Building & Construction
A hotline has been set up for clients to contact us and talk through the challenges you may be facing. If you are in a financial bind, we will provide some initial guidance in relation to credit & finance, supply chain, insurance, restructuring, real estate and construction related matters so together we can work out what your best options are. The number is (02) 8281 7980. You can also visit our online COVID-19 resource page.
20 August 2021 - Robert Kalde & Gabriella Porcu
COVID-19 Construction Restrictions
Currently, work is permitted at construction sites in both Greater Sydney (including local government areas (LGAs) of concern) and regional and rural NSW. With respect to local government areas (LGAs) of concern, work is permitted at construction sites provided occupiers of these construction sites:
1. Comply with capacity limits – construction sites that are permitted to operate in Greater Sydney can have the lesser of:
a. 1 person per 4 square metres of space on the construction site; or
b. 50% of the maximum daily workforce.
2. Comply with COVID-19 vaccination requirements – construction workers must provide evidence that they have received either:
a. Two doses of a COVID-19 vaccine
b. One dose of COVID-19 vaccine at least three weeks before attending work
c. One dose of a COVID-19 vaccine and, if less than three weeks since that vaccine was administered, a negative COVID-19 test or negative rapid antigen test in the previous 72hrs.
3. Implement a COVID-19 safety plan – COVID-19 Safety Plans are mandatory for construction on any site that is not an occupied residence in Greater Sydney.
4. Any corporations breaching the above Public Health Orders are liable to:
a. A fine of $55,000.00
b. Plus a further $27,500.00 fine each day the offence continues.
5. Further, on the spot fines can also be issued:
a. $10,000.00 for corporations and $2,000.00 for individuals for permitting a person whose place of residence is in a LGA of concern to enter or remain on the construction site, unless occupier is satisfied that the person has complied with specified vaccination obligations and carries evidence of their vaccination status.
In relation to regional and rural NSW, workers from LGAs of concern cannot work at a construction site in regional and rural NSW. Greater Sydney Workers who are authorised to travel to work at construction sites more than 50km outside of Greater Sydney must follow the rules for testing. Additionally, construction sites that are permitted to operate in regional and rural NSW can have the greater of either 1 person per 4m2 at the site or a maximum of 25 persons at the site at any one time.
A recent breach
On 17 August 2021, five construction workers from Sydney LGAs of concern were issued with infringement notices for breaching COVID-19 health orders in Kiama. Police allege the workers travelled from Sydney to work on a construction site on Collins Street in Kiama. Police allege the men also lied on their booking for accommodation and the owner of the rental home was unaware where they were from. The workers were sent home and had not tested positive to the virus.
As per the Public Heath Orders set out above, construction workers from LGAs of concern are not allowed to travel into regional NSW for work. Furthermore, workers from Greater Sydney must undergo a COVID-19 test every seven days to travel into regional NSW for work. For more information please see the ABC’s full article here.
In light of the above, we encourage all construction workers to consider the following key takeaways:
1. Construction workers with sites outside Greater Sydney should acquaint themselves with any subcontractor’s workers travelling from the impacted LGAs, in the knowledge that they cannot direct those workers under their contractual arrangements to act contrary to the Public Health Orders;
2. Given the economic impacts of COVID-19 and particularly, the recent construction shutdown, there has been a delay in supply chains, namely:
a. a shortage of some building materials;
b. unpredictability in whether materials will be readily available when required; and
c. upward pressure on labour and materials costs.
3. On this basis builders should revisit their force majeure and extension of time clauses wherever possible.
4. It is unlikely that that insurance coverage is available for fines issued in cases where the Public Health Orders are breached.
5. Legal advice should be sought in relation to notices which should be issued under contracts, to protect against delays from future occurrences or a widening of the LGA’s in strict lockdown.
6. Finally, as of Saturday 21 August 2021 Sydneysiders travelling outside Greater Sydney will need obtain permits via Service NSW for particular reasons, including authorised workers travelling from the Sydney’s LGAs of concern for work purposes. To avoid breaching Public Health Orders like the workers referred to above, we advise contacting NSW government to verify if a permit is required for your builders to work outside of Greater Sydney.
16 August 2021 - David Creais
Construction allowed on 7 days to kick start re-start
A new Construction Work Days Order has been published by DPIE to assist the construction re-start.
The Order allows the carrying out of building work, including the demolition of a building, to take place on weekends and public holidays, subject to the following:
work must be the subject of a development consent;
construction must comply with all conditions of the development consent other than any condition that restricts the hours of work or operation on a Saturday, Sunday or public holiday;
it must be carried out during the hours of work or operation specified for a weekday in the development consent;
the carrying out of rock breaking, rock hammering, sheet piling, pile driving or similar activities is excluded; and
all feasible and reasonable measures to minimise noise must be employed.
The order will be in place until 24 December 2021.
6 August 2020 - Jack Williams
21 April 2020 - Sharon Levy
21 April 2020 - Mark Glynn & Jack Williams
Every Day is a Business Day
The Coronavirus pandemic has impacted all areas of the Australian economy in unprecedented ways. During this uncertain period of time, it is critical that construction projects are carefully managed to avoid breaching terms and conditions of the contract.
On 2 April 2020, pursuant to section 10.17 of the Environmental Planning and Assessment Act 1979, Rob Stokes, the Minister for Planning and Public Spaces introduced the Environmental Planning and Assessment (COVID-19 Development – Construction Work Days) Order 2020 (Order).
Pursuant to this Order, the carrying out of building work, or the demolition of a building or work on a Saturday, Sunday, or public holiday, is now permitted; regardless of whether the previously issued ‘development consent’ allows it to do so. It is worth noting however, that there is a general obligation that is placed upon builders, to take reasonable steps to minimise the noise on these additional days, and the Order does identify certain types of works, like rock breaking, rock hammering, sheet piling, pile driving, or similar activities; which are still not permitted to be performed.
In announcing the introduction of the Order, Mr Stokes said “the construction and development sectors, which make up almost 10 per cent of NSW’s economy, will be vital in keeping people in jobs and keeping investment flowing over the coming weeks and months … we’re doing what we can to support the industry in line with the current medical advice by extending weekday construction site operating hours to weekends and public holidays … the extended hours allow the industry to facilitate social distancing on construction sites, while minimising the potential for lost productivity during the pandemic … in NSW there are almost 400,000 people employed in the property and construction industry and we are committed to doing everything we can to keep each of them in work, but most importantly, to keep them safe and healthy”.
It is hoped that the introduction of the Order will mean that whilst the daily progress of projects may diminish as adequate social distancing measures are implemented, the increased working days will enable the projects to be completed on or before the contractual date of practical completion.
20 March 2020 - Jack Williams & David Creais
The SOP Act stops for no-one
A simple google search using the search terms ‘contracts’ and ‘coronavirus’ yields dozens of articles concerning the effect on contracts of ‘force majeure’ and ‘frustration’. However, the Building and Construction Industry Security of Payment Act 1999 (SOP Act) remains immune to these concepts and a contractor in the construction industry is able to ensure prompt payment of invoices by making progress payment claims under the SOP Act.
Making a claim under the SOP Act
To be a valid ‘payment claim’ under the SOP Act, the claim must identify:
the work performed;
the value of the claim; and
that the claim is made under the SOP Act
What can the principal do on receipt of the claim?
Upon receipt of the payment claim, the principal then has 10 business days to respond, either agreeing to pay in full or, if only agreeing to pay in part or refusing to pay at all, the principal must provide written reasons.
Failure to respond?
If a payment claim has been validly served, and the principal fails to respond within 10 business days, the contractor has the option to recover the claimed amount as a debt due to the contractor by court action. In those proceedings, the principal is unable “ to bring any cross-claim against the claimant; or to raise any defence in relation to matters arising under the construction contract”.
A contractor is able to use the SOP Act to assist in ensuring that it’s cashflow remains consistent.
A principal has limited time to respond to a payment claim.
The SOP Act is effective irrespective of events that frustrate the contract or force majeure.
19 March 2020 - Robert Kalde
COVID-19 has created a lot of uncertainty in the building & construction industry, including in relation to supply interruptions, concerns and possible flow on costs.
A significant amount of construction materials are purchased from China including ceramic tiles, sanitary ceramics, doors, lighting, wallpaper and windows. These can often be sourced for up to 30% cheaper than elsewhere. Builders are already suffering delays in lead times due to reduced manufacturing capability, and fewer transport options delaying transit times. Literally many deliveries have to be put on a “slow boat from China”.
The below tips may assist you. As the COVID-19 situation progresses and evolves we will add to and change these as necessary so be sure to check back.
Builders – make sure your building contracts with owners/developers make provision for title passing on payment, rather than delivery, of unfixed or offsite materials. This will protect against increased costs from delayed deliveries, particularly overseas countries (i.e. China), where many bespoke items (ceramics and light fittings) are sourced for residential developments.
Developers – ensure your project is not delayed by interruptions in the supply chain for materials – factor in additional costs for purchasers being unsatisfied about alternate materials being used, where changes have had to be made due to late or non-delivery of items from overseas countries, build these costs into any rate for liquidated damages within your contracts.
19 March 2020 - David Creais
Security of payment – Principals whose businesses are adversely affected by restrictions imposed as a result of the pandemic will begin to suffer cash flow problems unless they have sufficient capital reserves. Banks which are providing funding to these principals may review their funding agreements and cease funding if repayment of loans is likely to be impaired. Contractors should give thought to whether their principal is are likely to fall into these categories and:
Make sure payment claims are made promptly and avail themselves of the security of payment legislation;
Seek assurances (with verification if possible) from principals that the principal has sufficient funding to complete the project;
Make appropriate provision for the possibility that progress payments will be late, partial or not made at all; and
Closely monitor public announcements regarding the principal’s industry generally and the principal in particular.