Major projects and construction: 5 Minute Fix 04

15 Feb 2018

Get your 5 Minute Fix of major projects and construction news. This issue: the shape of WA Infrastructure, security of payment, Building Code, and carve-outs from the scope of arbitration.

Infrastructure news

Western Australia

Australia's infrastructure sector has until Tuesday, 20 March 2018, to comment on the proposed model for Infrastructure WA (IWA), launched on 7 February by the Western Australian Government.

Similar agencies providing strategic infrastructure planning have long been established by the Commonwealth (Infrastructure Australia), New South Wales (Infrastructure NSW), Victoria (Infrastructure Victoria) and Queensland (Building Queensland). The proposed model for IWA closely aligns with that of Infrastructure NSW.

Read more about IWA objectives and functions here.


Building Queensland has published its "Infrastructure Pipeline" assessing unfunded infrastructure proposals under development by Queensland Government agencies.

The report identifies 30 priority infrastructure proposals for projects from Coolangatta to Cairns, including:

  • Beerburrum to Nambour Rail Upgrade (referred to Infrastructure Australia);
  • Cunningham Highway (referred to Infrastructure Australia);
  • South East Queensland Correctional Facilities Expansion (ready for Queensland Government consideration);
  • Public Safety Regional Radio Communications (ready for Queensland Government consideration);
  • Lower Fitzroy River Infrastructure Project; and
  • Townsville Eastern Access Rail Corridor.

Security of payment cases

High Court rules on jurisdictional error

The High Court yesterday delivered its much anticipated judgments in Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd [2018] HCA 4 and Maxcon Constructions Pty Ltd v Vadasz [2018] HCA 5.

The Court held that adjudication determinations are not amenable to review for non-jurisdictional errors of law on the face of the record. 

Read our Alert to learn more

Recent Victorian cases – late adjudication determinations and use of single-project SPVs

Justice Riordan has recently delivered two decisions in the Supreme Court of Victoria considering the Victorian Security of Payment Act.

PHHH Investments No 2 Pty Ltd v United Commercial Projects Pty Ltd [2018] VSC 15, follows a line of NSW authority in holding that an adjudication is valid, even where it is made outside the time prescribed in section 22(4) for the adjudicator to make a determination.

This case is a further example of the general preference of the courts for giving effect to the outcomes of adjudications where possible.

Ian Street Developer Pty Ltd v Arrow International Pty Ltd [2018] VSC 14 considered the application of section 7(2), which provides that the Security of Payment regime does not apply to domestic building contracts unless the building owner is in the business of building residences and the contract is entered into in the course of, or in connection with, that business" [emphasis added].

The question in this case was whether a single purpose vehicle established to develop the relevant property was "in the business of building residences". The court held that it was "in the business of building residences" and the Security of Payment Act therefore applied despite the single purpose vehicle developing only a single project. The decision should forestall the risk of a spate of corporate restructures of residential development groups looking to avoid the application of the Security of Payment Act.  

WASC considers carve-outs from arbitration agreements

GR Engineering Services Ltd v Eastern Goldfields Ltd [2018] WASC 19, a recent decision of the Supreme Court of Western Australia, demonstrates the importance of carefully drafting carve-outs from the scope of arbitration.

GR Engineering Services (GRE) argued that its claim against Eastern Goldfields (EG) for unpaid payment certificates and under a deed of guarantee fell within the carve out from the arbitration clause, which provided in part that "nothing herein shall prejudice the right of a party to institute proceedings to enforce payment due under the Contract …" [emphasis added]. On this basis, GRE resisted an application to stay the court proceedings under section 8 of the Commercial Arbitration Act 2012 (WA).

However, Justice Tottle construed the carve out as applying only to making payment of undisputed amounts, rather than any determination of whether an amount is payable. Supporting this construction was the fact that applying the carve out to the facts would have otherwise fragmented the broader dispute into multiple proceedings in different forums. Justice Tottle considered that this was not the objective intention of the parties, and ordered that the court proceedings be stayed. 

The decision is consistent with a general trend towards upholding arbitration agreements to the fullest extent possible.

ABCC – Building Code Update

The Australian Building and Construction Commission (ABCC) has recently updated the Building Code guidance material, which sets out the standards that must be met for a building company to be eligible for roles on projects using Commonwealth funding pursuant to related tendering rules. 

This includes building companies that permit the display of union slogans on employer-supplied clothing and equipment and the Eureka flag. This update has received much media attention recently, although probes into alleged breaches are not always vigorously pursued by the ABCC. 

Gong for Bell

Matthew Bell (Senior Lecturer and Co-Director of Studies for the Construction Law Program at the University of Melbourne and professional support lawyer in the Major Projects and Construction team at Clayton Utz) has been awarded the prestigious Hudson Prize for his paper "'How is that Even Possible?'  Raising Construction Regulation from the Ashes of Grenfell Tower".

Matthew's paper discusses the crucial topic of regulatory reform in the building and construction industry following the tragic events in West London in 2017, and other events in Australia.  The Hudson Prize is an annual competition administered by the Society of Construction Law in the United Kingdom.  Matthew will present his paper in London on 8 May 2018.  

This is a great achievement and a significant contribution to international thought leadership in this important regulatory area.   Congratulations Matthew! 

Related Insights

Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.