January 13, 2023
Welcome to the January edition of Projects & Construction Monthly.
This edition addresses:
- The first casualty of 2023;
- Snowy 2.0 snapped up by Webuild;
- A ban on unfair contract terms;
- Recent major projects; and
- LPC Lawyers’ current ‘Field’s Apart’
Snowy 2.0 snapped up by Webuild
Italian-based Webuild has signed a $17.6 million deal with Clough administrators to take full control of the Snowy 2.0 hydropower project and Inland Rail project.
Webuid and Clough were working together to help build the Snowy 2.0 project, Australia’s largest renewable energy project that involves 27km tunnels to develop 2,000MW of storage capacity.
Webuild will take on Clough’s assets and liabilities for Snowy 2.0, which include hundreds of millions of dollars in claims for cost blow-outs on the project.
The first casualty of 2023
As we move into 2023 the casualties continue, with Brisbane based construction company, LDC Pty Ltd, becoming the first company in the construction industry this year to collapse.
The luxury housebuilder which went into liquidation last Friday, leaves nearly 50 projects unfinished which will be referred to the QBCC and $7.03 million owed to creditors and subcontractors.
Ban on unfair contract terms impacting the construction industry
As part of the Treasury Laws Amendment (More Competition, Better Prices) Act 2022 (Cth) (‘New Act’), the Federal Government has tightened restrictions on the use of unfair contract terms (‘UCT’) in standard form contracts.
The New Act makes it illegal for businesses (i.e., principals or contractors) to use or rely upon UCT in standard form contracts with consumers or small businesses, with penalties introduced for any breaches.
Currently under the ACL, businesses are not strictly prohibited from including UCT in standard form contracts – while UCT may breach the ACL and be declared void by the court, there is no penalty. However, the New Act introduced penalties for businesses that include UCT in standard form contracts.
The New Act aims to protect consumers and small businesses lacking bargaining power to negotiate terms in standard form contracts. This could expose principals and contractors to significant financial consequences in the event of non-compliance with the ACL.
These changes come into effect on 9 November 2023, allowing a 12-month grace period to allow the opportunity to remove any UFC from standard form contracts to ensure compliance.
Recent Major Projects
M1 Pacific Motorway NSW extension
The Australian and NSW governments have announced John Holland Gamuda Australia Joint Venture and Seymour Whyte as the successful contractors for the two major contracts for the M1 Pacific Motorway extension.
John Holland Gamuda Australia Joint Venture will undertake construction works for the southern contract, a 10km section extending from Black Hill to Tomago, and Seymour Whyte Constructions will undertake works for the northern contract, a 5km section bypassing Heatherbrae.
Major construction will start next year and is expected to be open to traffic in mid-2028.
M7 Widening & M7-12 Interchange
John Holland (in a joint venture with Transurban Group, Canada Pension Plan Investment Board and QIC Private Capital) was announced the preferred contractor to deliver the M7 Widening and M7-12 Interchange project.
The project includes an additional lane to the M7 motorway between the M7 and M5 at Prestons and Oakhurst, and building a new interchange between M7 and M12.
John Holland is expected to shortly commence design work for the project.
Sydney metro – Western Sydney Airport Project
The final major contract for the Sydney Metro – Western Sydney Airport project was awarded to Parklife Metro consortium to deliver the Stations, Systems, Trains, Operations and Maintenance contract.
Parklife metro is also set to operate and maintain the Sydney metro – Western Sydney Airport line for 15 years after it becomes operational.
Construction is planned to commence early this year and expected completion is to occur in June 2026.
LPC Lawyers’ ‘Fields Apart’ Series
LPC Lawyers is nearing the end of a three-part series on all things relative to brownfield and greenfield projects.
‘Fields Apart’– Part 1
The first part of the series covers the terms that you should know and how site conditions impact a project. Read more here.
‘Fields Apart’– Part 2
Part 2 looks at the importance of drafting around latent conditions and the key risks parties should be aware of when looking at brownfield and greenfield developments. Read more here.
‘Fields Apart’ – Part 3 – COMING SOON
Part 3 of the series is set to discuss contractual drafting considerations for brownfield and greenfield developments, including with respect to dispute provisions. Coming Monday 16 January 2023.