May 5, 2023
Welcome to the May edition of Projects & Construction Monthly.
This edition addresses the following:
- Recent project updates;
- The case of Insite Construction Services Pty Ltd v Daniels Civil Pty Ltd & Anor [2023] QSC 33;
- LPC Lawyers’ ‘Weathering the Storm’ series;
- LPC Lawyers’ ‘Managing Procurement’ series; and
- Opportunities to join the LPC Lawyers’ team.
Recent Project Updates
HPA First Project
The Queensland Government awarded Alpha HPA a $21.7 million grant for its first high-purity alumina (HPA) project to assist with construction, commissioning and operation.
Alpha HPA’s technology allows for the extraction and purification of alumina of close to 100% purity, and the company has committed to sourcing 100% renewable energy for its operations.
The grant requires Alpha HPA to create and maintain an average of 151 full-time employees, incur $58.2 million in Qld supply-chain expenditure, scale to a minimum production of 10,640 tonnes of HPA per year, and have a total of $367.5 million in project expenditure.
This project is Alpha HPA’s world-first aluminium purification technology to manufacture aluminium products for use in de-carbonising technologies.
Centenary Bridge Upgrade
Bridge construction works for the $298.5 million Centenary Bridge Upgrade project have commenced at Jindalee and are due for completion in 2025. The entire upgrade is expected to be complete by 2027, increasing the motorway’s capacity and improving safety and efficiency for travellers.
The new bridge is due for completion in 2025, with the project forecast to be complete by 2027. The initial works for the project include investigating underground services, establishing site compounds, impact surveys and constructing a temporary jetty to enable bridge works.
The entire upgrade project will involve the following:
- construction of a new three-lane northbound bridge;
- widening the existing bridges to create three southbound lanes; and
- upgrade of transport facilities for pedestrians and cyclists.
Albert Street Station
Albert Street station, the first Brisbane CBD station built in over 120 years, is due to be completed in late 2027, with the construction of the future station building continuing to progress.
Lot 1 (main station entrance) construction activities include large concrete pours, cutting and fixing steel reinforcement bars and mesh, slipform and jumpform installation, and a tower crane installation.
The underground tunnelling works at lot 2 are undertaken 24hr / 7days and include installing formwork, steel fixing and concreting activities, installing blockwork, and the delivery and installation of precast mezzanine segments and platform culverts.
Lot 3 (the northern station entrance) construction works will result in the demolition of temporary structures that are no longer required and excavation and town crane changes that are necessary to facilitate the next stage of construction.
Rookwood Weir
Construction of the $367.2 million Rookwood Weir project is now 65% complete, with more than 81,000m3 of concrete poured for the weir’s foundations, abutments, monoliths and spilling basin.
Since commencing the project, Sunwater has overcome 6 site inundation events in the Fitzroy River and is expecting the completion of the construction works to be late-2023.
Case Summary – Insite Construction Services Pty Ltd v Daniels Civil Pty Ltd & Anor [2023] QSC 33
This case serves as a reminder to parties of a construction contract of the importance of providing reasons when challenging a payment claim under the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (BIFA).
Background
Daniels Civil Pty Ltd (Daniels), the subcontractor, was engaged by Insite Construction Services Pty Ltd (Insite) to construct new buildings at the Good Samaritan Catholic College at Bli Bli (project).
Over the course of the project, Daniels decided to cease trading and wind down its business. Accordingly, on 9 June 2022, Daniels issued Insite with a Notification of Contract Termination for the project, which advised of its decision to terminate the contract and its intention to complete the remaining block P earthworks (works).
Relevantly, Daniels did not have a right to terminate under the subcontract. Instead, under clause 25 of the subcontract, the process for termination only commenced once Insite issued a show cause notice.
Daniels claimed it terminated the subcontract on 26 August 2022 after it accepted Insite’s repudiation, evidenced by the engagement of another subcontractor to complete the remaining works. However, Insite claimed the subcontract was terminated on 9 June 2022 when it accepted Daniels’ notice of termination.
On 2 August 2022, Daniels served a payment claim on Insite (Payment Claim) regarding works completed according to a reference date of 28 July 2022 (reference date). Insite served Daniels with a payment schedule (Payment Schedule) asserting a nil amount was payable to Daniels on 11 August 2022.
Adjudication Decision
On 19 October 2022, the Adjudicator determined that Daniels was entitled to the full amount of the Payment Claim on the basis that Insite did not comply with the statutory requirements for payment schedules under section 69 of BIFA by failing to provide Daniels with adequate reasons for assessing the Payment Claim as nil.
Whilst the Adjudicator acknowledged that Daniels’ had breached the subcontract and its act of terminating the subcontract amounted to a repudiation, he found:
- the reference date and Payment Claim were valid, stating that the subcontract had remained on foot until Insite complied with the contractual requirements for termination by issuing a show cause notice was issued on 29 August 2022;
- Insite’s Payment Schedule was invalid, and therefore, Insite failed to give Daniels a payment schedule in accordance with section 76 of BIFA; and
- the uncontested valuation by Daniels (being the amount provided in its Payment Claim) was the acceptable amount payable by Insite (Adjudication Amount).
Held
Insite sought (unsuccessfully) a declaration that the Adjudicator’s decision was void on the basis that the Adjudicator denied it procedural fairness and committed a jurisdictional error in determining the Adjudication Amount.
The court held that Insite’s failure to provide reasons why the Payment Claim should not be paid entitled the Adjudicator to conclude that Insite did not dispute Daniels’ valuation. Ultimately, this failure by Insite, resulted in the court considering Daniels valuation had been impliedly accepted.
This decision reinforces the importance of including detailed reasons in a payment schedule if the valuation of the amounts claimed is being challenged.
You can read the full case here.
LPC Lawyers’ ‘Weathering the Storm’ Article Series
Part 1 – Batten Down the Hatches
As we make our way out of the La Nina weather pattern, we are left with unpredicted disruptions to projects and contractual risk allocations, which were inadequate for dealing with the last three years of increased inclement weather events. Part 1 of this series discusses known weather related risks and provides an overview of how these challenges impact the construction industry. Read more here.
Part 2 – Come Rain or Shine
With the increased probability of extreme weather events significantly impacting projects, consideration of the impacts will grow across the construction industry. Part 2 focuses on how the resilience of industry participants continues to be tested by unpredictable rain, flooding, and contractual arrangements that had not contemplated the three-year reign of La Nina. It further considers the practical implications for current projects, including reduced productivity, labour shortages, and material scarcity. Read more here.
Part 3 – Sunny Days Ahead?
Part 3 discusses the expected El Nino weather pattern, the challenges contractors face from traditional risk allocation when dealing with inclement weather, and the main takeaways for risk allocation in the current climate. Read more here.
Part 4 – Every Cloud Has a Silver Lining
The final part of this series focuses on the complexities surrounding contract administration (and project completion) due to the unpredictability associated with the shift from La Nina to El Nino weather patterns, highlighting common project concerns and setting out potential contractual arrangements to manage long-term risks. Read more here.
LPC Lawyers’ ‘Managing Procurement’ Article Series
Part 1 – The General Risks
LPC Lawyers’ latest series takes an in depth look at the general risks associated with project procurement, the processes that may be adopted while establishing such, the importance of selecting the right contracting model, and the common pitfalls in negotiating with subcontractors and consultants. Read more here.
Part 2 – Procurement Processes
Deciding on the best procurement model for a project will depend on a number of factors that must each be properly considered before a potential buyer goes to market. Part 2 of LPC Lawyers’ Managing Procurement series explores the major procurement processes that can be adopted, the associated risks, and how to manage them best to ensure successful outcomes. Read more here.
Part 3 – Contracting Models and Approaches
Stay tuned for this article which will be posted on 8 May 2023.
LPC Lawyers’ Continued Expansion
LPC Lawyers is looking to hire as we head into 2023, with opportunities for growth in our expanding practice.
Litigation Lawyers (1-3 years PAE)
LPC Lawyers is looking to hire a litigation lawyer with 1-3 years PAE to work closely with an ex-top tier partner. This role is ideal for a highly motivated candidate with 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 or to apply, please email your resume and cover letter to our Manager of Business Services at [email protected].