In Clarke Energy (Australia) Pty Ltd v Alinta Energy Transmission (Roy Hill) Pty Ltd [2026] NSWSC 1124 (Clarke), the Supreme Court of New South Wales (Rees J) determined a dispute arising out of the construction of a $78 million gas-fired power station in remote Western Australia.
The dispute concerned Clarke Energy (Australia) Pty Ltd’s (Clarke) entitlement to extensions of time (EOT), which were disputed by Alinta Energy Transmission (Roy Hill) Pty Ltd (Alinta) and rejected by the Superintendent. This included a dispute about the largest of the EOT claims relating to Alinta’s delay in removing inground services at the start of the project (EOT 1) on the basis that Clarke was time-barred from pursuing the claim.
Clarke claimed delay costs in respect of its EOTs, amounts for a variation (which Alinta also contended was barred because no Variation Order was issued) and that the 3 superintendents appointed during the course of the project were directly liable in negligence.
The judgment offers a masterclass on the contentions that can be raised where one party seeks to strictly enforce a time bar, as well as principles for assessing delay and delay costs and the role of a contract administrator.
Key takeaway points can be summarised as follows:
Time bars
- Time bar clauses are enforceable in accordance with the terms of the contract.
- However, there may be arguments that the time bars should not be applied such as where there is a waiver, act of prevention, failure to exercise a reserve power, misleading or deceptive conduct or estoppel.
Waiver
- A principal or contract administrator’s failure to comply with the EOT claim process can lead to a finding that the EOT regime has “broken down” and the principal has waived its right to rely on time bars as a result (in this case, the superintendent assessing claims some 19 months later, and by Alinta replacing the Superintendent when he indicated he would issue a determination about Practical Completion in Clarke’s favour).
- A Principal can waive its right to rely on time bars by directing the Superintendent to determine an EOT claim rather than relying on the time bars.
- The Superintendent can waive the Principal’s right to rely on a time bar (acting as its agent) by assessing the EOT claim without reference to the time bars.
Prevention
- A delay caused by the Principal (such as a breach of the contract or variation) that delays Practical Completion will constitute an “act of prevention” that can set “time at large” unless such delays are addressed by the terms of the contract.
- The contract may address acts of prevention under an EOT regime entitling the contractor to an EOT for such delays. This regime may require notices to be submitted within time, failing which the contractor is time barred from pursuing the claim.
Exercise of discretion to extend time (the “reserve power”)
- The contract may provide that the principal or contract administrator has a discretion to extend time notwithstanding non-compliance with the notice requirements.
- This discretion, upon a proper construction of the contract, may be required to be exercised “honestly and fairly” or in accordance with other requirements (such as “reasonably” or in “good faith”).
- If the discretion to extend time is not exercised honestly and fairly when required, the contractor may be able to invoke the prevention principle where acts of the principal caused the delay.
- The effect of the above is that, while the contract may contain an EOT regime, the parties have not contracted out of the prevention principle.
Misleading or deceptive conduct
- A contractor may be able to argue that time bars should not be applied because the principal engaged in misleading or deceptive conduct in contravention of the Australian Consumer Law[1].
- The principal may have a valid defence where its representations were as to future matters and it had reasonable grounds for making them based upon the information available at the time.
- The contractor has to show that it relied upon the representations and that there is a causal link between the representations and loss and damage suffered.
- “Non-reliance” or “entire agreement” clauses will be ineffective to exclude misleading or deceptive conduct claims but may be relied on as evidence there was no reliance.
Estoppel (EOT claim)
- The contractor may be able to argue that the principal is “estopped” from relying on the time bars where the principal’s conduct induced the contractor to take, or refrain from taking, action to its detriment.
- However, there must be a link between the principal’s conduct and the detriment. For example, if the conduct led the contractor to believe that it did not have to comply with the notice requirements.
Delay assessment
- The Court may determine an EOT claim (or make other assessments) on a retrospective basis using all available evidence even if that evidence was not available to the contract administrator who initially made the determination, subject to the terms of the contract.
- A time impact analysis is commonly used to assess EOT entitlements in accordance with the Society of Construction Law Delay and Disruption Protocol.
- A time impact analysis is not focussed on how the works were ultimately undertaken, but on the effect of the delay event on the program.
- A contractor will generally “own the float” such that the fact that the contractor can achieve Practical Completion without an EOT is irrelevant to assessing an EOT entitlement (subject to the terms of the contract).
Delay costs
- A contractor may not be entitled to delay costs for delays to float activities (non-critical delays) under the terms of the contract.
- A contractor will often be entitled to margin on labour rates and expenses comprising their delay costs.
- A requirement that delay costs be “directly incurred” generally equates with losses and expenses which flow naturally from the event and may include costs that are incurred outside of the delay period.
Variations / extras
- The contract may preclude a contractor from claiming for a variation where it does not comply with the notice requirements.
- However, the contractor may still be entitled to payment in some cases where it is directed to perform the works in the reasonable expectation of being paid and can establish the principal is “estopped” from relying on failures to comply with the notice requirements.
Duties regarding contract administrator
- The principal will often have obligations to ensure the contract administrator acts honestly, fairly and/or reasonably under the contract and will have a duty to cooperate that may be relevant to matters concerning the contract administrator.
- The principal may be in breach of these obligations (including its duty to cooperate) where it replaces the contract administrator to avoid an anticipated determination that is not in its favour.
- The principal may also undermine the role of the contract administrator by privately communicating about contentious decisions.
Liability of contract administrators
- A contract administrator will generally not owe a duty of care to a contractor to avoid pure economic loss and therefore will not be liable in negligence.
BACKGROUND
Alinta engaged Clarke to engineer, procure and construct a new 60MW gas-fired power station (NPS2) at Newman, situated in the far north of Western Australia, to sit between Alinta’s existing power station (NPS1) and a neighbouring BHP power station.
During a tender site visit in July 2019, Alinta’s representative indicated where site amenities should be located and told Clarke’s personnel that existing underground services would be removed before Clarke arrived on site.
On 15 May 2020, Alinta and Clarke entered into an EPC contract (EPC Contract) with a contract price of approximately $78 million. Under the EPC Contract, Clarke was required to reach Practical Completion 567 days after the Commencement Date with liquidated damages for delay of $60,000 per day, capped at 10 % of the contract price (approximately $7.8 million).
On 19 August 2020, Alinta issued a notice to proceed before it had removed the existing underground services. This fixed the Commencement Date under the EPC Contract as that date and, in turn, the Date for Practical Completion as 9 March 2022. Alinta was then required to give Clarke non-exclusive access to the site to perform the work on and from 10 Business Days after the Commencement Date.
Alinta, at this time, expected that the services could be removed with about 2 weeks’ work. However, it soon became apparent that the complexity and scale of the task meant it would take much longer than this. This delayed the commencement of Clarke’s first activity on site – bulk earthworks – as its earthworks subcontractor would not start until the site was adequately compacted and had access to the whole site. Alinta engaged its own contractor to remove the inground services at a cheaper price than Clarke would do it under a variation. That contractor’s backfilling and compaction, however, was inadequate and had to be redone before Clarke’s earthworks subcontractor would commence its work.
Clarke submitted an EOT claim in respect of these delays (EOT 1) which was ultimately only determined 19 months later by the superintendent with no extension being granted. Alinta disputed EOT 1 on grounds including that Clarke did not copy the Superintendent when it initially submitted EOT 1 as required by the EPC Contract and was therefore time barred from pursuing EOT 1. Alinta also raised disputes regarding the cause of delay, concurrent delays and mitigation and disputed Clarke’s claim for associated delay costs.
Further, Clarke submitted a variation claim (VO 05) for additional site preparation works after Alinta asked Clarke to relocate its site amenities from the location Alinta had identified at the tender site visit. Alinta disputed this claim.
Additionally, three further EOT claims were made and disputed.
First, a claim for delays caused by government restrictions during the COVID-19 pandemic that impeded the availability of fly-in fly-out labour (EOT 4). This prevented the structural steel subcontractor’s crew from travelling from South Australia, prompting the subcontractor to embark on “a google rampage of calling people” in an effort to hire local labour instead.[2]
Second, a claim for delays in providing safe access to a live relay panel at the existing NPS1 station (EOT 11). Alinta issued a permit to work and suggested that Clarke’s electrical subcontractor proceed with the works even though the isolations had not been performed, meaning that the subcontractor would have to work near live cabling. The subcontractor refused to proceed under these circumstances.
Third, a claim arising where, nearing project completion, Alinta did not make the electricity network sufficiently available for Clarke to perform testing to commission the new plant (EOT 12). Alinta was obliged to make available an electricity network capable of receiving the electricity generated by the new plant, which Clarke needed to carry out its commissioning tests.
Throughout the project, Alinta appointed 3 separate Superintendents at different times – two of whom were employees of Alinta and the last who was from an external firm. The third appointment was controversial because Alinta replaced the second Superintendent shortly after he privately indicated to Alinta that he was minded to issue a certificate of Practical Completion when Alinta did not agree that Practical Completion had been achieved.
Finally, Clarke advanced claims in negligence against the 3 Superintendents for not carrying out their functions with reasonable care and skill, including because they failed to act independently and impartially.
Rees J largely found in Clarke’s favour. Clarke was granted EOTs totalling 142 days (EOT 1: 92 days; EOT 4: 27.5 days; EOT 11: 16 days; and EOT 12: 6.5 days), and Practical Completion was found to have been achieved on 10 November 2022 (rather than 29 November 2022, as certified by the Superintendent). Liquidated damages were reduced from the $7,929,384 levied by Alinta to $2,880,000 (further reduced to $2,502,365 by an agreement concerning the early generation of electricity). After also allowing delay costs and VO 05, judgment was entered for Clarke for $7,192,414 plus interest. The claims against the Superintendents, however, failed.
The decision required Rees J to consider a range of legal issues that often get raised in a construction dispute. These are discussed below.
APPLICATION OF TIME BARS
Time bar provisions
Clarke was required under the EPC Contract to “give the Principal and the Superintendent” a written notice of delay to Practical Completion and written updates on the delay within specified periods of time (clauses 12.6 and 12.7).
Clarke was then required to “give the Principal and the Superintendent a written claim for an extension of time under clause 12.1 within 20 Business Days after the Contractor first becomes aware, or should reasonably have become aware, that the relevant Extension Event is no longer continuing to delay Practical Completion” (clause 12.8(a)).
The giving of the notice of delay under clause 12.6 (within 15 Business Days) and the claim under clause 12.8(a) (within 20 Business Days) were stated to be “condition[s] precedent to an extension of time” (cl 12.1(b)). The requirement to provide updates on the delay under clause 12.7 was not a condition precedent.
Clarke provided notices of delay, updates of delay and EOT 1 to Alinta within the time periods specified. However, it did not provide them to the Superintendent at the time. Clarke corrected this oversight promptly upon becoming aware by sending the notices to the Superintendent, but not within the time periods required by the EPC Contract.
Given that the notices and EOT 1 were not given to the Superintendent within time, Clarke was time barred from being entitled to an extension. It therefore had to rely on alternative arguments as to why the time bars should not be applied.
Waiver
Clarke first argued that Alinta had “waived”[3] its entitlement to rely on the time bars. This was said to have occurred by reason of Alinta’s conduct and the Superintendent’s conduct in response to EOT 1. Rees J accepted these arguments in favour of Clarke.
First, her Honour found that the “contractual regime for EOT claims to be determined promptly, by a fair and reasonable arbiter, had entirely broken down”.[4] This was because the Superintendent failed to determine EOT 1 within 15 Business Days as required by the EPC Contract, with a determination only being made some 19 months later (by a different Superintendent who had been appointed by then).
This appears to accept Clarke’s submission that clause 12 constituted a “code” for dealing with EOTs and Alinta was “not entitled to ‘cherry pick’ the provisions that suited it, insisting on the conditions precedent but “causing” the Superintendent not to comply with its obligations”.[5] Rees J also found that communications with Alinta “undermined” the Superintendent’s role and that the role was “effectively destroyed when Alinta replaced him on becoming aware that his indicated ‘fair and reasonable’ determination of whether Practical Completion had been achieved was not something with which Alinta agreed”.[6]
Second, her Honour found that Alinta had elected between inconsistent rights by directing the Superintendent to determine EOT 1 when Practical Completion was imminent 19 months later.[7] That is, it elected to have the EOT claim determined rather than relying on the time bar to deny the claim. This was in circumstances where Clarke had a claim that Alinta was in breach of clause 38.2(a) of the EPC Contract, which required Alinta to ensure that the Superintendent performed its functions “within the time expressly required [or] within a reasonable time”. Given this, Alinta instructing the Superintendent to assess EOT 1 was in its interests to mitigate this claim for breach of contract. Her Honour also made this finding despite initial correspondence from Alinta contending that Clarke was time barred.
Third, the fact that the Superintendent assessed EOT 1 without reference to the notification requirements was a waiver of those requirements.[8] This was on the basis that the Superintendent waived the notice requirements acting as Alinta’s agent.
In making these findings, Rees J also noted that clause 43.3, which stated that no party may rely on a waiver unless “in writing and signed by the Party granting the waiver”, was ineffective to preclude Clarke’s waiver arguments (consistent with authority that such a clause can itself be waived).[9]
In summary, the Superintendent’s failure (for which Alinta was responsible) to properly assess EOT 1 within the time and in the manner contemplated by the EPC Contract opened up Alinta to arguments (which in this case were successful) that it could not rely upon the time bars. Further, Alinta did not help itself by contributing to the non-compliance with the contractual regime in its communications with the Superintendent and later replacing the Superintendent when it disagreed with his opinion about practical completion. The fact that the Superintendent assessed the EOT claim almost 2 years later upon Alinta’s direction on its merits without reference to the time bars further contributed to the finding of waiver.
The decision goes to show that a principal can prejudice its position by not complying with the EOT regime where it itself seeks to invoke time bar provisions within that regime – in this case with a finding that the regime had “broken down” as a result. It also illustrates that a Superintendent (or equivalent) can prejudice a principal’s position by undertaking a substantive assessment of an EOT claim in rejecting it without reference to time bars (even where the principal initially reserves its rights to rely on the time bars). Further, it shows that Principals should be cautious about engaging in conduct that may constitute an election not to rely on the time bars.
Prevention principle
The prevention principle is that “a party cannot insist on the performance of a contractual obligation by the other party if it itself is the cause of the other party’s non-performance”.[10] The principle is enlivened where conduct hinders or impedes performance; it is not necessary to demonstrate that it made performance impossible.[11]
In the case of delay, the prevention principle may mean that a principal cannot hold a contractor to a required completion date under the contract where it has itself caused delay preventing the contractor from meeting that date. This can have the effect of setting time “at large” such that the contractor is no longer bound by the completion date and instead only has an obligation to complete the work within a “reasonable time”.[12] If the contract provides that liquidated damages were payable for not meeting the completion date, these also cannot be enforced in this scenario.[13]
However, time will often not get set at large because, in a typical construction contract, acts of prevention causing delays will be dealt with by an EOT regime. This works such that where the principal causes delay by an act of prevention (for example, not providing access in breach of the contract) the contractor’s recourse is to claim an EOT under the procedure in the contract. This procedure may also include submitting notices and claim documents within specified time periods as a condition to the entitlement (as was provided for by the EPC Contract). If the contractor does not submit these notices or claims within time, it can be “time-barred” from pursuing the EOT entitlement at all.
Given this, the principal can argue that time is not set at large by reason of the principal’s acts of prevention delaying completion of the works. This is because the principal can say that the prevention principle does not apply because the contractual completion date can be extended under the EOT regime, so that the principal will not have prevented achievement of that date.[14] This is also the case where the contractor fails to submit an EOT claim within time and is time-barred from making that claim.[15] The purpose of drafting such EOT clauses is not only to protect the contractor, but also to protect the principal by preventing the prevention principal from having the effect of setting time at large.[16]
However, the analysis does not end there, as there may still be an obligation for the principal or a contract administrator to exercise a discretion to extend time where there are acts of prevention. This is discussed below. If the principal is required to exercise its discretion to extend time, the contractor may still be able to rely upon acts of prevention by the principal. If this is the case, the EOT regime does not “contract out of” the prevention principle.
Exercise of discretion to extend time (the “reserve power”)
Clarke contended that, even if it had not complied with the notice requirements and was time-barred, Alinta had an obligation to exercise its discretion (known as the “reserve power”) to extend time in respect of EOT 1. This was in circumstances where the delay was caused by Alinta’s failures to remove underground services and provide access to the site. Clarke contended that Alinta had failed to exercise its discretion honestly and fairly in these circumstances under the EPC Contract.
The matter largely turned on whether, upon a proper construction of the EPC Contract, the EOT regime excluded the prevention principle such that Clarke would not be entitled to an EOT even if Alinta committed acts of prevention. That is, whether the EPC Contract required Alinta to exercise its discretion to extend time for acts of prevention, despite Clarke’s non-compliance with the notice requirements. Clarke contended Alinta was obliged to exercise the discretion to extend time “reasonably, honestly and fairly, having regard to the prevention principle and pursuant to an implied term that it exercised its discretion in good faith”.[17]
Clause 12.2(a) of the EPC Contract provided:
“Even though the Contractor is not entitled to an extension of time, the Principal may (in its absolute discretion) extend the Date for Practical Completion at any time for any reason by written notice to the Contractor.”
Clause 12.2(b) also provided:
“The Contractor is not entitled to make any Claim against the Principal in relation to an extension of time under clause 12.2(a), including for amounts under clause 12.4”
After reviewing other cases considering such provisions,[18] Rees J concluded that the EPC Contract did not exclude the prevention principle and that, where the reason for the delay was Alinta’s breach of contract, Alinta was required to act honestly and fairly in exercising the discretion under clause 12.2(a) of the EPC Contract.[19] This was the case even though that clause expressed the discretion as an “absolute discretion”. It was also the case even though clause 12.2(b) provided Clarke could not make any “Claim” in relation to extensions under clause 12.2(a) and that the definition of “Claim” included “an extension of time to the Date for Practical Completion”.
This was to be distinguished from the clause in Growthbuilt Pty Ltd v Modern Touch Marble & Granite Pty Ltd [2021] NSWSC 290, which had similarities to clause 12.2(a), but expressly included words in stating that “Growthbuilt is under no obligation to extend, or to consider whether it should extend, the Date for Completion”.[20] In that case, it was found that “there was no room to impose an obligation on Growthbuilt to exercise the power to extend the Dates for Completion, whether reasonably or fairly in the interests of [its subcontractor] having regard to the prevention principle or not”. This illustrates that whether the prevention principle is excluded will depend upon the terms of each contract.
Rees J found that the initial stages of the project were “littered with what may fairly be described as ‘acts of prevention’ by Alinta” and that “where Alinta was the cause of the delay, it was certainly a situation which called out for Alinta to exercise the power in favour of an extension”.[21] Accordingly, her Honour would have found in favour of Clarke on its contentions (if she had not already done so on the basis of waiver).
Misleading or deceptive conduct
In the alternative, Clarke claimed that Alinta had engaged in misleading or deceptive conduct in contravention of s 18 of the Australian Consumer Law.
Clarke alleged that Alinta represented at the tender site visit and in a conversation shortly before entry into the EPC Contract that it would relocate the existing underground services in a way that would not delay Clarke’s work and Clarke relied on this in not taking steps to remove the underground services itself.
Clarke submitted that the Court should preclude Alinta from affording the consequence of its conduct, in particular, relying on the time bars to deny the EOT entitlement.[22]
However, while it was found that Alinta did represent that it would remove the existing underground services before Clarke arrived on site, Clarke was unsuccessful on this claim.
The reason for this was because Alinta had reasonable grounds to make the representations (which were as to future matters) at the time.[23] While Alinta did not know everything about the underground services, there was still some time (about 5 months at the time the EPC Contract was signed) before Clarke was expected on site and it was reasonable to believe it could remove them within this time.
The decision shows that, while often run side by side, a misleading or deceptive conduct claim is not the same as a breach of contract claim. To establish that conduct is misleading, more is needed than simply showing that the defendant did not do what it said it would. The plaintiff also needs to show that any representations were misleading or deceptive and that they caused loss and damage. In relation to representations about future matters, the defendant may be able to show it had reasonable grounds for making the representation having regard to the information available at the time.
Nonetheless, misleading or deceptive conduct can in some cases be a valuable cause of action for a plaintiff in a construction dispute – for example, where information is given about site conditions or other matters that prove to be untrue.
Finally, it was noted that “entire agreement” or “non-reliance” clauses will not have the effect of excluding claims under the Australian Consumer Law. However, such clausesmay be relied upon as evidence of non-reliance and of the want of causal connection between the representation and entry into the contract.[24]
Estoppel
In the further alternative, Clarke contended that Alinta was estopped from disputing Clarke’s entitlement to EOT 1. Alinta was said to be responsible for the relocation works (as it acknowledged at various project meetings) and to have represented that it would complete those works in a way that would not delay Clarke’s work. Clarke alleged that it relied on Alinta’s representations and did not undertake any relocation works itself at the time. It submitted Alinta should be required to fulfil the assumption on which it relied.
Rees J found that the estoppel was not made out.[25] Alinta did not represent that, if it failed to remove the underground services in time it would grant an EOT or suspend the contractual regime for EOTs. Nor did Clarke prove (or plead) that Alinta had induced an assumption that it would not insist on compliance with the contract in respect of EOTs.
Further, the detriment to Clarke was the denial of its EOT and delay costs and this did not flow from Alinta’s representation. It resulted from Alinta denying the EOT claim on the basis that the contractual requirements were not met, and was therefore not connected with the representations. Rees J also observed that there is “limited scope for estoppel in comprehensive contractual regimes”.[26]
In general, the decision suggests that it is unlikely that an estoppel argument can succeed where the representations relate to the delay event itself where the contractor could have avoided the consequences by submitting a valid EOT claim. However, in cases where the representations induce the contractor to believe that the principal will not require compliance with the notice requirements in granting an EOT, a contractor may have more success.
Estoppel is discussed further in respect of VO 05 below, where Clarke succeeded on its argument.
ASSESSMENT OF DELAY
Retrospective assessment
The judgment provided some useful guidance on how the Court will assess disputed determinations by a contract administrator.
First, it was noted that the Superintendent’s decision was not final and binding (under this particular contract) and either party could seek a determination from the Court where there was a disagreement under the terms of the EPC Contract.[27]
Second, the Court was not bound to determine Clarke’s entitlements only on the basis of the material which could have been known to the Superintendent.[28]
Third, and relatedly, it is open to the Court to assess delay on a retrospective basis even though that course would not have been available to the Superintendent at the time of the original assessment (necessitating a prospective assessment).[29] This method is considered a “more practical and more accurate and sensible” way to analyse delay with the benefit of hindsight utilising actual “as build” facts to ascertain how the works were actually constructed and delayed.[30]
Fourth, the above can be applied to other determinations such as, in this case, the assessment of whether Practical Completion had been achieved. The EPC Contract in this case provided that satisfactory alarms and warnings during the Guarantee Tests (a requirement of Practical Completion) “shall be determined by the Principal”. Upon a proper construction of the EPC Contract, it was found that the Court could consider retrospectively whether or not the requirement had in fact been met having regard to all of the evidence.[31]
Fifth, the above may be subject to the terms of the contract which may require a different approach.[32]
Delay assessment methodology
The EPC Contract stated in clause 12.10: “To the extent practicable, the effects of the Extension Event will be assessed using a time impacted analysis”.
The EPC Contract did not define “time impacted analysis” but it was noted that time impacted analysis was one of a number of methods available to programmers and recognised in the Society of Construction Law Delay and Disruption Protocol.[33] The Protocol describes the method as follows:
“Time impact analysis is based on the effect of Delay Events on the Contractor’s intentions for the future conduct of the work in the light of progress actually achieved at the time of the Delay Event and can also be used to assist in resolving more complex delay scenarios involving concurrent delays, acceleration and disruption. It is also the best technique for determining the amount of EOT that a Contractor should have been granted at the time an Employer Risk Event occurred. In this situation, the amount of EOT may not precisely reflect the actual delay suffered by the Contractor. That does not mean that time impact analysis generates hypothetical results – it generates results showing entitlement. This technique is the preferred technique to resolve complex disputes related to delay and compensation for that delay”
Rees J also noted judicial comment that the methods referred to in the Protocol “have apparently been accepted into programming or delay analysis lore”.[34] Both Clarke’s and Alinta’s programming experts applied the Protocol.
The approach involved the following steps undertaken by Clarke’s expert:[35]
- Choose a baseline program accounting for actual progress just prior to the commencement of the Extension Event (and therefore accounting for all delays that had occurred prior to the Extension Event);
- Introduce the Delay Event into the baseline program to create an impacted program. Additional logic to the delay activity may also need to be added where necessary to correctly and accurately model the impact of the delay event on Practical Completion;
- Determine the extent of delay by comparing the forecast date of Practical Completion in the baseline program against that in the impacted program;
- Account for concurrent delay by deducting any period over which critical delay to Practical Completion would have occurred in any event;
- Assess whether Clarke had complied with its obligations to mitigate delay.
Rees J also found that how the works were ultimately undertaken is not the focus of time impacted analysis, but rather the focus is on the effect of the delay event on the program.[36]
This was applied in Clarke’s favour where its expert changed the logic between two activities (changing from “Start to Start” to “Finish to Start”) to account for a change discussed at the time of the Delay Event between Alinta, Clarke and its subcontractor to minimise risk of injury at the site.[37] Alinta disputed this because this logic did not reflect what happened in actuality (when these activities were carried out months later) such that it was not supported by the as-built programs. However, her Honour found (after concluding that the change in logic was reasonable) that this did not matter for the purposes of a time impacted analysis.
Ownership of the float
Rees J held that Clarke, as the contractor, had the benefit of float in the program. That is, where activities (including critical activities) could be completed earlier than what was programmed and thereby accruing a float of contractual time for performance, Clarke “owned” that float for the purposes of assessing EOT claims.
Rees J noted there were contractual provisions providing for an extension where Practical Completion was delayed and that whether Clarke could achieve the Date for Practical Completion without an extension of time was to be disregarded in assessing delay.[38]
Her Honour then concluded as follows:
“… in considering whether an EOT should be allowed, and by what period, the fact that Clarke has ‘float’ and can achieve Practical Completion without an extension of time is irrelevant. This is consistent with treating any ‘float’ in the program as something which Clarke has achieved, by its own efforts in planning or progressing the Works, and which Clarke is entitled to use for its benefit. That is, Clarke owns the float”.[39]
However, the fact that Clarke owned the float did not change that it had to show delay to critical path activities to be entitled to an EOT (i.e. the delay had to cause delay to Practical Completion). This was applied to EOT 11 so that Clarke was only entitled to 16 days’ extension for an activity (relay house works) that was delayed for 17 days where the activity was not on critical path until the second of the 17 days.[40]
DELAY COSTS
Costs of delay to float
Clarke was not awarded delay costs for delay to float activities.
This was the case applying clause 12.4(a) of the EPC Contract, which provided that “if the Date for Practical Completion is extended … for delay to Practical Completion … the Principal must pay to the Contractor the reasonable additional costs and expenses directly incurred by the Contractor as a result of that delay” (Rees J’s emphasis).[41]
Clarke was only entitled to delay costs for delays to Practical Completion under this clause.
Labour rates margin
Clarke claimed a margin on labour rates which formed part of its delay costs. Alinta disputed this claim contending Clarke should only be entitled to actual costs calculated based on salaries plus benefits.
Rees J determined in Clarke’s favour and awarded the margin saying as follows:
“If the Contractor incurs costs and expenses as a consequence of a delay which, by definition, it did not cause, could not avoid and was unable to mitigate, then commercial parties would hardly expect the Contractor to pass on its costs to the Principal without enjoying the usual margin or economic rewards inherent in the contractual arrangement. The Contractor would not be expected to now provide goods and services on a non-profit basis, absent clear words. And the contract, I think, reflects this, referring to “reasonable additional costs and expenses … directly incurred”.”[42]
The finding that “absent clear words” the contractor would not be expected to provide goods on a non-profit basis perhaps suggests that more often rates that include a margin will be used in assessing delay costs as opposed to actual costs incurred by the contractor based upon salaries plus benefits.
Expenses margin
Clarke was awarded a margin for overheads and profits on expenses incurred as a result of the delay. This finding relied, in part, on authority that very often overheads costs will be a significant part of a delay claim and the contract would require express language to exclude those amounts.[43]
Rees J accepted the application of a 15% margin (which was the margin payable on variations under the EPC Contract) to expenses such as flights, accommodation and equipment hire.[44]
Meaning of “directly incurred”
The EPC Contract entitled Clarke to “reasonable additional costs and expenses directly incurred by the Contractor as a result of that delay”. Alinta contended that certain costs were not “directly incurred” and therefore not payable to Clarke.
Rees J agreed with Clarke, finding that “directly incurred” can be equated with losses and expenses falling within the first limb of the rule of Hadley v Baxendale (1854) 9 Ex 341,[45] being loss which “flows naturally from the breach”. [46]
Clarke was allowed travel costs in respect of EOT 11 outside of the delay period which were incurred to account for the contingency that personnel may not be able to access the remote site. Her Honour said that there “does not need to be a neat correspondence between the period of delay and the date of flights or accommodation” for the costs to be recoverable if they were a consequence of the delay.[47]
On the same basis, off-site storage charges for long-lead items (such as radiators, high voltage cables and the main transformer), which had to be stored because of the EOT 1 delay, were recoverable even though the storage periods did not precisely align with the period of delay.[48]
VARIATIONS / EXTRAS
VO 05: Site amenities
Clarke claimed a variation (VO 05) for additional site preparation works for moving site amenities to a new location.
Alinta’s representative asked Clarke to change the location following a weekly meeting, to accommodate Alinta’s operations, including the turning circle required for large trucks delivering to Alinta’s existing diesel tanks. The proposed relocation was then set out in an email from Alinta’s representative, which Clarke agreed was “a good plan”. Although Clarke flagged there would be additional costs, there was no agreement as to any additional amount payable at this time.
Clarke performed the works and then later submitted a variation proposal. Alinta rejected the variation claim because Clarke had not provided any Variation Proposal prior to doing the work and proceeded with the works unilaterally without Alinta giving a Variation Order.
Under clause 14.3 of the EPC Contract, Clarke was not entitled to make any claim against Alinta in relation to a variation where no Variation Order had been given.
Clarke was unsuccessful in arguing that an email from Alinta constituted a Variation Order under the EPC Contract. This was because the definition of “Variation Order” required that the order “states it is a variation order under clause 14.3” (which the email did not).[49]
Therefore, Clarke was not entitled to additional payment for VO 05 if applying clause 14.3 of the EPC Contract.[50]
Promissory estoppel
Notwithstanding the above, Clarke further contended that it was still entitled to payment for the variation because Alinta was estopped from denying that entitlement. This was on the basis that Alinta had, by its representations and conduct, induced Clarke to act to its detriment in performing the works.
Clarke contended that Alinta’s representative communicated at a weekly meeting (as shown in the minutes) that he intended to deal with the additional costs associated with relocating site amenities by requesting that Clarke provide a Variation Proposal. However, by Alinta’s oversight, this never occurred and Clarke did not submit a Variation Proposal before performing the works (and nor did Alinta issue a subsequent Variation Order).
Clarke said that it relied upon the representation at the weekly meeting to issue a purchase order to its subcontractor and proceed with the works.
Rees J applied Brennan J’s well-known formulation from Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387at 428 – 429 of what must be shown to establish an equitable estoppel:
- The plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that that particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship;
- The defendant has induced the plaintiff to adopt that assumption or expectation;
- The plaintiff acts or abstains from acting in reliance on the assumption or expectation;
- The defendant knew or intended him to do so;
- The plaintiff’s action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and
- The defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise.
Rees J found that Clarke was entitled to expect that a request to provide a Variation Proposal would be forthcoming.[51] Additionally, where Alinta’s representative wanted the site amenities in the “new spot”, Clarke was also entitled to expect that, on providing a variation proposal, Alinta would issue a Variation Order. Further, Clarke could expect that there would be a negotiation about the amounts recoverable from Alinta in respect of the relocation of amenities.
Accordingly, Clarke was entitled to payment for the variation despite its non-compliance with the contractual requirements, only submitting its claim after the works were completed. Clarke was awarded $69,000, being its quantity surveyor’s assessment less an allowance for what Clarke would have spent on site amenities in their original location.[52]
The finding shows that a contractor may still be entitled to be paid for a variation where it was induced by the principal to proceed with the works with the reasonable expectation of receiving remuneration.
CONTRACT ADMINISTRATORS
Duty to ensure contract administrator acts honestly and fairly
The EPC Contract required Alinta to ensure that the Superintendent performed its functions within the time required by the contract and “acts honestly, fairly and reasonably and arrives at reasonable determinations” (clause 38.2).
As the project neared completion, the second Superintendent emailed Alinta (without copying Clarke) indicating that he would be “seeking to issue the notice” of Practical Completion. Following that, Alinta’s operations manager engaged in private communications with the Superintendent about Practical Completion. Within days, Alinta had prepared an engagement letter for an external Superintendent and soon after replaced the second Superintendent with immediate effect.
The second Superintendent’s anticipated determination in Clarke’s favour was a reason for Alinta replacing him.[53]
Her Honour found that “the Principal removing the Superintendent so that its determination could not be made, where the Principal disagreed with that determination, destroyed the parties’ contractual bargain”.[54] While Alinta did not have to give advance warning or reasons for replacing the Superintendent, its discretion to do so “had to be exercised with the implied duty of cooperation in mind so that, in exercising the discretion, the Contractor was not deprived of the benefit of the contract”.[55]
Her Honour also found that “[r]emoving a superintendent to prevent them from giving a determination that you do not want also effectively destroys the role of a superintendent”.[56]
Further, her Honour was critical of private communications between Alinta and the Superintendent about Practical Completion and EOT 1, saying that “[p]rivate communication between a superintendent and one contracting party on a contentious topic fundamentally undermines the role of a superintendent”.[57]
The replacement of the Superintendent and private communications formed part of the basis for why Alinta was held to waive its rights to rely on the notice requirements (and therefore could not deny EOT 1 on that basis) as discussed above. [58] This was a significant consequence of Alinta’s conduct.
In summary, the judgment provides important guidance about dealing with a contract administrator appointed to make determinations under a construction contract. It shows that parties should be cautious in unilaterally communicating with such a contract administrator about their determinations. It also warns against taking action (such as replacing the Superintendent) that may undermine their decisions.
Contract administrator’s liability
Clarke also claimed in negligence against the 3 superintendents appointed at different times during the course of the project. The damages sought were, effectively, the same amounts sought against Alinta.
However, Rees J found that the superintendents did not owe a duty of care to Clarke in respect of economic loss and therefore Clarke could not claim against them.[59]
This finding applied the established approach to determine whether a duty of care exists of having regard to, in particular, whether the plaintiff is “vulnerable” to the defendant’s actions. The courts will generally not find a duty of care exists where there is a sophisticated contractual regime allocating risk.
Rees J noted:
“There was a comprehensive and lengthy agreement between Clarke and Alinta setting out their respective rights and obligations. Both contracting parties were well-resourced and had legal assistance in drafting the contract. Clarke had the opportunity to include provisions in the contract that gave it recourse if the Superintendent did not do their job, and the contract included such provisions.”[60]
The decision therefore confirms that a contract administrator will generally not be liable in negligence to a contractor for pure economic loss.
The position may, however, be different in respect of a contract administrator’s liability to a principal that engaged them, given that a breach of contract claim will often be available.
Further, the position could also be different for personal injury or property damage claims as distinguished from claims for pure economic loss.
Finally, a contractor may consider whether there are any other arguable non-contractual claims such as for misleading or deceptive conduct under the Australian Consumer Law where supported by the facts.
CONCLUSION
The case shows that denying a claim because it is time barred will not always be straightforward. While the contract may be clear about the conditions for making a claim, there may still be valid arguments why the time bars should not apply. Doctrines such as waiver, estoppel and the prevention principle, as well as statutory provisions, may allow a court to look at the wider circumstances to determine the entitlement.
Alinta sought to deny Clarke an EOT for delays that it itself caused, relying on an oversight by Clarke in not copying the Superintendent when sending its notices. This was despite the fact that the delay was well known between the parties, the notices were given to Alinta within time and that the oversight was promptly corrected. It was also in circumstances where Alinta itself had failed to ensure that the Superintendent complied with the contractual process, and in which it had acted in ways that undermined the Superintendent’s role, to the point where the Court found that the contractual machinery for determining EOT claims had broken down.
Alinta also denied Clarke a variation for moving site amenities where Alinta directed the works and it was discussed that Alinta would issue a request for a variation proposal. Although Clarke did not comply with the contractual claim requirements, it was reasonable for it to expect payment.
Luckily for Clarke, there was a legal pathway by which it could be granted its entitlements despite its non-compliance with the contractual process. While other cases might end in a harsher result, Clarke was able to achieve its desired outcome in this case.
Finally, more generally, the case will serve as a valuable reference for practitioners dealing with complex construction disputes going forward, particularly where there are issues concerning time bars, delay, delay costs and the role of the contract administrator.
[1] Competition and Consumer Act 2010 (Cth), schedule 2.
[2] Clarke at [6] and [330].
[3] Rees J noted that the term “waiver” is an imprecise term capable of describing different legal concepts, notably election and estoppel: Clarke at [761], citing Commonwealth v Verwayen (1990) 170 CLR 394 at 406 (Mason CJ).
[4] Clarke at [766].
[5] Clarke at [759].
[6] Clarke at [767].
[7] Clarke at [768] – [773].
[8] Clarke at [774] – [775].
[9] Clarke at [762], citing Civil Mining & Construction Pty Ltd v Wiggins Island Coal Export Terminal Pty Ltd [2017] QSC 85 at [799].
[10] Clarke at [259], citing Spiers Earthworks Pty Ltd v Landtec Projects Corporation Pty Ltd (No 2) [2012] WASCA 53 at [47].
[11] Clarke at [864], citing Bensons Property Group Py Ltd v Key Infrastructure Australia Pty Ltd [2021] VSCA 69at [122] – [127].
[12] Clarke at [866], citing A Hudson, Hudson’ Building and Engineering Contracts (13th ed, 2015, Sweet & Maxwell) at [6-033].
[13] Ibid.
[14] Turner Corporation Ltd (rec and mgr apptd) v Austotel Pty Ltd (1994) 13 BCL 378 at 384 – 385.
[15] Ibid.
[16] Clarke at [867], citing Spiers Earthworks Pty Ltd v Landtec Projects Corporation Pty Ltd (No 2) 2012 287 ALR 360; [2012] WASCA 53 at [49].
[17] Clarke at [856].
[18] Clarke at [868] – [872], where her Honour considered Peninsula Balmain Pty ltd v Abigroup Contractors Pty Ltd [2002] NSWCA 211, Probuild Constructions (Aust) Pty Ltd v DDI Group Pty Ltd (2017) 95 NSWLR 82; [2017] NSWCA 151and Growthbuilt Pty ltd v Modern Touch Marble & Granite Pty Ltd [2021] NSWSC 290.
[19] Clarke at [872] – [875].
[20] Clarke at [870] – [871].
[21] Clarke at [875].
[22] Clarke at [879], citing Viterra Malt Pty Ltd v Cargill Australia Ltd (2023) 74 VR 1; [2023] VSCA 157 at [437] – [440]; Brighton Australia Pty Ltd v Multiplex Constructions Pty Ltd (2018) 56 VR 557; [2018] VSC 246; DIF III – Global Co-Investment Fund LP v Babcock & Brown International Pty Ltd [2019] NSWSC 527 at [273].
[23] Clarke at [880].
[24] Clarke at [73], citing Butcher v Lachlan Edler Realty at [150] – [152]; Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25 at [31].
[25] Clarke at [896] – [879].
[26] Clarke at [897].
[27] Clarke at [11].
[28] Clarke at [12], citing Built Qld Pty Ltd v Pro-Invest Australian Hospitality Opportunity (ST) Pty Ltd (2022) 13 QR 148; [2022] QCA 266 at [115].
[29] Clarke at [12], citing Built Qld Pty Ltd v Pro-Invest Australian Hospitality Opportunity (ST) Pty Ltd (2022) 13 QR 148; [2022] QCA 266 at [116] – [117] (which cited V601 Developments Pty Ltd v Probuild Constructions (Aust) Pty Ltd [2021] VSC 849 at [623], [627]).
[30] Clarke at [13], citing V601 Developments Pty Ltd v Probuild Constructions (Aust) Pty Ltd [2021] VSC 849 at [587].
[31] Clarke at [15] – [18].
[32] Clarke at [19] – [20].
[33] Clarke at [407], citing Alstom Ltd v Yokogawa Australia Pty Ltd (No 7) [2012] SASC 49 at [1268].
[34] Clarke at [408], citing White Constructions Pty Ltd v PBS Holdings Pty Ltd [2019] NSWSC 1166 at [190] (which cited Alstom at [1282]).
[35] Clarke at [415] – [417].
[36] Clarke at [834].
[37] Clarke at [825] – [837].
[38] Clarke at [134].
[39] Clarke at [134].
[40] Clarke at [515] – [526]. Also see [413] – [414] regarding the differences between the programming experts’ assumptions in this regard.
[41] Clarke at [528].
[42] Clarke at [538].
[43] Clarke at [546], citing Built Qld Pty Ltd v Pro-Invest Australian Hospitality Opportunity (ST) Pty Ltd (2022) 13 QR 148; [2022] QCA 266 at [172].
[44] Clarke at [547] – [548].
[45] Hadley v Baxendale (1854) 9 Ex 341 addresses the scope of damages that may be claimed for a breach of contract (or whether the damage is too “remote”). There are two “limbs” of damages that may be claimed: first, loss that flows “according to the usual course of things” from the defendant’s breach; and second, loss arising from special circumstances within the knowledge of the defendant (including where it does not flow in the usual course of things).
[46] Clarke at [544], citing GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd (2003) 128 FCR 1; [2003] FCA 50 at [1170].
[47] Clarke at [544].
[48] Clarke at [845] – [850].
[49] Clarke at [289] – [290].
[50] There was also a dispute about whether the works were within Clarke’s scope. The Principal’s Project Requirements in the EPC Contract provided that Clarke could put the office and amenities in any location. Alinta asked Clarke to change the location after Clarke had determined the location and circulated drawings. The change was a variation to the scope of works, including because of additional earthworks that were needed: Clarke at [285].
[51] Clarke at [297] – [300].
[52] Clarke at [305].
[53] Clarke at [649] – [652].
[54] Clarke at [653].
[55] Clarke at [554].
[56] Clarke at [654].
[57] Clarke at [642].
[58] Clarke at [767].
[59] Clarke at [911] – [920].
[60] Clarke at [917].