Tutorial Answers – Time

Question (i)

Explain whether Bush has committed a substantial breach of contract under

the contract by handing over possession of the site late to Warrington.

• In accordance with clause 24.1 of the contract conditions, Bush should have
handed possession of the site over before the expiry of the time in Item 22,
which was stated as within 14 days of date of acceptance of tender. This
means that Bush should have given site possession by 26 Feb 2019, which is
14 days after 12 February, when Warrington’s tender was accepted.
• According to clause 39.7 a) iii) of the contract conditions, late handover of site
possession can only be a substantial breach of the contract if the principal fails
to rectify inadequate possession within the time stated in Item 31. The time
stated in Item 31 is 14 days, which means that Bush has until 12 March (i.e. 14
days after 26 Feb) to rectify inadequate possession.
• Bush gave possession of the site on 6 March, which is before 12 March.
Therefore, Bush has not committed a substantial breach of contract.

Question (ii)

In relation to Event A, advise Warrington as to its best courses of action under

the contract to obtain time and costs remedies for the delay caused by the late
giving of site possession by Bush. You should also provide Warrington with
advice regarding the appropriate quantum of remedies it is likely to be entitled
to under the contract due to the late handover of site possession. You may
assume that despite Warrington having taken all reasonable measures to
mitigate the delay, the duration of the delay to practical completion is the same
as the duration of the delay in giving site possession.

• Warrington’s best courses of action would be to apply for an extension of time

and delay damages under clauses 34.3 and 34.9 of the contract conditions
respectively.
• Late handover of site possession is a default of the principal and, therefore,
according to the definitions in clause 1, is both a qualifying cause of delay
under clause 34.3 a) and compensable cause under clause 34.9.
• Here, Bush should have given site possession by 26 February in accordance
with clause 24.1 and Item 22. Therefore, actual handover of site possession on
6 March was given 8 days late.
• Note that despite Warrington having effected reasonable mitigation measures,
the duration of the delay to practical completion is the same as the delay in
giving site possession. Therefore, as late handover of site possession will delay
the critical path, Warrington should be entitled to the full 8 days extension of
time.
 • In accordance with clause 34.9 as amended, Warrington is also entitled to
delay damages in the amount of $8,000 for every day the subject of an EOT for
a compensable cause.
• Assuming that an 8-day EOT has been directed, Warrington is entitled to claim
a total of $64,000 delay damages for the late handover of site possession (8
days x $8,000 per day).

Question (iii)

In relation to Event B, the superintendent rejects Warrington’s EOT claim on

the basis that it has been submitted too late. Warrington contends that it has
submitted its EOT claim in time because it was given within 14 days of the last
day of the delay in accordance with clause 34.3 of the contract. Warrington
also contends that, in any case:

• contractual claims cannot be barred due to late submission under

clause 41.2 of AS 4000; and
• according to the decision in Peninsula Balmain v Abigroup Contractors
[2002] NSWCA 211, the superintendent is obligated to award an EOT due
to a combination of clause 20 and clause 34.5 in the contract.

Advise whether Warrington is likely to be entitled to claim an EOT under the

contract for Event B, addressing all of Warrington’s contentions above.

• According to clause 34.3 b) as amended:

o Warrington shall be entitled to an EOT as the superintendent assesses if
the contractor gives the superintendent a written claim for an EOT within
14 days of the delay occurring, which includes sufficient information for
the superintendent to assess the claim; and
o Failure to give an EOT claim to the superintendent within 14 days of a
delay occurring shall bar the contractor from giving an EOT claim in
relation to the delay.
• In Re Multiplex Constructions Pty Ltd [1999] 1 Qd R 287, the court found that
the wording in the contract, that a claim must be made ‘within 28 days after the
delay occurs’, means that the contractor should give the claim no later than 28
days after the delay first occurred.
• Therefore, Warrington has until 8 October to give an EOT claim to the
superintendent (14 days after 24 September 2019, which is the first day of the
delay caused by the late provision of the roof drawings). Warrington actually
gave an EOT claim to the superintendent on 14 October 2019, which is outside
the 14-day time bar under clause 34.3 b).
• Warrington’s contention that contractual claims cannot be barred under clause
41.2 is not valid, due to the contract having been amended to delete clause
41.2. Warrington’s contention may have had some merit if clause 41.2 had not
been deleted, as this clause provides that failure to communicate a claim in
accordance with the relevant contract provisions shall neither bar nor invalidate
 the claim. Although, it should be noted that clause 34.3(b), as amended, clearly
states that failure to give the EOT claim within 14 days will bar the contractor
from giving an EOT claim with respect to that cause of delay.
• Warrington’s contention that, pursuant to the court’s decision in Peninsula
Balmain v Abigroup Contractors [2002] NSWCA 211 the superintendent is
obligated to award an EOT, will also not be valid, as clause 34.5 of the contract
conditions has been amended to add the words “at his or her discretion” at the
end of the second paragraph. If these words had not been added, Warrington’s
contention may have had some merit due to the combination of:
o The unilateral EOT provision in the 2nd paragraph of clause 34.5, which
provides that notwithstanding that the contractor has not claimed an EOT,
the superintendent may at any time and from time to time before issuing
the final certificate, direct an EOT; and
o The principal’s obligation to ensure the superintendent carries out all
aspects of their role and functions reasonably and in good faith under
clause 20 of the contract conditions.

Question (iv)

In relation to Event C, advise as to the likely outcome of Warrington’s 10-day

EOT claim for inclement weather.

• Warrington will not be entitled to an EOT for the 10 days in January when the
temperature was over 35 degrees Celsius. This is because the definition of
qualifying cause of delay in clause 1 of the contract conditions has been
amended and inclement weather of any type or the effects of that inclement
weather is no longer a qualifying cause of delay.

Question (v)

In relation to Event D, advise on the contractual procedure that Warrington

should follow pursuant to clause 34.3 of the contract with respect to
submitting an EOT claim. Additionally, advise with reasoning how many days
EOT Warrington is entitled to under the contract in relation to Event D if the
superintendent is of the opinion that the late delivery of the HVAC equipment
and insolvency of Mech Install Pty Ltd have contributed equally to any period
of overlapping delay.

• According to clause 34.2 of the contract conditions, upon becoming aware of

anything which will probably cause delay to WUC, a party shall promptly give
the superintendent and the other party written notice of that cause of delay
and the estimated delay.
• Warrington, therefore, should give such a notice of delay to the
superintendent and Bush on or shortly after 6 Nov, when it became aware
from the superintendent’s email that the HVAC plant may be delivered later
than expected.
• According to clause 34.3 b), to be entitled to an EOT, Warrington must give a
written claim for an EOT to the superintendent within 14 days of the delay
occurring which includes information sufficient for the superintendent to
assess the claim.
• Therefore, Warrington should submit an EOT claim to the superintendent by
26 Nov 2019 (i.e. 14 days after Warrington first became aware that the
delivery of the HVAC equipment was actually late on 12 November) which
state that an EOT of nine days is claimed due to late delivery of the HVAC
plant and includes supporting information.
• It is unlikely Warrington will be entitled to the full nine days claimed because a
situation of overlapping delay exists (i.e. qualifying and non-qualifying delays
overlap).
• The late delivery of the HVAC equipment caused a nine-day delay to the start
of the HVAC installation activity from 12 to 20 November (inclusive). Note that
20 November is included in the delay period. This is a qualifying cause of
delay because it was the principal’s responsibility under the contract to supply
the HVAC equipment to site by 11 November.
• The liquidation of Mech Install on 5 November (and the difficulty in finding a
replacement installer) means that an 8-day non-qualifying delay has occurred
to the start of the HVAC installation activity from 12 to 19 November
(inclusive). Note that Jennings was ready to start work on the morning of 20
November and, therefore, 20 November is not counted in the non-qualifying
delay.
• The overlapping qualifying and non-qualifying delays are shown in the figure
below.

12 Nov 20 Nov (inclusive)

Principal delay (late delivery of HVAC plant) – 9 days

Contractor delay (subcontractor insolvency) – 8 days

19 Nov (inclusive)

• Warrington will be entitled to a 1-day EOT for the 9th day of the principal-
caused delay which is not concurrent.
• According to clause 34.4 of the contract conditions, when both qualifying and
non-qualifying causes of delay overlap, the superintendent shall apportion the
resulting delay to the work under the contract according to the respective
causes’ contribution. In this case, the superintendent is of the opinion that the
causes contributed equally to the delay and, therefore, Warrington will be
 awarded a further 4 days EOT with respect to the 8-day period of overlapping
delay.
• Therefore, in total, Warrington should be awarded 5 days EOT for the late
delivery of HVAC plant.
• Note that clause 34.4 leaves it up to the superintendent to apportion the
overlapping delay. How this apportionment should be decided by the
superintendent may be a matter for debate. For example, a party might
challenge the superintendent’s apportionment on the basis that the other
party’s cause of delay occurred first and, therefore, is the sole cause of delay.
For the purposes of this question, however, the superintendent’s opinion as to
a 50/50 apportionment has been adopted.

Question (vi)

Based on appropriate evaluations of EOT entitlements for Events A–D,

calculate the total amount of delay damages to which Warrington is entitled
under the contract. You may assume that Warrington has duly given notices of
delay under clause 34.2 in relation to all EOT claims submitted.

• According to the amended clause 34.9, the superintendent shall certify, as due
and payable to the contractor, delay damages in the amount of $8,000 for every
day the subject of an EOT for a compensable cause.
• Under clause 1, a compensable cause includes any act, default or omission of
the principal. In Events A to D, the appropriate EOTs that should be awarded
which are due to compensable causes are as follows:
o Event A: Later handover of site possession = 8 days
o Event D: Late delivery of HVAC plant = 5 days
• Therefore, Warrington is entitled to a total of 13 days x $8,000 per day =
$104,000 delay damages.

Question (vii)

Based on appropriate evaluations of EOT entitlements for Events A–D,

calculate the total amount of liquidated damages that are due and payable by
Warrington to Bush.

• As mentioned in the answer to Question 2.6, Warrington is entitled to a total

EOT of 13 days for Events A and D. Warrington in not entitled to any EOT for
Events B and C as discussed in the answers to Questions 2.3 and 2.4
respectively.
• This is likely to extend the date for practical completion under the contract from
20 March 2020 (as per Item 7 a) of Annexure Part A in the contract conditions,
to 2 April 2020.
• According to clause 34.7 of the contract, the superintendent shall certify, as due
and payable to the principal, liquidated damages in Item 24 for every day after
the date for practical completion to and including the date of practical
 completion. The amount of liquidated damages stated in Item 24 is $10,000 per
day.
• The actual date of practical completion is 15 April 2020 (as stated in Event E),
which is 13 days later than the extended date for practical completion.
• Therefore, a total of 13 days x $10,000 per day = $130,000 is due and payable
from Warrington to Bush.

Question (viii)

Explain the implications, and how your answers to Q2.6 and Q2.7 above would
be affected, if clauses 34.3 a) and 34.4 of the contract had been amended as to
read as follows:

Clause 34.3 a)

the Contractor is or will be delayed in reaching practical completion by the

date for practical completion by a qualifying cause of delay; and

Clause 34.4

When both non-qualifying and qualifying causes of delay overlap, the

Superintendent shall apportion the resulting delay to WUC according to the
respective causes’ contribution.

In assessing each EOT the Superintendent shall have regard to:

(a) whether WUC can nevertheless reach practical completion by the date
for practical completion without an EOT; or
(b) what prevention and mitigation of the delay has not been effected by the
Contractor.

The Contractor shall not be entitled to an EOT for any delay which does not or
should not (assessed at the time of its occurrence) affect the Contractor
reaching practical completion by the date for practical completion.

(Note: You are not expected to calculate exact amounts of damages for Q2.8.
Rather, you are just required to comment with reasons on whether delay
damages and liquidated damages would increase or decrease in light of the
amendments to clauses 34.3 a) and 34.4.)

• The effect of the amended wording to clause 34.4 is to change the float
ownership in the contract program. Instead of the contractor owning the float,
now the project owns the float.
• This means that the 28-day float (or contingency) can be used to absorb some
if not all the principal’s delay (13 days) and the contractor would likely not be
entitled to the full or possibly any of the 13 days EOT (depending on what other
delays occur during the works). Therefore, the amount of delay damages to
which Warrington is entitled is likely to be reduced.
 • It would also mean that, due to the likely reduction in the amount of EOT to
which Warrington is entitled, the amount of liquidated damages payable by
Warrington to Bush would increase. For example, if the float/contingency
absorbed the full 13 days of Bush’s delay, the actual date of practical
completion (15 April) would be 26 days after the original date for practical
completion of 20 March (as per Item 7 a)) and, therefore, the Principal’s
entitlement to liquidated damages would increase to 26 days x $10,000 =
$260,000.

Question (ix)

Warrington claims that the liquidated damages rate in the contract amounts to
a penalty and, therefore, should be struck out of the contract. Advise on the
likelihood of Warrington being correct in this respect.

• The liquidated damages rate is unlikely to amount to a penalty. In Dunlop

Pneumatic Tyre Co Ltd v New Garage & Motor Co Ltd [1915] AC 79, the court
held that, in order for a liquidated damages rate to amount to a penalty, it must
not be so high as to be extravagant and unconscionable in amount in
comparison with the greatest loss that could conceivably be proved to have
followed from the breach.
• An indication of the potential actual loss to Bush may be determined by using
the average rental value of the apartments ($600 per week) multiplied by the
number of apartments (120), which equals $72,000 per week or $10,285 per
day. This estimate of actual cost slightly exceeds the liquidated damages rate
of $10,000 per day in the contract.
• Furthermore, in Paciocco v Australia and New Zealand Banking Group [2016]
HCA 28, the court found that a liquidated damages provision will only amount
to a penalty if the liquidated damages amount is out of all proportion to the
interests of the party which it is the purpose of the provision to protect, and
that the interests may be of a business or financial nature. This, in effect,
means that the liquidated damages rate may include not only an amount for
the estimated direct costs that would be caused by a breach, but also for
wider potential costs that may arise from the breach which affect a party’s
commercial interests.
• Therefore, it is likely to be difficult for Warrington to prove that $10,000 per
day is so high as to be extravagant and unconscionable in amount in
comparison with the greatest loss that could conceivably be proved to have
followed from the breach.