Australian Consumer Law in construction projects - can time bars preclude liability under the ACL, and aggressive litigation be "unconscionable"?

The Victorian Supreme Court has recently held that liability under the Australian Consumer Law (ACL) cannot be defeated by contractual time bars on bringing claims.

In Brighton Australia Pty Ltd v Multiplex Constructions Pty Ltd [2018] VSC 246, Brighton, a subcontractor, made claims against Multiplex relating to the construction of the NAB headquarters in Docklands, Melbourne. Among other things, Brighton pleaded that it had entered into the relevant subcontracts with Multiplex in reliance on representations made by Multiplex that were misleading and deceptive in thus in breach of section 18 of the ACL.

The special referee appointed by the Court found that the ACL claim should fail on various grounds, including that the claim had not been made in accordance with the subcontracts. Relevantly, the subcontracts contained a clause requiring a prescribed notice of any claim to be given within seven days.

However, Justice Riordan held that the special referee erred in so finding holding the attempt to rely on the time bar as "an unacceptable interference with the public policy underpinning" the ACL.

In Probuild Constructions (Aust) Pty Limited v Shade Systems Limited [2018] NSWSC 54 the Court considered whether actions taken in litigation might be “in trade or commerce” for the purpose of the unconscionable conduct provisions in sections 20-21 of the ACL.

Shade Systems argued that Probuild’s claim for liquidated damages (which far exceeded the amount the subject of the adjudication determination in Shade Systems' favour) was being "prosecuted for an ulterior purpose, namely to shut Shade Systems out of its rights under the adjudication determination". On this basis, Shade Systems sought leave to amend its pleadings so as to contend that the conduct of Probuild in commencing the liquidated damages proceedings constituted unconscionable conduct under the ACL.

While Justice McDougall noted that courts are typically"reluctant to agree with the proposition that conduct in litigation can be conduct engaged in in trade or commerce", he considered "there is no principle of law to the effect that litigious conduct cannot be conduct engaged in in trade or commerce". Shade Systems was therefore granted leave to amend its pleadings, leaving the question of whether Probuild’s conduct was in fact unconscionable for resolution at trial.

Justice McDougall acknowledged that it is at least arguable that construction industry participants may use litigation as an instrument in its pursuit of commercial gain, but also cautioned that such a finding may not necessarily make aggressive litigation "unconscionable". It remains to be seen how the implications of the ACL for the maintenance of litigation will play out in future litigation.