22 Jul 2021

Major Projects & Construction 5 Minute Fix 80: QBCC licence reform, superintendent dual roles, heads of agreement

By the Major Projects & Construction team

Get your 5 Minute Fix of major projects and construction news. This issue: QBCC licence reform postponed to July 2022 to allow for industry consultation; privilege over communications with superintendent not waived where the superintendent is not acting as independent certifier; and heads of agreement falling within the second category of Master v Cameron does not lead to final settlement because of unsatisfied conditions.

 

QBCC licence reform postponed until July 2022

The postponement gives unlicensed developers and head contractors who tender for, or contract to carry out, building work in Queensland some breathing space – for a year. Amendments removing the existing exemption for head contractors from the requirement to hold a QBCC licence were due to take effect on 24 July 2021. However, the Building Industry Fairness (Security of Payment) and Other Legislation Amendment (Postponement) Regulation 2021 postponed removing the exemption to 24 July 2022. According to the Explanatory Notes, the postponement is to allow extra time for industry consultation.

The exemption meant that developers, who had no intention of carrying out building work themselves, did not need to be licensed if they engaged an appropriately licensed builder to carry out the building work. Read more about the exemption and the reasons for its removal here. If the removal of the exemption proceeds, developers and head contractors who tender for, or contract to carry out building work, will need to be licensed.

With the QBCC's increased focus on licensing and enforcement, developers and head contractors who have, until now, relied upon the exemption will need to ensure they are ready to comply with the licensing requirements, including demonstrating they meet the relevant minimum financial requirements.

Waiver of legal professional privilege: disclosure of documents to agents, superintendents or independent certifiers

Third parties are frequently appointed to administer construction contracts. Sometimes they are appointed as agents of the principal for all purposes. More common is the appointment of a Superintendent exercising a dual agent and independent certifier role.

As demonstrated in Built Environs WA Pty Ltd v Perth Airport Pty Ltd [No 5] [2021] WASC 237, the particular categorisation of the appointed third party will have a bearing on whether sharing documents with them can constitute imputed waiver of legal professional privilege.

In this case Perth Airport's solicitors sent documents to an independent certifier, APP, which had been engaged to act partly as Perth Airport's agent and partly as an independent assessor. During discovery in an extant proceeding, Perth Airport redacted some of those documents to prevent disclosure of information that it claimed was privileged, and Built Environs sought full disclosure on the grounds that sending the documents to APP constituted imputed waiver.

Justice Kenneth Martin held that whether sending documents to a third party appointed to administer a construction contract constituted imputed waiver was influenced by the role of the third party. Where the documents were provided to, or emanated from, a Superintendent acting in an independent certification capacity, then the documents might no longer be protected by the rules of legal professional privilege. However, if the recipient was not acting in that capacity, but was acting as the principal's agent when receiving or sending the documents, then privilege might not be waived.

In this case, it was relevant that APP was appointed as Perth Airport's agent when not acting as independent certifier, and in the role of agent it owed to Perth Airport contractual and equitable duties of confidentiality. In these circumstances Justice Kenneth Martin concluded that disclosure to an agent or to a consultant, in circumstances of confidentiality, was not inconsistent with the maintenance of privilege over the parts of legal advice recorded in the documents.

Post-mediation heads of agreement does not provide pathway to binding settlement

In Nergl Developments Pty Ltd v Vella [2021] NSWCA 131, the NSW Court of Appeal was required to determine whether a heads of agreement entered into following a mediation provided a binding pathway to a final settlement of the underlying dispute.

In essence, the central disagreement related whether the heads of agreement contained:

  • the full settlement terms, such that the parties were bound to enter into a subsequent formal deed embodying the terms of settlement. Nergl Developments sought this outcome; or
  • preconditions requiring the performance of other obligations that, if not satisfied, meant that a subsequent formal settlement deed need not be entered into. This was the interpretation preferred by Ms Vella.

Each party sought specific performance of the heads of agreement based upon its preferred interpretation. The trial judge found in favour of Ms Vella. Nergl Developments appealed and contended that aspects of the heads of agreement indicated that the parties were bound to enter into a formal deed based upon the terms of the heads of agreement.

This argument was rejected by the NSW Court of Appeal. The heads of agreement contained additional obligations that involved further transactions as a precondition of subsequently entering into a binding settlement deed. Relevantly, the transactions needed to give effect to a settlement were sufficiently described in the heads of agreement. In these circumstances the heads of agreement fell into the second category of Masters v Cameron agreements. This category includes agreements “in which the parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless had made performance of one or more of the terms conditional upon the execution of a formal document.”

The application of the second category of agreements was elaborated upon by Justice Basten. His Honour observed that merely because an agreement fell into the second category of Masters v Cameron agreements did not mean that a single formal document was required which restated all of the terms of the heads of agreement. Rather, the parties were required to perform a number of further obligations and transactions pursuant to the heads of agreement, after which a formal settlement deed would be entered into. As those obligations and transactions were not completed, there was no binding agreement to enter into a final settlement deed.

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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.