Australian Construction Law Q&A series

No. If your contractor has gone into administration then the “ipso facto” rules under the Corporations Act will prevent you from being able to terminate the contract due to the insolvency of the contractor while they are in administration. You may however be able to terminate for other reasons.

Most contracts will provide a right for the principal to terminate the contract if the contractor goes insolvent, although the exact scope of this right will depend on the terms of the specific contract. The right will usually allow you to terminate if the contractor goes into administration.

However, if a contractor goes into administration, it is likely that the principal will not actually be able to rely on its contractual right to terminate due to the insolvency of the contractor. This is because the right must be read in the context of the “ipso facto” rules in Part 5.3A of the Corporations Act, which put a stay on the enforcement of any express contractual rights, including termination, for the reason (in substance) of the company going into administration.

During the administration period, parties can exercise other rights they have to terminate the contract, as long as the reason for termination is not, in substance, due to the company going into administration. Therefore, termination for default rights under the contract will likely remain available. Beware, however, that termination for convenience rights may fall foul of the “ipso facto” stay regime if the administrators can establish that the termination for convenience right has been, or will likely be, exercised because of the administration in substance. The termination for convenience right is therefore not without risk in these circumstances.

The “ipso facto” stay does not apply to a company in liquidation and therefore, if a contractor goes into liquidation rather than administration, the principal’s right to terminate due to the insolvency event will likely remain intact.

Maybe! The principal’s wrongful rejection of a valid EOT claim is unlikely to constitute a ‘direction’ so as to give rise to an entitlement to acceleration costs under the terms of the contract. However, in these circumstances, reasonably incurred acceleration costs may be recoverable as damages, or alternatively as mitigation costs.

“Acceleration" refers to a situation where the contractor is required to complete the works, or a specific milestone, faster than the original programmed or contractual completion date. Acceleration typically involves increasing resources - such as labour, plant, equipment, working hours, or shift patterns—to compress the remaining program duration.

Acceleration typically occurs when a principal/superintendent formally directs (in writing) the contractor to accelerate the works in accordance with the terms of the contract. The acceleration regime will generally be clearly set out in the contract and will allow the contractor to recover additional costs if the regime is followed.

However, there may be circumstances where a contractor encounters a delay to critical path caused by a qualifying cause of delay and properly requests an EOT, but the principal wrongfully denies the EOT while insisting on practical completion by the unadjusted date for practical completion. This effectively forces the contractor to accelerate to avoid liquidated damages or default exposure under the contract. This is referred to as “constructive acceleration”.

Although well established in the US, ‘constructive acceleration’ claims are not generally recognised by Australian courts. However, the case of V601 Developments Pty Ltd v ProBuild Constructions (Aust) Pty Ltd [2021] VSC 849 may have created some new avenues for contractors to recover their acceleration costs in these situations. The case established that a wrongful refusal or delay in granting EOTs does not, by itself, constitute a contractual “direction” to accelerate, but the resulting and reasonably incurred acceleration measures may be recoverable as damages (or alternatively as mitigation costs) where the time regime is mis-administered.

The case opens the door for acceleration costs to be claimed as damages where:

• there is a qualifying cause of delay that would entitle the contractor to an EOT;
• the contractor's EOT claim was submitted in compliance with the contract's requirements;
• the principal wrongfully denied the EOT claim; and
• the principal's denial of the claim constitutes a breach of the contract

No. A contractor in liquidation cannot use SOPA to serve or take any action to enforce a payment claim made under SOPA in NSW. However, these rights may still be available to a contractor if it is in administration.

In NSW, section 32B of the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOPA) prohibits companies in liquidation from serving a new payment claim, making adjudication applications or enforcing previous adjudication determinations. The provision also states that if a company is placed into liquidation, any active adjudication application it has made is considered withdrawn.

The reasoning behind this section is that SOPA operates on a "pay-now-argue-later" basis, and if a claimant in liquidation could access SOPA, payment obtained by the liquidator would not be truly interim — the respondent would have no practical ability to recover it later because the money would simply enter the general pool for distribution to the claimant's creditors, defeating the interim/provisional character of relief under SOPA.

However, in NSW the courts have allowed distressed companies, including those in administration, to use SOPA. In Kennedy Civil Contracting Pty Ltd (Administrators Appointed) v Richard Crookes Construction Pty Ltd [2023] NSWSC 99, Ball J held that the purpose of section 32B is "to deny the benefits of the legislation to companies in liquidation and not otherwise.”

However, there may be some circumstances where the court may grant a stay preventing contractors from enforcing adjudication determinations even if the contractor is not yet in liquidation. It is therefore important to obtain legal advice in these circumstances.

Further, the relationship between the security of payment legislation and insolvent contractors varies between the States and territories. We will consider the position in other States in later weeks.

Sharing legal advice with third-party consultants may waive privilege, making it disclosable in future proceedings. The safest approach is to provide a separate briefing note to the consultant along with assumptions that they can rely on. If disclosure is unavoidable, engaging third-party consultants as agents with strict information-handling protocols may reduce, though not eliminate, the risk of waiving privilege.

When a party provides its legal advice to a third-party, that may constitute a waiver of privilege, meaning that the advice will be disclosable in future proceedings as evidence.

Whilst privilege in communications with third parties can exist in Australia (see for example our week 22 post on common interest privilege), it is a complex area with no one-size-fits-all approach - it is therefore best to avoid having to rely on this area at all. If there are parts of the legal advice that you need your consultant to be aware of, it is better to prepare a separate briefing note for the consultant along with a set of assumptions that can be relied upon, rather than directly providing them with the legal advice.

However, if that approach is not possible, there are certain ways you can protect yourself when providing your legal advice to a third-party consultant, for example:

• engage your third-party consultant as an agent of your company rather than an independent contractor. The terms of engagement will be critical. They will need to characterise the engagement of the third-party as a true agent and expressly deal with the obligations for storage and distribution of your legal advice. We recommend getting legal advice on the terms of engagement to ensure the nature of the engagement it is properly documented and substantiated;
• provide a separate briefing session to the third-party consultant about privilege risks, and tips and tricks that they must implement to seek to protect privileged communications when performing their function;
• set up internal email addresses for each third-party consultant providing such services to your company; and
• password-protect any legal advice.

However, proceed with caution. Even with the above protocols in place, there is still a risk that the court will look at the characterisation of the relationship between a client and a third-party and find against an agency relationship, in which case privilege will be waived.

In more recent times, the courts have adopted a strict application of privilege, with numerous examples of expert and third-party evidence being subject to disclosure. We therefore recommend getting legal advice before disclosing legal advice to a third-party consultant.

To make a valid EOT claim, you must strictly follow the contractual regime, which is typically highly prescriptive. You will need to ensure that your formal EOT claim is submitted within the time frame specified in the contract, contains all of the information required by the contract and is served by the method of service prescribed by the contract. You should also check that you have provided all of the notices required - contracts will often require that a notice of the delay is submitted prior to the formal EOT claim.
 
If you consider you are entitled to an extension of time (EOT) under a contract, most contracts will require that your EOT claim is made strictly in accordance with the specific procedural requirements of the contract in order to be a valid claim.

The procedure under each contract will be different, however there are certain elements which are common in most contracts. For example, most contracts will require that a notice of delay is issued first (which is generally for information only and is not the formal claim), followed by a formal EOT claim. It is important to appreciate that these are two different things.

Usually, to submit a valid EOT claim you must strictly adhere to the contractual timeframes for submitting the claim. Often, a failure to submit your claim on time will invalidate your claim even if the delay and impact to the works was legitimate and claimable. Further, the required contents of the claim will usually be clearly set out in the contract and it is important you ensure your EOT claim complies with all of these elements. Typically, contracts will require that the claim contains certain details such as details of the delaying event, the number of days of extension requested and evidence showing impact to the critical path.

The contract will also specify the required method of service for an EOT claim, which may include personal delivery, registered mail, or some form of electrical communication (whether this be by email or through the specific project management software used on the project). It is important that the method of service prescribed by the contract is properly complied with and that evidence of receipt is kept so as to ensure the other side cannot claim that your claim was delivered outside of the strict contractual timeframes. For example, if the notice is sent by post, tracking numbers or acknowledgment of receipt should be kept as evidence.

For claims for breach of contract, the limitation period begins at the time of breach. For claims in negligence, the limitation period begins on the date that actual, measurable damage manifests – but beware, the damage does not need to have been actually discovered for time to start to run.

The six-year limitation period for a breach of contract starts to run from the date the cause of action accrues. That is, when the breach occurs (and not necessarily when the loss is suffered). For example, a contractual warranty may be breached at the completion of works, even if it does not become apparent that the works were not fit for purpose (or some other breach) until much later. This is because, the works failed to meet the required contractual standard at the time they were handed over – even if this was not known at the time.

You may have multiple available breaches to mount a claim upon. Characterising the breach is therefore central to identifying when the limitation period begins. For example, where the breach is a failure to rectify a notified defect ‘within a reasonable time’, the breach may not have actually crystalised until that reasonable time has passed. It’s important to have regard to the specific language of your contract, and what the clause actually requires by way of performance.

Claims in negligence also attract a six-year limitation period, although this cause of action does not accrue until loss is actually suffered. By loss, we mean damage that is actual and measurable, rather than minimal or negligible. It is not a defence to a limitation period that a prospective plaintiff was unaware of their loss, or their legal rights. It is therefore essential to seek legal and technical advice as soon as an issue is identified, to ensure that your rights in respect of a potential claim are kept ‘live’.

The timing of the limitation period for negligence is especially significant in cases involving latent conditions. Such defects may not become apparent for many years after the work was completed. Damage is taken to be sustained if and when the defects were actually discovered or became manifest, in the sense of being discoverable by reasonable diligence. It is at this point that time begins to run. 

It’s also important to keep in mind specific legislation in respect of building works in each jurisdiction (refer to our “how long do I have to bring a claim for defects?” tile below for more information), which in some cases provide for a 10-year ‘long-stop’ date. For example, in Victoria, claims in negligence cannot be brought more than 10 years after the date of the occupancy permit for the relevant works – even if the damage manifests after that time period, the claim will be subject to the statutory long-stop date.

It gets complicated! Most states have 10 year periods for defective building claims, however the exact application of these differ across the jurisdictions - some are limitation periods in their own right and others are merely long-stop dates. Queensland and Western Australia do not have any limitation periods that apply specifically to building claims and generally rely on the general limitation periods for contractual actions. 

The right to bring a legal action to court does not exist for an unlimited period. Damages claims for breach of contract must be brought within the relevant statutory limitation periods, which vary from state to state.

All states and territories (other than Queensland and Western Australia) have some form of 10 year period for most “building actions”, although the exact building actions covered by this varies between jurisdictions. The application of these 10 year periods also differ between the jurisdictions. In some states, the courts have held that the 10 year period acts as a long stop period, in that it only operates to prohibit a claim for damages for defective building work from being commenced after the 10 years have elapsed. Therefore, if there is a shorter statutory limitation period applicable to that claim, the 10 year period for building claims will not act to extend that shorter limitation period and the respondent can rely on the shorter period from barring the applicant’s claim. In other states, the 10 year period has been held to be a limitation period in its own right, in that it allows the commencement of such claims at any time up to the expiry of that period.

In Queensland and Western Australia, there is no specific statutory limitation period for building actions. Instead, in these jurisdictions, the applicable statutory limitation period depends upon the type of contract concerned. Generally, an action for a breach of simple contract, written or oral, must be brought within six years. However, if the contract is a deed, the limitation period in Western Australia is 12 years. In Queensland, the limitation period for the deeds entered into before 1 August 2025 is 12 years, however, for deeds entered into on or after 1 August 2025, it is now 6 years.

It is also necessary to consider whether a claim in negligence may be available against a builder, engineer, or architect for the defective work. Depending on the circumstances, the applicable limitation period for negligence may differ from and in some cases extend beyond that which applies to a claim for damages for breach of contract.

A contractor is usually responsible for the conditions of the site that can be identified through reasonable investigation. However, the risk of unforeseen physical conditions of the site that cannot be discovered through reasonable investigation (often referred to as latent conditions) is often shared between the parties.

Depending on the terms of the contract, a contractor usually assumes all risk associated with the site, except for the risk of latent conditions.

Latent conditions are hidden physical conditions of a site that could not be identified by a competent contractor at the time of tendering through site inspections and reasonable investigation. These can include features like utility services, mine shafts, soil contamination, asbestos or other subsurface/geotechnical features. Whether something is in fact a latent condition will depend on the terms of the relevant contract, as the exact definition will vary from contract to contract. To work out whether a site condition is latent, you will need to engage a good technical expert or experts. Latent condition claims are where the technical-legal analysis step into the spotlight – detailed briefs to experts and clear expert opinions means we can deliver robust advice to our clients about their likely legal entitlements.

Standard contracts often share the risk of latent conditions between the principal and the contractor. The way this risk is shared depends on the specific terms of the contract. A common way to share the risk is for contractors to be entitled to an extension of time or reimbursement for additional costs if they encounter a latent condition.

To determine who should handle the risk of latent conditions, consider:

• who is the most capable of managing the risk (taking into account which party has the necessary expertise and access to critical information);
• what information/disclaimers were provided in tender documents;
• were there any existing investigations into the site;
• how long a contractor is being given to consider any existing ground conditions as part of any tender process; and
• what processes are established to handle latent conditions.

No, if you have received a third-party subpoena issued by the Federal Court, you should be able to recover the costs you reasonably incur in complying with that subpoena.

A third-party subpoena is a legal document issued by the court compelling a person or entity, who is not a party to the legal proceedings, to produce documents or give evidence at a hearing.

Depending on the type and volume of information captured by the subpoena, complying with such an order can involve considerable time and cost. This can seem a particularly unfair burden if the subpoenaed party has no direct interest in the outcome of the litigation.

As a result, in the Federal Court, when a subpoena is issued, the party requesting the issue of the subpoena should provide “conduct money” to the person that has been subpoenaed. The conduct money is intended to cover the initial costs of complying with the subpoena. If you have been subpoenaed, you are not obliged to comply with the subpoena if the conduct money has not been received within a reasonable time before the date for production of documents or attendance at the hearing.

If you decide to comply with a subpoena without conduct money, or you have received the conduct money but it does not cover your costs, you can seek to agree an amount for costs with the issuing party. Alternatively, if an agreement cannot be reached, you can make an application to the court for an order that the issuing party pays the costs of any reasonable loss or expenses incurred in complying with the subpoena.

The court takes a fairly wide view of the costs that can be recovered, in acknowledgement that a third-party subpoena is an imposition on a party with no direct interest in the litigation. Compensable losses or expenses can include:

• any solicitor costs incurred (which will be assessed on an indemnity basis), including costs incurred in assessing the lawfulness of the subpoena and whether to comply with it, as well as assessing whether documents are confidential or subject to privilege;
• correspondence with the issuing party as to the terms upon which access to the documents should be permitted;
• the cost of wages of the persons required to identify and assemble copies of documents falling within the request;
• insurances and loading entitlements (for example, leave entitlements) on top of those wages; and
• ‘the cost of office space (suitably air-conditioned) and secretarial assistance’.

If site access is not granted by the principal, the contractor will likely be entitled to an extension of time under the contract. If no such regime exists, the prevention principle may be enlivened stopping the principal from enforcing the contractual timeframes. In some circumstances the contractor may be able to terminate the contract as the obligation to provide site access is fundamental.

The principal is obliged to make the site available to the contractor to perform the work required in accordance with the Contract. Sometimes this may be specified as a precise date, other times it may be specified by reference to the program. This is often an express term of a construction contract, however in the absence of an express term, it will likely be implied.

The extent of access required to be granted by the principal will depend on the specific terms of the contract. However, the typical contractual position is that the principal is only required to grant non-exclusive site access, in that the contractor is not entitled to absolute possession or control of the site and the principal retains the right to allow other parties to enter and work concurrently.

If site access is not granted by the principal in a timely manner, most construction contracts will include an extension of time regime under which the contractor will be entitled to an extension of time to the date for practical completion in the event that it is unable to carry out the works for a period of time due to lack of access to the site. If the contract does not include an extension of time regime, the prevention principle may be enlivened. The prevention principle stops the principal from being able to enforce strict adherence to contractual timeframes for performance if there is a delay due to default by the principal, such as not providing failing to provide the required site access on time.

In general, there are very few positive obligations placed on a principal under a construction contract, however the obligation to provide site access is a fundamental one. Without site access, the contractor is unable to perform the contract.  As a result, depending on the facts and circumstances of each case and the specific terms of the contract, if site access is not provided and no extension of time regime exists in the contract, the contractor may be able to terminate the contract. However, it is important to seek legal advice before determining whether the contract can be terminated on this basis. If the contract is terminated without proper cause or without following the right steps (which are usually prescribed by the contract), you may end up being liable for breach of contract.

No. A Contractor’s legal liability for defects does not usually expire when the contractual defects liability period (DLP) ends. A Contractor will typically remain liable for defects well beyond the expiry of the DLP. It is a common misconception that a contractor’s liability for defects automatically ends on expiry of the DLP.
 
A DLP is a short-term contractual mechanism which governs the rectification of defects for a fixed period of time (usually 12-24 months). Exactly how the DLP works and the rights and obligations it confers on the parties depends on the terms of the individual contract. However, the DLP mechanism often requires the contractor to remedy any defects itself for the duration of the DLP. In addition, upon the expiry of the DLP, the principal is typically required to return any remaining security or retention monies to the contractor, if there are no outstanding defects.

However, the expiry of the DLP doesn’t mean that the contractor’s legal liability for the defects expires too. A contractor is likely to remain liable for defects years beyond the expiry of the DLP.

This is because, in most cases, a defect is a breach of contract. For example, a typical construction contract will require the contractor to carry out the work in accordance with the contract including drawings, specifications and standards, and to carry out the work in a proper workmanlike manner using suitable materials. Defects are generally a failure to comply with some or all of these terms. In these circumstances, the principal will be able to bring a claim for damages against the contractor.

Damages claims for breach of contract do not expire with the DLP but are governed by the relevant statute of limitations and must be brought within the limitation period under those statutes. Although, working out the correct limitation of actions is often complicated and highly technical. Different legislation operates across the states and territories, and even within a specific state or territory, different timeframes apply to different actions. The time when the clock starts running on the limitation periods can also be different depending on the claim. In light of this, we recommend seeking legal advice if you need to work out the time frame for bringing a claim. You will see a separate Q&A on limitation periods in coming weeks.

Yes, it is possible to sidestep an expert determination clause where there is good reason not to enforce the process, however the starting position is that parties should ordinarily be held to their contractual bargain.

In a recent Supreme Court of South Australian case (Dexus SAHMRI2 Pty Ltd (atf Sahmri2 Trust) v South Australian Health and Medical Research Institute Ltd), the Court considered to what extent a clause in a contract mandating expert determination could prevent a party from commencing court proceedings.  

In this case a party commenced court proceedings without going through the dispute resolution process required by the contract, which included a requirement for disputes to go through expert determination before legal proceedings could be commenced. The other party made an application to the court to stay the proceedings on the basis they had been commenced in breach of the contract.

The Court accepted that the dispute before it was, on the contract, required to be referred to expert determination before litigation.  However, ultimately the court did not grant a stay of the proceedings.

In deciding whether to grant a stay, the court stated that the starting point is that parties should ordinarily be held to their contractual bargain, but that position may yield where there is good reason not to enforce the process, for example where:

• expert determination would only deal with part of the dispute;
• following the agreed process would result in a duplication of effort;
• the dispute was unsuitable for expert determination because it was outside of the expert’s field of expertise or it would not involve the application of specialist knowledge; or
• expert determination was inappropriate or inadequate for the nature of the dispute. 

In this case, the legal proceedings concerned specific performance and mandatory injunctions to compel the execution of leases. The court held that the question of relief in this case was not something an expert could determine and ultimately needed to be resolved by the court. As a result, it was appropriate for the entirety of the dispute to be determined by the court.

The Court noted that expert determination may be well suited to discrete technical questions, but it may be less suitable where the dispute raises broader issues of contractual construction, the characterisation of parties’ conduct, or legal questions such as waiver and estoppel.  It may also be less appropriate where the relief sought is something only a court can finally grant, such as specific performance or mandatory injunctive relief.  

The decision illustrates that while expert determination agreements cannot simply be ignored, they do not operate with automatic force. 

Yes, but proceed with caution. If your tool removal is too significant, it might be seen as evincing an intention to no longer complete the works which can constitute repudiation. We recommend first looking at remedies available under the contract and legislation to secure payment.
 
You should always check the terms of your contract, but usually if they are your tools and equipment (not Principal-supplied plant, materials and equipment) then you are free to do with those items as you please. Moving tools and equipment around can constitute business-as-usual activities.

However, if you aren’t getting paid under the contract, we recommend you look for other remedies before demobilising plant and equipment. For example, depending on the facts and circumstances of the non-payment, the particular clauses of your contract, and the applicable security of payment legislation in your State or Territory, you may have the right to suspend works, charge interest, apply for rapid adjudications, or utilise other swift processes under your dispute resolution clause such as determination of claims by the superintendent, mediation, or expert determination.

The reason caution should be exercised before removing tools and equipment from site in circumstances where you aren’t getting paid is because, if the Principal sees a correlation between failing to pay and you taking your tools off site, you are arming them with factual information that may prejudice you down the track. For example, when a contractor starts taking a significant amount of tools and equipment offsite, that could be characterised as evincing an intention to no longer complete the works which may constitute repudiation. Repudiation has significant consequences, such as allowing the other party to elect to accept your repudiation and terminate the contract.

Whether conduct amounts to repudiation depends on what that conduct, viewed objectively, signifies to a reasonable person.

Whether removing your tools and equipment off site amounts to repudiatory conduct will depend on the specific facts of each case. In light of this, we recommend seeking legal advice before doing so in circumstances where you aren’t getting paid and to get guidance on other options that may be available to you to secure payment under the contract.

Common interest privilege allows you to share privileged information with third parties without waiving the privilege. For privilege to be maintained, the communication of the information must be confidential and the parties must share a common legal interest in the subject (i.e. co-defendants in litigation).

Why do you need it?

Common interest privilege allows you to share privileged and confidential information with third parties (who you share a common legal interest) without waiving privilege.

Suppose you are litigating against the Principal and you share the same, non-conflicting, interests in the outcome of the litigation with another contractor (for example, you are both members of the unincorporated D&C Contractor JV). You may want to share privileged communications to discuss strategy. Or in another case, perhaps you wish to share this information with your insurer, one of your subsidiaries or another co-defendant in litigation.

To avoid waiving legal professional privilege when you share the communications, you will need to establish the required common legal interest with the other person so that you share the legal professional privilege that attaches to the communication.

When will you have it?

Common interest privilege is not a separate category of privilege, but rather an exception to the waiver rule. While it is not limited to litigation, common interest privilege generally arises in a litigation context. Its applicability outside of litigation is less certain at common law.

For common interest privilege to exist, the communication or documents you are sharing with a third party must already be protected by legal professional privilege or litigation privilege.

When the privileged document or communication is shared with a third party, for common interest privilege to apply the document must be shared on a confidential basis and both parties must have a common interest in the outcome of litigation or the legal advice. However, the concept of common interest is not strictly defined and we recommend you exercise caution when relying on it.

Whether common interest privilege exists will depend on the facts existing at the time the privileged material is shared. It has been found that common interest does not arise where each party has their own selfish, potentially adverse, interests in receiving the privileged information, or where the interest are not legal but are commercial or financial.

In our example of an unincorporated JV above, we suggest you enter into a common interest deed with the other party/parties setting out your shared legal interest. While this is not conclusive evidence that a common interest exists, it will minimise the risk of waiver when sharing privileged documents between you.

Now! As of 15 April 2026, just about all the amendments to the Building and Construction Industry Security of Payment Act 2002 (Vic) are operative.

The commencement of the new SOPA regime was announced on 14 April 2026, to take effect on and from 15 April 2026. This brings forward the previous longstop date for commencement of 1 September 2026.

The new rules apply even if your contract commenced under the old regime. So, you will need to keep the following in mind if you find yourself in a SOPA adjudication on and from 15 April 2026:

• The concept of ‘excluded amounts’ has been abolished, meaning an adjudicator can consider a wider array of matters when determining the validity of a payment claim (including, for example, contractual set off rights).
• The concept of a ‘claimable variation’ has been abolished, meaning an adjudicator can consider amounts referable to a variation even if that variation has not been agreed in writing.
• If responding to a payment claim, you must provide all relevant reasons in your payment schedule – it is no longer possible to supplement these reasons in an adjudication response.
• An adjudicator may decline to enforce a time bar which is deemed to be unfair (including, for example, where it is unreasonably onerous for the contractor to comply).   
• The concept of ‘reference dates’ has been abolished, meaning claimants can now submit one payment claim per month (referable to work undertaken during the specified month), and one payment claim on or following the termination of a contract.
• If seeking recourse to security, you must notify the other party at least five business days prior – even if your contract imposes no notice requirement.
• A claim for the return of security may be served 20 business days after the end of the defects liability period – if your contract specifies a later date for the return of security, that will be of no effect.

There are two amendments which are yet to commence (expected 1 September 2026), which allow an adjudicator to have regard to submissions in support of a performance security claim, and specify when adjudicator fees must be paid.

It can be hard to keep up with ever-changing (and nationally inconsistent) SOPA procedures. If you need assistance navigating the playbook, feel free to reach out and we’d be happy to discuss. 

The term “qualifying cause of delay” is usually a reference to a specific event or events that entitle a contractor to an extension of time to the date for practical completion under a construction contract. The qualifying causes of delay relevant to each construction contract are defined in each particular contract. 

It is a common feature of construction contracts that, in specific circumstances, the contractor will be entitled to an extension to the relevant completion date under the contract. This entitlement will generally arise only where a ‘qualifying cause of delay’ has occurred, being a particular event or circumstance defined in the contract.

Typical qualifying causes of delay can include: 

• Delays caused by the principle or its representatives (including the superintendent);
• Variations;
• Force majeure events, such as acts of war or terrorism;
• Industrial action / disputes;
• Latent conditions; 
• Changes in legislative requirements occurring after the contract date; or
• Inclement weather.

As a matter of contractual risk allocation, the typical position is that the party best able to control a particular risk should bear the time and cost consequences of delay attributable to that risk. Therefore, delay caused by the contractor will not ordinarily constitute a qualifying cause of delay. By contrast, delay caused by the principal will usually be treated as a qualifying cause of delay. This also avoids the operation of the prevention principle, under which a principal may be precluded from enforcing the contractual completion dates where its own acts have prevented the contractor from completing on time. Delays arising from causes beyond the control of either party, often described as ‘neutral’ delays, are commonly the subject of contractual negotiation as to whether they constitute a qualifying cause of delay or not. 

The extension of time entitlements under construction contracts are important because construction contracts will often contain a mechanism where, if completion is not achieved by the required date under the contract, the contractor will be liable to pay liquidated damages (a pre-agreed daily or weekly amount) to the principal for the period of the delay. The entitlement to an extension of time therefore offers the contractor relief from having to pay liquidated damages associated with that delay. 

Not necessarily - privilege will not generally be waived where the privileged material is shared unintentionally, and reasonable steps are subsequently taken to protect its confidentiality. However, prompt action to rectify the inadvertent disclosure is critical.

Privilege can be waived by accidentally sharing a document with the wrong person, however the waiver is not automatic. If you act quickly to rectify the mistake and maintain the confidentiality of the document, privilege will not generally be waived. 

Where you have inadvertently shared privileged material, you should promptly take the following steps to rectify the mistake:

• upon realisation, immediately notify the recipient that the disclosure was a mistake; 
• assert privilege over the information; and 
• request that the recipient destroy the document without reading or copying it. 

It is also good practice to ask the recipient to provide written confirmation that they have destroyed the materials and to keep a record of this communication.

Not necessarily - it will depend on both the character of the ministerial direction and the breadth of your change in law provision.

If your contract defines ‘Law’ or ‘Statutory Requirement’ narrowly (i.e., by reference only to statutes and regulations), a ministerial direction will not trigger the provision. If your definition is broader than that (as many are) and includes wording such as orders, decrees, directives, subordinate instruments, delegated legislation and proclamations, it is likely that a ministerial direction will trigger your change in law provision.

A change in law provision allocates the risk of legislative or regulatory changes that may occur throughout the life of a contract. A typical change in law provision will define what constitutes a change, oblige the parties to comply with the change and entitle the contractor to claim for the extra time or costs required to account for changes to the scope of works caused by the change in law.

In deciding whether a change in law provision has been triggered, the label ‘ministerial direction’ is not decisive. What matters is whether the direction is a binding legislative instrument, and if the direction is captured by the wording of the change in law provision.

Ministerial directions are issued in respect of specific legislation. The legislation the direction is made under will typically, but not always, state whether the direction is or is not a legislative instrument. For example, under section 23 of the Liquid Fuel Emergency Act 1984 (Cth) (the Act) the Minister may give a direction to corporations regulating or prohibiting the supply of liquid fuel. If your definition of ‘Law’ or ‘Statutory Requirement’ includes words like ‘delegated’, ‘subordinated’, or ‘secondary’ legislation, then it is likely to pick up a ministerial direction under this section (or sections like it).

Even if not stipulated, a ministerial direction will still be construed as a legislative instrument if the direction alters the content of the law.

Note that a change in law is not an automatic entitlement to relief. Typically, to be entitled to time or cost relief, you will need to be able to show that the ministerial direction caused:

• an increase in cost;
• delay; or
• an inability to perform.

The industry finds itself in a complex situation, and legislative intervention may be on the cards as the situation develops.

Yes - you are generally responsible for the acts of your agents, provided they were acting within the scope of their authority.

At common law, an agent is a person who acts in a representative capacity for you and in your interests. If you are a principal, this would include the project’s superintendent when they are performing contract administration actions on your behalf. However, in most cases this will not include your subcontractors.

You will generally be liable for the acts of your agents provided they were acting within the scope of their authority. This includes liability for torts or breaches of contract committed by the agent in the course of their duty.

Importantly, the scope of your agent’s authority includes not only the express authority that you have given in words or writing, but also the authority to do things incidental or necessary to carry out that express authority (implied authority). This authority is referred to as their “actual” authority. Further, the scope of their authority includes the authority that you (or your agent, provided you have allowed them to do so) hold them out as having i.e. authority that a third person reasonably believed the agent has based on your actions, even if no actual authority exists. This is referred to as their “apparent” or “ostensible” authority. You are generally responsible for your agent’s acts within both their actual and apparent authority.

Coupled with your responsibility for your agents’ actions is the fact that, unless specifically excluded in a contract between you and your agent, you must also indemnify your agents against all liabilities incurred in the reasonable performance of their agency.

No - where performance becomes impossible due to circumstances outside of the parties’ control, the contract may be “frustrated” and the parties discharged from their future obligations under the contract.
 
In Australia, the law recognises that circumstances exist where it would be unfair for parties to be required to perform their contractual obligations because factors outside of their control have made it impossible to do so. In these circumstances, the doctrine of frustration discharges the parties from their future obligations under the contract.
 
A contract is frustrated where, without the fault of either party, events occur that cause performance under the contract to be radically different to that which was completed at the time the contract was made. For example, this can occur where the parties have contracted on the basis that their bargain would be performed in a particular way, and that method of performance is no longer possible. Courts have used terms such as “radical change”, “a thing different in substance”, “fundamentally different” or an event depriving a party of “substantially the whole benefit which it was the intention… that he should obtain”.

However, the doctrine of frustration is difficult to establish and will only be applied narrowly by the courts. Events such as hardship, inconvenience or material loss occasioned by being required to continue to perform the contract are generally not sufficient to frustrate a contract. For example, if the contract is for the delivery of goods and the normal or planned transit route is no longer available but the goods can still be delivered by taking a longer and harder route that would increase the seller’s costs, it is likely that the contract will not be frustrated. This is because performance is deemed possible despite being inconvenient. Further, a “bad bargain” or expectations that did not eventuate do not amount to frustration as these are risks that are inherent in contracting.

A term is essential when it is of such importance to the parties that they would not have entered into the contract without being assured of strict or substantial performance of that term.

A term in a contract is considered essential when it goes to the root of the contract. This will be the case where a contractual term is so important to a party that they would not have entered into the contract unless assured of strict or substantial performance of that term, and the other party knows or should have known this to be the case. The party’s intention that the term was to be essential can be determined through express words used by that party, or by considering the term in the context of the contract as a whole.

A term is likely to be essential where any kind of breach of that term would result in serious consequences for the other party, so that it effectively deprives the other party of “substantially the whole benefit” of entering into the contract. Further, a term is more likely to be essential if it is determined that damages would not adequately compensate the aggrieved party for a breach of the term.

A breach of an essential term can give rise to the right to terminate the contract. As a result, if a breach of the term is likely to occur, it is less probable that the term is an essential term on the basis that the parties are less likely to have intended for such a breach to result in the termination of the contract.

A term in a construction contract stating that “time is of the essence” is a widely accepted example of an essential term.

A project is largely complete once Practical Completion (or its equivalent) is reached. However, it is not until the Certificate of Final Completion (or the like) has been issued that your obligations to carry out the works, and the Principal’s obligation to pay you, have been discharged – that is, the project has finished.
 
There are generally two key concepts or milestones in construction contracts which mark completion – “Practical Completion” and “Final Completion”. Most construction contracts incorporate this general distinction though they may not use the same terminology.

In the case of the Practical Completion, the Superintendent, Independent Certifier or other designated party will issue a ‘Certificate of Practical Completion’ when the works are complete except for minor defects which do not impair the operation / functionality of the works.
 
However, while the works may be practically complete when this certificate is issued, the project is not actually finished until the defects liability period has ceased and defects are rectified. It is at this point in time when you will be issued with what is often called a ‘Certificate of Final Completion’. This will commonly be accompanied by a release of any remaining security the Principal holds. The Certificate of Final Completion signifies that your obligations to carry out the works, and the Principal’s obligation to pay you, have been discharged. That is, the project has finished.
 
In some cases, Practical Completion and/or Final Completion may have quite prescriptive requirements beyond those we have identified, which you will find in contractual definitions or the operable completion clauses.

No, not necessarily. If you have a security interest in something other than land – for example, materials procured by the subcontractor for incorporation in the works – your interest may not be ‘secure’ if you have not registered it on the Personal Property Securities Register (PPSR).

The default position under section 55 of the Personal Property Securities Act 2009 (Cth) is that a perfected security interest (i.e., one that is registered on the PPSR) has priority over an unperfected security interest. For example, if the subcontractor becomes insolvent and enters liquidation, your claim to the property subject to your security interest (or funds from its sale) will rank behind someone else who has registered their own security interest in that property.

But, beware the risk of taking your time! If someone else has a security interest in personal property (e.g., your subcontractor’s financier has security over all of your subcontractor’s present and after acquired property) and they register that interest on the PPSR before you register your own, the default rule says their interest will have priority over yours.

The takeaway? Register your interests as soon as you can, otherwise you might not be as secure as you think.

If the arbitration clause is valid and binding and the dispute is within the scope of the clause, you must go to arbitration. There might however be an exception if you are seeking urgent interlocutory relief from a court.

An arbitration clause is a dispute resolution provision in a contract that requires parties to resolve disputes through arbitration rather than through court proceedings, or some other process. These clauses are commonly used in construction contracts.

Arbitration clauses are often legally binding, which means that if the dispute that has arisen falls within the scope of the clause, you will not be able to go to court. In most modern construction contracts, arbitration clauses define dispute broadly and therefore tend to capture most if not all of the disputes that are likely to arise in connection with the contract.

Arbitration clauses are often considered to be independent of the main contract, which means that they remain enforceable even if the main contract is invalidated.  In some rare cases, the arbitration clause itself might be invalid and therefore not enforceable (in which case you can refer the dispute to court). However, to establish that the clause is invalid is a very high bar.

No. Only confidential communications with your lawyer that are prepared for the dominant purpose of obtaining legal advice or for existing or anticipated litigation are privileged. Communications about non-legal matters, such as general business advice, will not be privileged.
 
Legal professional privilege safeguards the confidentiality of communications between a client and their lawyer, ensuring that information shared through conversations, emails or written correspondence is protected where it is both confidential and for the dominant purpose of obtaining legal advice or for existing or anticipated litigation. This privilege also extends to documents generated from these communications, such as notes and email trails. In these circumstances, the communications are protected from disclosure in court proceedings or to regulators with powers to ask for documents.

The rationale behind legal professional privilege is to encourage open communication between clients and their lawyers to help protect the administration of justice.
 
However, privilege does not cover everything that a client and their lawyer communicate about. General communications about non-legal matters such as business advice, or documents that were not specifically created for the dominant purpose of legal advice will likely not be privileged.
 
As the test is one of substance and not form, copying in a lawyer to correspondence and marking it as privileged does not mean that communication will have the necessary dominant purpose to attract privilege.

No, you cannot contract out of the various security of payment legislation which is in place in all Australian jurisdictions.

Security of payment legislation has been implemented across all Australian States and Territories. The various security of payments laws and regulations are designed to promote efficient cash flow for payments within the construction industry. They do this by establishing statutory rights to make payment claims, imposing payment timeframes and providing rights to have payment dispute speedily resolved (on an interim basis) by adjudication in accordance with the relevant legislation.

In all States and Territories, the relevant security of payment laws cannot be contracted out of. Parties are unable to exclude, modify, or restrict the operation of the relevant legislation within their contract, and any clause within an agreement that attempts to do so will generally be void and have no effect.

Yes. Generally you can sue a joint venture, but the type of joint venture – ‘unincorporated’ or ‘incorporated’ – will determine how you do this.

A joint venture typically refers to a commercial arrangement where multiple parties collaborate on a specific project or business opportunity (rather than operating as an ongoing business), share resources and form a contractual association to achieve a common goal. Joint ventures can take many forms, including being incorporated or unincorporated.

If a joint venture is incorporated, it forms a separate legal entity and can sue and be sued independent from its members. You can therefore bring the action against that incorporated joint venture entity, rather than the individual members that sit behind it.

However, if a joint venture remains unincorporated, you typically sue the individual members directly as there is no separate legal joint venture entity to sue. Although it depends on the specific terms of the contractual arrangement, most commercial joint venture agreements provide for joint and several liability of each of the members. If this is the case, you can either sue all of them together for the full amount, or any one of the members individually for the entire loss.  

Force majeure is a creature of contract and catastrophe is not necessarily required.
 
A ‘force majeure’ clause can stipulate that any event, no matter how insignificant, can be sufficient to trigger the stated remedies.
 
As the qualifying force majeure events are defined within the contract itself, it is entirely up to the parties to determine which events will be eligible force majeure events in their particular contract. Ultimately, force majeure clauses are just a tool to allocate risk for the occurrence of certain events in a contractual arrangement.

To ensure a force majeure clause will be enforceable, parties need to specify which events qualify and the provisions of the contract that will apply if the events occur. The description of the events should be as specific as possible to avoid future disagreement about your counterparty’s interpretation. Whilst that description can, and often will, include ‘catastrophic’ events like a freak storms or global conflict, you can agree for the terms of these clauses to apply when less catastrophic events pop up that still impact on the project.

No. A remedy which operates as a penalty is unenforceable.

When a contract is breached, the law states that the wronged party should only be put into the position they would have been had the contract been correctly performed. As a result, clauses in a contract that are included for the purpose of penalising a party for their breach will be invalid. This is true even if both parties have agreed to be bound by that penalty clause.

When assessing whether the clause operates as a penalty, the courts will ask is whether the damages stipulated in the contract are ‘out of all proportion to the interests of the party which it is the purpose of the provision to protect’.

The courts do recognise that the parties to a contract are in the best position to estimate the financial impact of a specific breach. Accordingly, clauses which are a genuine pre-estimate of the damage likely to be caused by a breach will generally be valid and enforceable, especially if the clause has a strong commercial justification. Further, the estimate is an estimate of the likely damage at the time of entering into the contract. If circumstances change so that, at the time of the breach, the amount is not reflective of the actual loss, it will still be enforced by the courts if it was a genuine pre-estimate at the time the contract was signed.

Not always. It depends on the field, but experience counts!

Usually, a witness can only speak to their direct knowledge of things they experienced firsthand and cannot provide their opinions. However, when a person has specialised knowledge or experience, they can provide their expert opinion when giving evidence on subjects that are within their area of expertise.

Depending on the subject area, formal qualifications are not always required. A court can accept that a witness has specialised knowledge in a field that has been gained through training or extensive experience alone. However, in highly technical fields, formal qualifications are likely to be needed in addition to extensive experience.

Some experts are independent, external witnesses appointed (usually by lawyers) to prepare a report and provide an opinion based on a set of facts and assumptions. In a construction context, many project team members can also provide expert opinion evidence based on their training and experience – but you should keep in mind that this evidence is not independent and might be given less weight than an independent expert’s report.

Yes, but only if the email is sufficiently clear and formal and complies with all obligations of the contract in relation to issue and form.

First and foremost, a certificate of practical completion must comply with the requirements of the contract. If the contract prescribes that the certificate must be issued in a form that is not an email, you cannot certify practical completion by email.

However, if the contract is not prescriptive on form, an email may be acceptable. The test is whether, in the circumstances in which it is provided, the email is understood, viewing the matter objectively, to be certifying practical completion. What is certain is that the email will need to be clear and unambiguous (so that the parties are not left in doubt) and adopt suitably formal language (J Hutchinson Pty Ltd v Transcend Plumbing and Gas fitting Pty Ltd [2023] VSC 39).

For an email to function as a certificate of practical completion, it will help if it:

• expressly identifies that it is a certificate of practical completion;
• clearly states what the relevant date or dates are (for example, where there are separable portions of the works);
• makes formal assurances or confirmations in relation to facts in an authoritative manner; and
• is a single email (rather than part of a longer chain).

It is very unlikely. Most Australian jurisdictions now impose Christmas/New Year blackout periods in their security of payment regimes, with Victoria set to adopt one in 2026.

During the Christmas period, the NSW, ACT, SA, TAS, NT, QLD and WA security of payment regimes all operate blackout periods by excluding certain dates from the definition of “business day”, on top of the usual public holidays. This means that timeframes under the various security of payment regimes in these jurisdictions are paused, preventing respondents from being ambushed during the following periods:

• New South Wales, the ACT, South Australia and Tasmania: 27–31 December;
• Northern Territory: 25 December to 7 January;
• Queensland: 24 December, 27-31 December and 2-10 January (noting the days that fall in between are already excluded as public holidays); and
• Western Australia: 22 December to 10 January (however note that contracts entered into before 1 August 2022 are still under the old WA security of payments regime which imposes a shorter blackout period running from 25 December to 6 January).

Victoria is the only outlier. Its current legislation excludes only weekends and statewide public holidays from the definition of “business day” However, the Victorian Government has endorsed amendments to the current legislation which include excluding the period from 22 December to 10 January from the definition of “Business Day”. These amendments will take effect from 1 September 2026 and will apply to construction contracts irrespective of when they were entered into.

Maybe, so proceed with caution. There is no clear line between permissible scoping and repudiation and the answer will depend on what you are actually doing, viewed objectively and what it signifies to a reasonable person.
 
Whether testing the market for alternative contractor/subcontractor options amounts to repudiation will depend on what you are actually doing, viewed objectively, and what that signifies to a reasonable person. This is because “testing the market” is a broad concept and can vary in nature and degree. Further, the courts are yet to consider a case where a principal has scoped alternative subcontractor options, so we cannot say for certain where the line between permissible scoping and clear repudiation lies.
 
Generally, you will repudiate a contract where your words or conduct convey to a reasonable person that you do not intend to be bound by the contract (Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623, 647-8, 664; Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115, 135). Your counterparty may then elect to terminate the contract (Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd; McDonald v Denny Lascelles (1933) 48 CLR 457, 469-70).
 
It is likely therefore that speaking to other subcontractors generally about rates and methodology will not objectively show your intention not to fulfil your contract. Formally tendering a works package, on the other hand, may show you intend to give work within your subcontractor’s scope to someone else.
 
In response to this question, always ask: could what I’m doing signify that I’m unwilling to continue performing the contract?

Yes, if you are claiming costs on a quantum meruit basis (meaning ‘what the job is worth’), you can recover profit.

Quantum meruit means “as much as they deserve” or “what the job is worth”. When determining payment on a quantum meruit basis, the court will consider what a ‘fair and reasonable value’ would be for the works performed. This generally includes a reasonable percentage to cover profit and overheads.

As the foundation for quantum meruit lies in unjust enrichment, the actual amount awarded will depend on the specific circumstances, and the evidence that can be adduced.

However, following Mann v Paterson [2019] HCA 32, the court will be reluctant to award an amount in quantum meruit that exceeds the total contract price or appropriate portion of the contract price (with that apportionment to be determined on a case by case basis, depending on the contract terms). However, the contract price will usually have already accounted for a profit margin.  

Yes, an arbitration clause will generally outlive the contract in which it sits. An arbitration clause functions as a separate agreement to the main contract.

If the main contract is terminated, rescinded, frustrated, or otherwise ‘dead’, the arbitration clause remains operational and is treated as distinct from the contract itself. This means that a dispute as to the validity of the contract can (and usually must) be determined in accordance with the arbitration clause, and the arbitrator can make a determination that the contract is void without depriving themselves of the jurisdiction to do so.

However, an arbitration clause will not be enforced if the clause itself is invalid. (International Arbitration Act 1974 (Cth) s 7(5)). Whether the arbitration clause is valid will be a question of fact and law specific to the clause. The events that killed the main contract will not necessarily affect the arbitration clause and courts have held that it is “necessary to distinguish between repudiation of the substantive contract and repudiation of the arbitration agreement” (CPB Contractors Pty Ltd v Celsus Pty Ltd [2017] FCA 1620 [65]).

For example, a homeowner entered into a building contract with a builder who held a fraudulent licence. The homeowner purported to rescind the contract with the builder by reason of the fraud and sought to transfer the proceedings from arbitration to court. However, the court held that the parties were still required to apply the arbitration clause because it was treated as a separate agreement, not affected by the fraud (Ferris & Anor v Plaister and Anor (1994) 34 NSWLR 474).