
This edition addresses the following:
- Recent updates on Major Projects;
- Case Summary – ESR Investment Management 2 (Australia) Pty Limited v AllRoads Pty Ltd [2023] QSC 235;
- LPC Lawyers’ ‘Reading Between the Lines’ series;
- LPC Lawyers’ upcoming Article series; and
- Opportunities to join the LPC Lawyers’ team.
Recent Updates on Major Projects
M1 Pacific Motorway – Extension to Raymond Terrace
In January 2024, construction commenced on the Extension to Raymond Terrace project, which proposes to link the M1 to the Pacific Motorway.
Jointly funded by the Federal and NSW governments, the project has an estimated total cost of $2.1 billion and will be delivered in two stages using Design and Construct contracts for each stage, with the Hexham Straight Widening delivered as an Alliance contract.
The expected completion of this project is in 2028.
Seadragon Project
As Australia’s first offshore wind farm, the Seadragon project will include up to 150 fixed foundation turbines to generate 1.5GW of wind energy in Gippsland, with an estimated total expenditure of $6.5 billion.
The project is currently in the development phase and scheduled to be completed by the end of 2025, with construction expected to commence in 2028.
Queens Wharf
From August 2024, the multi-billion dollar Queens Wharf Brisbane development is anticipated to open The Star Grand casino, 50+ restaurants, and retail outlets to the public and other public spaces, including the Sky Deck.
The development covers more than 12 hectares of Brisbane CBD land. It includes the restoration and repurposing of the Treasury Building and the Land Administration Building heritage buildings.
Mount Morgan Pipeline Milestone Achieved
The Mount Morgan Pipeline project reached a key milestone in late-January 2024, with the first pipes being laid. The project includes a 28km potable water pipeline and the construction of a new reservoir and pump station to provide long-term water security to the area.
The project is being jointly funded by the Federal and State Governments and Rockhampton Regional Counsel, with an anticipated total cost of $88.2 million. The project is expected to be completed in September 2025.
Case Summary: ESR Investment Management 2 (Australia) Pty Limited v AllRoads Pty Ltd [2023] QSC 235
This case is a reminder that parties should consider the language used when advising the other party about any financial impacts associated with the project and the scope of the requirement to provide records upon contract termination, as the term ‘records’ may cover more than communication between the parties.
Facts
AllRoads Pty Ltd (AllRoads) issued a letter to ESR Investment Management 2 (Australia) Pty Ltd (ESR) under their civil works contract (contract) in August 2023. The letter outlined the delay and cost impacts on the project, advising that ‘it has become evident that the cost to complete on our ongoing project far outweighs the projected revenue we will earn…it has become increasingly unviable to continue this project as per the original contractual obligations’ (statement).
ESR exercised its right to terminate the contract, arguing that AllRoads had triggered its right to terminate the contract as ESR considered the statement indicated that AllRoads was unable to financially proceed with the contract. In response, AllRoads disputed ESR’s assertion and argued that ESR’s termination amounted to a repudiation of the contract.
Subsequently, ESR requested that AllRoads provide quality assurance documents, documents required for certification, test results, design documents and applications to any statutory authority. ESR relied on three clauses:
- Clause 44.5: allowed ESR to direct AllRoads to return all property of ESR in its possession upon termination;
- Clause 44.10: required AllRoads to provide ESR with any documents prepared at the time of termination relating to the works; and
- Clause 31.10: required AllRoads to give ESR access to inspect and copy records of all matters relating to the WUC.
Supreme Court Proceedings
ESR brought an originating application, resulting in the parties agreeing that the real issues for determination related to whether the statement informed ESR that AllRoads was ‘financially unable to proceed with the Contract’, triggering ESR’s right to terminate and the scope of ‘documents’ and ‘records’ in respect of Clauses 44.5, 44.10 and 31.10.
Held
The effect of the declarations made by Justice Kelly was such that:
- The statement did not indicate that AllRoads was financially unable to proceed with the contract. Therefore, Clause 44.5 was not applicable.
- The court rejected ESR’s arguments regarding its entitlement to documents under Clause 44.10, finding that the clause was limited to documents already prepared at the time of termination.
- The documents requested by ESR fell within the scope of ‘records’ of matters relating to WUC under Clause 31.10. AllRoads argued that ‘records’ should be interpreted narrowly and be limited to documents that record interactions between parties. In rejecting this, the court found that the use of ‘records’ and ‘all matters relating to’ indicated a broader application of the term ‘records’ and included the plain meanings of the term (including electronic records).
Read the full case here.
LPC Lawyers’ ‘Reading Between the Lines’ Article Series
Part 1 – Implied Terms
As we roll into another busy year for construction in Australia, there will be projects at all stages – those in the contract formation stage, set to commence or coming to an end. Wherever project participants may find themselves on a project’s life cycle, it is a timely reminder to ensure parties remember some of the nuances of obligations that may implicitly exist or survive once a contract has concluded or been terminated.
Part 1 of LPC’s ‘Reading Between the Lines’ series provides an overview of the key principles of implied terms in contracts in Australia and outlines several drafting considerations to be aware of.
Part 2 – Statutory Obligations
Parties to construction contracts are often unaware of obligations that may exist or that can be implied into a contract, even where the parties had not turned their minds to them during contractual negotiations. Such obligations can be just as important as the express terms of a contract. They can have significant impacts on the rights and responsibilities of the parties.
Part 2 of LPC’s ‘Reading Between the Lines’ series considers various statutory obligations that may dictate certain aspects of the relationship between project participants.
Part 3 – Arbitration Agreements
It is not uncommon for a construction contract to prescribe a dispute resolution process containing a clause whereby the contracting parties agree to submit certain disputes to arbitration (i.e., an arbitration agreement). Such agreements can be an attractive option for dispute resolution as arbitration is often a private and sometimes more efficient and cost-effective option, as opposed to litigating through the courts.
This final article of the series explores the survivability of arbitration agreements and highlights what parties can do to avoid potential headaches down the line.
Read the full article series here.
LPC Lawyers’ Upcoming Article Series
Stay tuned for LPC Lawyers’ next article series on common design risks on large scale projects which will be posted on 5 February 2024.
LPC Lawyers’ Continued Expansion
LPC Lawyers is continuing to look to hire candidates with opportunities for growth in our expanding practice.
Law Clerk
LPC Lawyers is looking to hire a law clerk for three days per week in their third or fourth year of study. As a law clerk, you will have the opportunity to work closely with our managing partner and assist solicitors with case management, legal research, discovery processes, the preparation of legal documents and correspondence, and general administrative tasks.
Litigation Lawyers (1-3 years PAE)
Working closely with an ex-top tier partner, this role is ideal for a highly motivated candidate familiar with the Security of Payment Legislation and has experience in drafting correspondence, simple pleadings, briefs for Counsel, and some client advisory work.
For more information about our current career opportunities, visit our website here. To apply for either role, please email your resume and cover letter to [email protected].