The recent Queensland Court of Appeal decision in Built Qld Pty Limited v Pro-Invest Australian Hospitality Opportunity (ST) Pty Ltd demonstrates how generalised descriptions in the contracted scope of work can easily result in disputed delays and variations, which otherwise may not arise with a fully detailed scope.
The appellant Contractor (Built) proposed at tender an alternative AC system for a hotel development at Spring Hill, which alternative proposal was accepted by Client (Pro-Invest) as a suitable cost saving alternative. The alternative proposal was referenced in the Contract by general description, without detailing the full scope of “the alternative proposal”.
At first instance, the Court held reference to extrinsic material (beyond the terms of the Contract) was not permitted to give meaning to the general contract description of the alternative proposal, unless sufficient ambiguity existed by the words of the Contract.
On appeal, the Court of Appeal rejected this approach, citing authorities demonstrating resort to extrinsic evidence to give context to the general description in the Contract was appropriate, particularly where without resort to that evidence, the general description had little meaning.
By reference to that extrinsic material, the Court of Appeal determined that the alternative AC system installed by the appellant conformed with the Contract (consistent with the alternative proposal), and the Client’s purported defect notice dated 11 August 2016 issued to the appellant instead constituted a Variation, because it directed installation of different components from that nominated by the Contract. This gave rise to a disputed delay and EOT claim.
The Contract required EOT claims to be given within 14 days of the appellant reasonably becoming aware of the delay. On 26 August 2016, a written claim for an EOT was given by the appellant. The lower Court held this date to be outside of the 14 day period because the appellant became aware of the delay on 11 August 2016.
The Court of Appeal rejected this, saying 11 August 2016 was not the relevant date the appellant reasonably became aware of the delay. It held engineering and legal matters arising from the Client’s 11 August 2016 notice needed to be resolved and only once resolved, could the appellant be reasonably aware of the delay. Accordingly, the appellant had given the EOT claim within time and was entitled to the extension of time and associated delay costs.
Owners and contractors need to be aware that fully documenting a detailed scope of work in the Contract is critical to avoid uncertainty and the potential for protracted disputes.
If you require further contracting information, contact Julian at julian@troylegal.com.au.
