Major Projects & Construction 5 Minute Fix No 137: construction productivity; forum shopping, and indemnity clauses

Key insights from the Queensland Productivity Commission’s interim report on construction productivity

With the 2032 Brisbane Olympics on the horizon and population growth fuelling demand for housing and infrastructure, Queensland’s construction sector is under increasing pressure to boost productivity. The Queensland Productivity Commission’s (QPC) interim report, Opportunities to Improve Productivity of the Construction Industry, offers a timely reform roadmap. 

The report reveals a stark reality: construction productivity has risen just 5% over the past 30 years (compared to 65% in the broader economy) and has declined 9% since 2018. To reverse this trend, the QPC proposes reforms across four key areas:

• Procurement:  Streamline government procurement and permanently remove Best Practice Industry Conditions (BPICs), which are driving up project costs and inefficiencies.

• Land Use Regulation: Review the Planning Act 2016 and the Building Act 1975 to address inconsistencies, streamline approvals processes, and enable higher-density development.

• Improve building activity regulation: Level the playing field for modern construction methods (e.g. modular construction) and conventional construction methods. The report also recommends that the further rollout of Queensland's trust account framework remain paused pending further evidence that the framework achieves its intent.

• Optimise labour market operations: Tackle workforce shortages through occupational licensing reforms and reassessment of labour hire requirements.

The interim report is open for public consultation ahead of finalisation in October 2025.

Narrowing the scope: what it takes to withdraw an adjudication application 

The Queensland Supreme Court has clarified when an adjudication application is taken to have been withdrawn under section 97(1)(b) of the Building Industry Fairness (Security of Payment) Act 2017 (Qld).

In Downer EDI Rail Pty Ltd v DT Infrastructure Pty Ltd [2025] QSC 212, DT Infrastructure Pty Ltd (DTI) applied for an adjudication in respect of Downer's assessment of a payment claim.  The difference between the amount claimed and the amount assessed totalled $8.7 million, with $681,445.37 relating to two variation claims.  Notably, the adjudication only sought a determination in respect of the $681,445.37 – the subject of the two variation claims. Before a decision was made, Downer paid the $681,445.37 (plus interest). Downer argued that the adjudication application should be taken to be withdrawn because of this payment, by operation of section 97(1)(b) of the Act. DTI argued the adjudication application could not be withdrawn unless the entire claim amount of $8.7 million was paid.

Justice Treston found in favour of Downer after considering the construction of section 97(1)(b) and the purpose of the Act. Her Honour held that section 97(1)(b) refers only to the specific amount listed in the adjudication application, not the broader amount claimed in the payment claim. To interpret otherwise would undermine the purpose of adjudication – providing a quick and efficient dispute resolution process.

This decision provides clarity around the meaning and application of section 97(1)(b). It establishes that an adjudication application can be validly taken to be withdrawn if the amount pursued in the adjudication application (and therefore the subject of the adjudication) is paid in full, even if the balance of the amount claimed in the payment claim remains unpaid.

A inconvenient truth:  NSW Court stays Fiji construction dispute

A recent NSW Supreme Court decision highlights the importance of adhering to arbitration clauses and the risks of pursuing litigation in an inappropriate forum.

In China Civil Engineering Construction Corporation (Fiji) Co Ltd v Sinclair Brook Pty Ltd [2025] NSWSC 960, Justice Hammerschlag stayed proceedings commenced in NSW concerning a high-rise project in Suva, Fiji. The contract included an arbitration agreement requiring disputes to be arbitrated in Fiji under Fijian law. Despite this, the plaintiff commenced litigation in NSW, alleging breach of contract, negligence, and wrongful termination.

The Court upheld the arbitration agreement, applying the doctrine of separability to reject claims it had ceased to be binding upon contract termination. Justice Hammerschlag noted Fiji’s adoption of the New York Convention and UNCITRAL Model Law, reinforcing the enforceability of arbitral awards under Fijian law.

Although the stay was granted primarily on the basis of the operation of the arbitration agreement, the Court also found that the proceedings would also be stayed in any event on forum non conveniens grounds, finding that NSW was simply an inappropriate forum for the dispute. Key factors in this finding included that the law applying to the dispute was Fijian law, the location of the project and evidence was in Fiji, and the fact that two parties to the dispute were Fijian entities. The Court also highlighted the inefficiency of duplicating proceedings, as arbitration had already been initiated in Fiji.

This decision highlights the binding nature of arbitration clauses, the risks of forum shopping, and the importance of respecting agreed dispute resolution mechanisms to avoid delays and costs prior to any determination of the actual substantive dispute.

Queensland Court of Appeal bins broad interpretation of contractual indemnity provision

In Shamrock Civil Engineering Pty Ltd v Cleanaway Solid Waste Pty Ltd [2025] QCA 178, the Queensland Court of Appeal considered the proper construction of the indemnity clause in a construction contract, which required the contractor (Shamrock) to indemnify the principal (Cleanaway) for loss or damage to property "arising out of or in the course of or by reason of the execution of the Works."  

The key issue was whether a mere coincidence of time and place (ie. damage occurring at the site during the period of the works) was sufficient to trigger the indemnity, or whether a closer connection was required. 

In this case, heavy rainfall impacted a waste disposal site, leading to flooding and the production of leachate. Cleanaway alleged that the above indemnity entitled it to recoup the cost of necessary remediation works from Shamrock, despite the fact that the damage occurred during a period when no construction activity was occurring in the relevant area of the site.

Shamrock argued that the indemnity clause did not provide a blanket indemnity for any loss or damage occurring at the site during the period of the works, contending that there must be a real and identifiable nexus between the loss or damage and the actual execution of the works.  As Shamrock put it, the wide interpretation sought by Cleanaway would result in Shamrock moving from a contractor to an unlimited insurer.

In its assessment, the Court of Appeal rejected the wide construction contended for by Cleanaway, noting that there were "powerful reasons" for rejecting such an interpretation, and that the mere coincidence of damage arising at the time or place in which a contractor has control of a site and an obligation to execute works is not sufficient, and that there must be a nexus between the damage and the execution of the works. The Court of Appeal found a lack of nexus, noting there was no pleaded case that the damage was caused by any failure of Shamrock to perform its contractual obligations, or that the damage was as a result of the manner in which the works were executed.