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Baulderstone Hornibrook v Quantas Airways

BAULDERSTONE HORNIBROOK PTY LTD V QANTAS AIRWAYS LTD [2003] FCA 174

Federal Court of Australia – 11 March 2003

FACTS

Qantas Airways Ltd (“Qantas”) entered into a contract with Baulderstone Hornibrook Pty Ltd (“BHPL”) for the building project known as the Domestic Infrastructure Terminal Development at a price of $52.6 million. The works involved theextension of Domestic Terminal 3 at Melbourne Airport including the construction of an extension to the existing terminal building; the  construction of a new valet car park and the construction of a new concourse.

BHPL claimed that from the time of commencement of work it encountered a series of difficulties in obtaining sufficient access to carry out its works, resulting in the project being delayed and the works substantially disrupted. BHPL claimed that it was entitled to rely on the dates in the construction program which was approved by the Superintendent. Qantas contended that the program was a statement of intention and made vigorous attempts to ensure that BHPL’s extensions of time were not granted by the Superintendent.

BHPL claimed damages for breach of an implied term of the contract that Qantas improperly interfered with the Superintendent’s duty to act impartially and independently by failing to certify the proper amount due for delay and disruption damages.

ISSUE

Superintendent’s duty to act impartially.

FINDING

The Court found that the Superintendent had acted impartially and independently.

QUOTE

Finkelstein J at paragraph 99 concluded on the Superintendent’s duty to act impartially:

“… I am satisfied that he did in fact carefully consider the extension of time claims and resolved them on what he regarded to be their merits, without being influenced by Qantas’… urgings that the claims be rejected. Indeed, [the Superintendent] was sufficiently sympathetic to BHPL’s plight that, notwithstanding his view that BHPL was not entitled to all the extensions sought, he exercised his discretion under clause 9.05 to grant an additional 26 days extension in excess of what he believed to be its only entitlement. In these circumstances I am not able to ignore [the Superintendent’s] certificate and will not myself undertake an assessment of the extension claims.”

As to the construction program Finkelstein J said at paragraph 58:

“It is that there is a significant risk of delay and disruption inherent in every major construction project. Numerous things can go wrong at any one of the many stages between the planning and completion of construction. Things may be overlooked; mistakes can be made; climatic and physical conditions may not be as expected; contractors, suppliers or agents may not meet their obligations, to name just a few. It is inevitable that time will be taken up with these matters and costs will be incurred. For this reason a works program, especially a program which is not contractually binding may, when prepared by a contractor, be little more than a statement of intention or a statement that the contractor will use his best endeavours to comply with it. If prepared by an owner, a works program may be more than a statement of expectation; it may be said to contain a timetable which is regarded as feasible. But, in each case, the program will always be regarded as subject to the ever present risk that the project may be delayed or disrupted for a myriad of reasons, including reasons that may be beyond the control of the parties.”

IMPACT

A Superintendent must carefully consider and resolve a Contractor’s claim on its merits and must not be unfairly influenced by the Principal.

Further, a construction programme is likely to be considered by the Courts as a statement of intention or expectation rather than a contractually binding timeframe.

This publication is intended to be a topical report on recent cases in the construction, development and engineering industries. This publication is not intended to be a substitute for professional advice, and no liability is accepted. This publication may be reproduced with full acknowledgement.

Jim Doyle

Tel.: 1800 888 783

jdoyle@doylesconstructionlawyers.com
www.doylesconstructionlawyers.com

Baulderstone Hornibrook v Queensland Investment Corporation

BAULDERSTONE HORNIBROOK PTY LIMITED V QUEENSLAND INVESTMENT CORPORATION [2006] NSWSC 522

Supreme Court of New South Wales – 7 June 2006

FACTS

Baulderstone Hornibrook Pty Limited (“BHPL”) entered into a contract with Queensland Investment Corporation (“QIC”) whereby BHPL agreed to design and construct the Westpoint Shopping Centre Redevelopment at Blacktown.

BHPL served a Payment Claim on QIC, said to be made in accordance with clause 42 of the contract and under the Building and Construction Industry Security of Payment Act 1999 (NSW), in the sum of $105,411,474.00. QIC provided BHPL with eight folders of documents in response, including a document said to be a Payment Schedule under the Act, and a document said to be a progress payment certificate under the contract.

BHPL denied that a valid Payment Schedule had been provided by QIC, on the basis that the covering letter accompanying the folders only referred to the Progress Certificate and not the Payment Schedule, and the Payment Schedule itself was signed only by the Respondent’s solicitors. BHPL, having taken this position, then purported to give notice to QIC under section 15(2)(b) of the Act of its intention to suspend carrying out work, and applied to the Supreme Court for judgment in the sum of $105,411,474.00.

ISSUE

Whether a valid Payment Schedule was provided to BHPL by QIC?

FINDING

The Court rejected BHPL’s arguments as to the invalidity of QIC’s Payment Schedule, finding that when looked at as a whole, there could be no doubt that the document provide to BHPL by QIC was a Payment Schedule. The Court made orders that the Payment Schedule complied with the Act, and declared that the section 15(2)(b) notice served on QIC by BHPL was invalid.

QUOTE

Einstein J at paragraph 23 endorsed QIC’s submission that:

“Given that there is no requirement under s.14 of the Act that an endorsement be included to the effect that the payment schedule is made under the Act, it is immaterial that the accompanying letter made no reference to the Act, and did not use the phrase “payment schedule”.

Einstein J found, at paragraph 36, that: “

i. The are no requirements in s.14 of the Act that in order for a document to be a “payment schedule” it must be signed in a particular manner or by a particular person.

ii. Indeed, there are no requirements that the payment schedule be signed at all.

iii. The only relevant requirement is that the payment schedule be provided by the respondent [being the person on whom the payment claim has been served] to the claimant (s.14(1));

iv. The question as to whether the payment schedule has been provided to the claimant by the respondent is a question of fact;

v. That question of fact is answered in the affirmative on the evidence before the Court”.

IMPACT

The Court will consider whether a document is a Payment Schedule by reference to the provisions of the Act. In doing so, the Court tends to avoid being overly technical, but care should still be taken when preparing a Payment Schedule to ensure that no doubt is left as to whether the document is a Payment Schedule under the Act and that the requirements of the Act are met.

This publication is intended to be a topical report on recent cases in the construction, development and engineering industries. This publication is not intended to be a substitute for professional advice, and no liability is accepted. This publication may be reproduced with full acknowledgement.

Jim Doyle

Tel.: 1800 888 783

jdoyle@doylesconstructionlawyers.com
www.doylesconstructionlawyers.com