A number of challenges are expected to impact the construction and infrastructure sector in 2018, including:
- changes to insolvency laws
- the Court of Appeal’s recent interpretation of when practical completion has occurred
- the ongoing furore around combustible cladding.
We summarise the key points about these challenges in the article below, and our Construction & Infrastructure team will also cover them in greater depth at an upcoming Melbourne seminar ‘2018: The year ahead’ on 6 March, discussing what these challenges mean for the industry and how the associated risks can be best managed.
Termination rights for insolvency
Changes to the Corporations Act 2001 (Cth) received widespread coverage when they were passed into law in September last year.
The new laws prohibit clauses that automatically give one party a contractual right to terminate where the other party has become insolvent. We will be discussing what these changes will mean in practice, and how to best respond to the changing commercial landscape.
With the laws coming into force on 1 July 2018, now is the time to review your contracts and bring them into line with the legislative requirements.
The New South Wales Court of Appeal decision in Abergeldie Contractors Pty Ltd v Fairfield City Council  NSWCA 113 found that, in interpreting the Australian Standard AS4000 contract, the date of practical completion was the date upon which the certificate of practical completion was issued by the Superintendent, and not the date stated in the certificate. The decision has widespread implications given that the date of practical completion is integral to the operation of the defects liability period, liquidated damages and in some cases acts as a reference date for a Security of Payment claim.
In our upcoming seminar we will examine the background and implications of the decision, and how drafting in the various standard forms deals with practical completion.
The Victorian Cladding Taskforce (VCT) released its interim report into highly combustible aluminium composite panels (ACP) and expanded polystyrene (EPS) on 1 December 2017. The products, which have been widely used since the 1990s, have been implicated in a number of blazes including the fires at Dockland’s Lacrosse building and London’s Grenfell tower that claimed the lives of 71 people.
The interim report made a number of key findings and recommendations to government, chief among them being the ban of ACP and EPS cladding on buildings of two or more storeys that are residential, health-care, assembly or aged care buildings, and buildings of three or more storeys that are office, shop or storage buildings. A number of other significant recommendations came out of the interim report, including a proposed statutory duty of care on building practitioners, including architects and designers, in the residential strata sector.