The legal wash up from the recent floods in Queensland

The partners of the Queensland Construction and Infrastructure team would like to send our condolences to all those affected by the recent floods. 

We trust the information below is of assistance in dealing with the wash up from this extreme event.  The information will be covered in more detail at our breakfast seminar on 27 January 2011.

Force Majeure

If, as a result of the floods, you have been unable to fulfil your obligations under your contract then: what are the ramifications and what should you do to protect yourself?

In short you should:

1. Read the contract for the particular project and review the relevant clauses.
   
   
2. Look specifically for a force majeure clause.
   If your contract contains a force majeure clause you may be relieved from performance of your obligations under the contract if your ability to perform those obligations has been impacted by the Queensland floods.
   Unless there is a specific exclusion in your contract in respect of flooding or extreme weather events, courts have interpreted acts of god as force majeure events and therefore in most cases, it will be reasonable to conclude, that a force majeure event exists as a result of the Queensland floods. 
   
   
3. Follow through with the mechanics of the relevant force majeure clause.
   In order to have the protection of a force majeure clause, you must follow the requirements of the clause which in most circumstances will involve the issuing of a notice.  You should review your contract for any notices required to be issued and ensure that they are attended to in accordance with the timeframes set out in the contract.
   Depending on your contract there will be differences in the way force majeure notices should be drafted.
   
   
4. Take steps to mitigate.
   Most force majeure clauses will pass on to you an obligation to take steps to control or limit the consequences of the flooding on your project.  You should therefore not only issue the relevant notice but take steps to control the ongoing impact of the flooding on your project.  

Building & Construction Industry Payments Act

Time keeps ticking under the Building and Construction Industry Payments Act (BCIPA).

The Act contains strict timing regimes for the submission of:

1. payment schedules (10 business days);
   
   
2. adjudication applications (10 business days); and
   
   
3. adjudication responses (5 business days). 

Given the interruptions to businesses over the last week (and in some cases the continuing disruption) it is important to note that there is no mechanism in the BCIPA by which these timeframes can be extended, even in the unfortunate circumstances which have occurred over the last week. 

Accordingly, and arguably unfairly, in spite of the fact that many businesses were (and may still be) closed, timing for the purposes of the BCIPA continues to run. 

Particularly in relation to payment schedules, this is important, as failure to serve a payment schedule within 10 business days results in the total amount of the payment claim being due and payable in full. 

It is therefore imperative, despite the disruption of the last week, that payment schedules (and adjudication applications and adjudication responses) are served strictly within the timeframes contained in the BCIPA.

Extension of Time Claims and Delay Claims

Many (although not all) construction contracts contain a clause enabling a party to claim an extension of time to the date for practical completion as a result of inclement weather.  The terms of the contract will then govern whether or not inclement weather also entitles a party to delay costs. 

Contracts often contain strict time bars in relation to the timing of claims for extensions of time and/or delay costs: some also remove the Superintendent’s overriding discretion to allow claims for an extension of time and/or delay costs if they are claimed out of time.