Prevention Again, and All That

The Court of Appeal of Victoria, a couple of weeks ago, refused  in V601 Developments Pty Ltd v Probuild Constructions (Aust) Pty Ltd [2022] VSCA 77 (2 May 2022) a stay of execution of the judgment in V601 v Probuild [2021] VSC 849 (22 December 2021) pending appeal. Past experience suggests that such a refusal diminishes the prospect of the appeal being pursued.

The decision is a lengthy one, at 1451 paragraphs over 458 pages, covering a number of matters including prevention.[1] 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 [2021] 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[2].  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.

Some other highlights from the V601 case include:

  • The contract expressly required that in certifying, the project manager must act independently, reasonably, having regard to the express terms of the contract and not in the commercial interests of either party. Digby J found that those same four terms would ordinarily be imposed at law.
  • The court found that the certifying Project Manager had, inter alia:
    • sought advice from the owner’s lawyers in relation to assertions regarding his independence [109];
    • attended many critical meetings with the owner and its lawyers, including to discuss the owner’s tactics and strategy dealing with the contractor’s claims [110];
    • provided the owner with drafts of his determinations in respect of expansion of time claims [115];
    • was involved with the owner in devising a strategy to delay and minimise the contractor’s contractual entitlements [120].
  • The result was that the certifying Project Manager’s purported assessments, determinations and certifications were a nullity, and should be set aside [793].
  • The contractor was entitled to its acceleration costs as reasonable costs incurred in mitigation of delays or likely delay is, this being in the alternative to the builder’s entitlement to recover those same costs by way of damages for the owner’s breach in failing to award and compensate the builder for extensions of time.

This decision is likely to stand alongside Alstom v Yokogawa (No 7) [2012] SASC 49 as one full of useful principle, but perhaps likely to be underused because of the sheer length of the judgment?




[1] A useful summary of the decision is given by Philip Davenport in his article V601 V  PROBUILD – THE DUTY OF A CERTIFIER TO ACT INDEPENDENTLY, which appears at page 28 of the March/April 2022 issue (#203) of the Australian Construction Law Newsletter.

[2] Key Infrastructure Australia Pty Ltd v Bensons Property Group Pty Ltd (No 2) [2019] VSC 763 (26 November 2019)

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