December 9, 2024
Over the last two weeks, we have broadly explored the role and obligations of a superintendent under a contract and how they are appointed. In doing so, we briefly touched on the dual nature of that role and the conflict it may pose for superintendents who act as both independent certifier and agent for the principal.
This week, we will look at this conflict in greater depth, specifically what the duty of impartiality is and the possible consequences of breaching it.
Duty of Impartiality
Under a contract, the superintendent is required to impartially and independently perform its certification functions in respect of extension of time claims, variations, progress claims or practical completion. That is, the superintendent must reach its own conclusions, coming to its own decision on the point in question, without external influence of the principal.
The degree to which the superintendent’s functions are to be performed depend on the specific wording of the contract, however standard form contracts generally provide that the superintendent must:
- act honestly and fairly, within the prescribed time, or if no time is prescribed, a reasonable time, and arrive at a reasonable measure or value of work quantities or time (AS 4300/ AS 2124); or
- fulfill all aspects of the role reasonably and in good faith (AS 4000/ AS 4902).
In Paciocco v ANZ Banking Group,[1] the duty of good faith was described as including obligations to:
- act honestly;
- act with fidelity to the bargain;
- not to act dishonestly and not to act to undermine the bargain;
- act reasonably and with fair dealing; and
- have regard to the interests of both parties.
However, the requirement to act impartially does not in itself mean that the superintendent can not receive any assistance in reaching its decision. It is common on complex projects for a superintendent to engage external consultants to advise on specific areas which may be outside its expertise. This does not affect the independence of the superintendent as long as the external consultant was engaged by the superintendent themselves and not the principal.
Enforcing compliance with the Contract
Generally, the onus is on the principal to ensure the superintendent performs their role under the contract. This means that the where the principal fails to ensure the superintendent’s compliance with the contract, the contractor may have recourse against the principal for a serious breach of contract. Consequently, it is in the interest of the principal to ensure that appropriate mechanisms are in place to ensure the superintendent understands the boundaries of their roles and establish clear communication protocols between the parties to reduce risk of undue influence.
Waiver of Privilege
A key aspect of this duty involves ensuring transparency in decision-making and communications. When the superintendent’s impartiality is compromised, the legal implications can extend beyond contractual breaches to include the waiver of legal professional privilege.
Where documents are shared with a superintendent acting in its independent certifier capacity then legal professional privilege over those documents may be waived such that they are required to be produced to a requesting party.[2] Further, courts have recognised that any communications between a principal and superintendent concerning the certification activities required to be performed under a contract, which are not disclosed to the contractor, potentially give rise to an actionable breach against the principal.[3]
As such there must be careful management of the communication between the principal and the superintendent to ensure that the principal is not unduly influencing the superintendent on issues relating to certification. Superintendents and principals alike must ensure they are aware of this principle so as not to mistakenly assume a conversation is privileged when it is not and to know when disclosure of such conversation is required.
Key Takeaways
It follows that it is pivotal that the contractor, principal and superintendent understand the dual role and duties of a superintendent under a contract to ensure its successful administration. In doing so, this will improve the transparency in the project, reduce the risk of disputes and promote fair outcomes in complex projects.
Lamont Project & Construction Lawyers
The Lamont Project & Construction Lawyers team has extensive knowledge regarding the appointment and role of Superintendent’s on large commercial projects. With this knowledge and expertise, Lamont Project & Construction Lawyers can provide the required support and advise on projects with respect to the functions of a Superintendent in administering a commercial contract.
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
[1] [2015] FCAFC 50.
[2] Bulit Environs WA Pty v Perth Airport Ltd [No 5] [2021] WASC 237.
[3] Vestas Australia Wind Technology v Lal Lal Wind Farm Nom Co Pty Ltd [2020] VSC 554.