NSW Construction “Pause” and Extensions of Time

Construction industry participants should note that as and from 12:01 am today (19 July 2021) the New South Wales government has prohibited (with very limited exceptions) the carrying out of works at construction sites in various parts of greater Sydney (including the Blue Mountains, the Central Coast, Wollongong, and Shellharbour).

As most modern construction contracts provide that a contractor (or subcontractor) is only entitled to an extension of time (EOT) in the event that the contractor (or subcontractor) complies with a detailed notification and claims process (often requiring notification and a claim within 2 business days of a delay occurring), it is vitally important that you immediately and urgently review your contracts to ensure that claims are notified and made in a timely fashion and in the proper format.

The failure to notify and claim EOT’s in a timely way might:

• Prevent you from claiming and EOT in relation to the “pause” at all; and
• Could see you exposed to claims for liquidated damages in relation to the period covered by the “pause”.  Such outcome could be disastrous as we simply do not know at this point in time how long the “pause” will ultimately extend.

Further, you should also be reviewing your contracts to see whether or not you might be entitled to extra costs as a result of the “pause”.  Again, as in the case with EOT’s the failure to notify and make a claim as required by your contract, could mean that you are not entitled to extra money that you might have otherwise been able to claim.

Finally, the “pause” is not merely an issue for contractors and subcontractors.  In circumstances where a construction contract allows for the granting of a discretionary EOT (whether by a superintendent or some other party), then the principal may (depending upon the precise terms of the contract) be obliged to ensure that the superintendent (or other party) grants such an extension of time.  For example, if a project is covered by an unamended AS4000-1997; we think that it is fairly arguable that such a discretion might be required to be exercised in favour of a contractor/subcontractor given the lockdown of the construction industry.  Of course, such might have implications for the principal in terms of the payment of extra costs.

The above is not to suggest that a commercial approach to resolving issues relating to the “pause” should not be pursued in appropriate cases, however we wish to specifically note that such an approach should not blind parties to their contractual obligations in terms of notifications and claims, as for getting such obligations can prove to be disastrous from a financial standpoint. Put another way, we do not recommend that parties engage in negotiations and sit on their hands and fail to issue notices when they have a right to do so.

Queries

If you have any questions about this article please get in touch with the author or a member of our Building & Construction team.

Disclaimer

This information and the contents of this publication, current as at the date of publication, is general in nature to offer assistance to Cornwalls’ clients, prospective clients and stakeholders, and is for reference purposes only. It does not constitute legal or financial advice. If you are concerned about any topic covered, we recommend that you seek your own specific legal and financial advice before taking any action.