I was expecting to be in the Supreme Court of Victoria on Friday (virtually) but that was been adjourned by consent. Tomorrow I will be in Auckland in New Zealand (virtually) talking at Brightstar’s conference Building and Construction Regulation and Law about (surprise surprise) Extra-Contractual Recoveries. Meanwhile, I have accepted an invitation from the indefatigable Arran Dowling-Hussey to give the keynote speech at the Society of Construction Law Ireland conference in November in Dublin (virtually), which sounds fun, and which might be even more fun if I’m able to get there in person.
It is hard not to have mixed feelings about this brave new world of virtual appearances. I used to spend a lot of time on aeroplanes, and to some extent of course it was wasteful to the point of absurdity (more than once, I have been asked to fly a thousand miles for a directions hearing). But there is something about being there in person which is missing from the virtual thing.
My chambers introduced a new inter policy – we all have to install Microsoft InTune. It seems to be something akin to an internet equivalent of those electronic tags they put on criminals. I hate it. Longer and more tedious PIN & password requirements. It slowed my Surface to a snail’s pace.
Anyway, no chambers email for the last hour.
To contact me until this gets sorted , please copy emails to me to email@example.com.
As bespoke contracts have become lengthier, and more heavily laden with Queen of Hearts clauses and “I Delay, You Pay” arrangements, it has increasingly been the case that the contractual entitlement of contractors and subcontractors to commercially reasonable payment for their work is shut out by express contractual provision. They may read the contract once, twice, or 20 times, and find no express contractual route to payment. In those circumstances, it is necessary to turn to extra-contractual routes to recovery; that is to say routes to recovery that are not to be found in the express words of the contract.
These routes have become all the more important. They are not much taught in law schools, and are frequently overlooked by claimants to whom they may be available. As such, they can represent hidden opportunities for claimants. They can also constitute hidden risks for employing parties – both owners and contractors who engage subcontractors – that may not become apparent until a legal case against them has been advanced in legal proceedings.
Understandably, a good deal of what is said and written about construction law centres on construction contracts. This paper focuses on one aspect of construction law: what rights are available to a party which executes construction or engineering work to get paid? And understandably, people typically start looking at the express wording of the contract. And those who are to pay for the work typically assume that their liability to pay is limited to what the contract says.
There are two particular problems with this approach. Firstly, there are numerous alternative routes to payment for work other than the express wording of the contract. This paper is intended to illuminate the overall landscape of extra-contractual recovery by looking at a dozen particular paths. Some of them are very well established. Others are more speculative.
The author has not made a precise count, but guesses that in about half of the recoveries in which he has been involved as a lawyer have involved some element of extra-contractual recovery, often pleaded in the alternative to the contractual right.
As one looks at these alternative routes, one sees a second problem. Very often, parties do not do what they have contracted to do. Conceptually, this is easily understood where the contractor does not build what he has contracted to build, and thus becomes liable for the cost of rectification, either under the contract or by way of damages. More complex is what happens when the owner, and/or the owner’ s agents, do not do what they are required to do by the contract. A number of the alternative routes to payment are concerned with the legal consequences of such failures.
Clearly, these alternative routes to payment represent opportunities for contractors and risks for owners. They are not as well recognised as they might be, and it is in that sense that they might be characterised as hidden. For the parties who have undertaken work for which they have not been paid, notwithstanding their legitimate commercial expectation, the takeaway from this paper will be that it is worthwhile going through these alternative routes in order to see whether any of them are available. If you are advising an owner, the takeaway is not to be too myopic about the contract: the risks might well lie elsewhere.
The decision is a lengthy one, at 1451 paragraphs over 458 pages, covering a number of matters including prevention. The prevention point here was that the owner had prevented the contractor from putting in claims based (as required by the contract) on the Approved Contractor’s Program, by not approving the contractor’s programs. that is a relatively unusual application of the prevention principle, but not entirely unknown; it is referred to at page 217 of my book on Extra-Contractual Recoveries for Construction & Engineering Work.
The decision claim about six weeks after the High Court refused special leave in Key Infrastructure Australia Pty Ltd & Ors v Bensons Property Group Pty Ltd  HCATrans 185 (5 November 2021), where the issue sought to be appealed was the nature of the prevention principle, but Justice Digby did not refer either to that special leave application, nor to the Court of Appeal’s decision in that case. In that case, the Court of Appeal of Victoria found that the prevention principle is only enlivened where the prevention is a breach of contract, and further that it is merely a matter of implied term rather than rule of law. As I have explained elsewhere, the latter is probably a heresy (although not an entirely novel heresy) but the former clearly runs counter to considerable authority, and that authority was not referred to by the Court of Appeal. As such, it seems the decision was per incuriam. Further, the Court of Appeal found as a fact that there had been no prevention, and so in any event the observations of the Court of Appeal about the prevention principle were also obiter dicta. It appears that it was essentially on that basis that the High Court declined to give special leave to appeal – it not being a suitable vehicle to resolve the point.
We are down to the last few days now of the pre-order discount period for Extra-Contractual Recoveries, and I am pleased to say that people have been buying the book, notwithstanding that none of the construction law publications have yet reviewed it, and we are still waiting for completion of the printing process.
I am grateful for the suggestion of Julian Bailey of White & Case for his suggestion of London Publishing Partnership as the publishers for my book. He switched to them for his third edition of his 3 volume work Construction Law, in part because it enabled a massive reduction in the price of the book (which I thoroughly recommend, by the way; it really is the lawyers’ law book on construction law: whilst it does not have the history of Keating or Hudson, it is considerably more detailed at some 2,300 pages. And so while construction lawyers might sensibly start with Keating or Hudson for a summary of the law on any particular construction law topic, it is then wise to look to Bailey for the more nuanced wrinkles).
For those following the Façade Designs International v Yuanda saga, an update:
FDI, having issued proceedings against Yuanda, has been ordered to provide security for costs, on the basis that there are credible grounds that it may not be able to pay the costs of Yuanda if ordered to do so. The initial tranche of security – to close of pleadings – is $200,000.
More unusual was the application that FDI’s solicitors Piper Alderman be restrained from acting for FDI unless and until an adequate information barrier (Chinese wall) be put in place. This issue arose because it emerged that Piper Alderman partner Daniel Fitzpatrick, who had conduct of the case, had previously acted for Yuanda on a number of occasions when employed by Gadens. Following what Justice Delany described as “gradual movement on the part of Piper Alderman” over some months the requirements of a proper Chinese wall were eventually put in place, such that Piper Alderman were permitted to continue with a fresh team (not including Mr Fitzpatrick), but a costs order was made against Piper Alderman and FDI was made in respect of the application.
The security for costs order was made on the basis of the inference that FDI’s refusal to disclose its full financial position was motivated by a wish not to reveal liabilities, as to do so would likely confirm impecuniosity. This approach is sometimes characterised as the rule in Browne v Dunn. Justice Delany referred to the much more recent decision, just a few days earlier, in Wu v Bi.
I was instructed by Yuanda as leading counsel on both limbs of this, and so Continue reading →
Dragon, the voice recognition software, is pretty good these days, if used with a decent computer and a decent microphone. But it does have its issues, sometimes misunderstanding what is intended.
I meant this morning to send a round robin email to a few people I know to give them the preorder details for my new book. I was planning to send a test version of the email to my PA. But instead, my Lodestone application sent the round robin to a much wider group of recipients!
Dragon was open at the time, and I think it might have overheard me talking to my PA, and interpreted what it heard it as an instruction to send the email out to the wider group. Either that, or Continue reading →
“This text, the magnum opus of an already impressive oeuvre, will make a formidable contribution to the domain of construction law and provide great value to counsel, arbitrators, judges and construction industry participants at all levels of the industry.”
— From the book’s foreword by Professor Douglas Jones, international commercial and investor/state arbitrator, and an International Judge of the Singapore International Commercial Court
“The merit of the book lies in the author’s encyclopaedic knowledge, but also in its engagement with the real-life business of setting up and running projects. It will delight all those (lawyers and construction professionals) in the business of claims and defending against them. To have such experience distilled in such a rigorous and systematic way is a gift to the reader.”
— Philip Britton, co-author of Residential Construction Law (Hart, 2021) and Visiting Professor (Law), King’s College London
“To the unwary, a construction contract may give the impression of creating a complete universe of rights and obligations. Yet any contract is merely foreground, against a wider landscape of common law, statute and sometimes even customary laws. Contracting parties need to know where they stand from an overall legal perspective. In Extra-Contractual Recoveries, Robert Fenwick Elliott shows us with great clarity the ‘Yang’ of construction law that nestles against the ‘Yin’ of the contract’s written letter”.
— Julian Bailey, author of Construction Law (3rd edition, LPP, 2020) and partner at White & Case LLP, London
“Construction law is traditionally understood to be primarily a subset of contract law, as applied in detail via the common law and via standard and bespoke forms of contract. This understanding can obscure the growing importance of remedies which lie outside (or, adjacent to) this contractual realm. This book is valuable not only for bringing these extra-contractual matters out of obscurity but in its sheer generosity of insight, drawn from the author’s deep and thoughtful engagement at the forefront of international construction law discourse and practice over many years. The international construction law community, and the broader community it serves, will be all the richer for this book’s contribution.”
— Dr Matthew Bell, Associate Professor and Co-Director of Studies for Construction Law, Melbourne Law School, The University of Melbourne