Each
construction project will have its own challenges. Often a significant portion
of these challenges will arise from the particular conditions of a given site
and it is important that any potential site difficulties are addressed as early
as possible in the planning stages of any project.
Some of the most common site issues that lead to litigated construction disputes include a failure to carry out sufficient site investigations before entering into a contract leading to surprise (latent) conditions causing problems during a project, repossession of a site by a principal and disputes with neighbours who adjoin a work site. All of these issues are discussed below.
A warning for contractors about implied site terms or lack thereof
It should never be assumed that a site is suitable for the work set out in a contract or that the works requested by a principal and detailed in the site specifications are in fact able to be carried out on the site in question.
Unless there is a contractual provision to the contrary, a contractor should always make all necessary enquiries to ascertain whether it is even possible to carry out the work proposed in the contract on a particular site. Courts in Australia have shown on multiple occasions that they are loathe to imply any contractual terms that will contradict an express term so this really is a case of ‘contractor beware’.
Latent conditions and how best to deal with them
A reference to a ‘latent condition’ generally means a site condition that cannot be identified during a site inspection or following a reasonable site investigation. Latent conditions may include, but are not limited to such things as site contamination and sub-soil conditions and utilities such as power cables and water pipes.
Disputes about latent conditions are becoming increasingly both common and expensive particularly on more difficult or complex projects. This really is a case of forewarned being forearmed and a considerable amount of expense and potential angst can be avoided if this issue is given sufficient and proper consideration at the pre-contract stage.
A proactive approach to this issue is the key to minimising disputes. We recommend that both principals and contractors take all possible steps to ensure that site conditions, and most importantly the question of responsibility and liability for site conditions are adequately dealt with in the contract.
It is also vital that as many site conditions as possible are identified during the pre-contractual stage so that a contractor is able to take these conditions into account when setting a price for their work.
It is possible for a principal to shift the risk of any latent conditions to a contractor. However, in order to do this a contract must be very carefully drafted and clearly worded.
If you are a principal seeking to shift risk we strongly recommend that you seek legal advice rather than attempting to draft a contractual clause of this kind by yourself. Similarly, if you are a contractor asked to agree to this type of contractual clause we also recommend that you seek legal advice before signing any contract.
When can a principal repossess a site?
The right to access a site that a contractor obtains when entering into a building contract with a principal is essentially a licence to access the site for as long as the principal allows the licence to continue. At any time a principal may terminate a contractor’s contract, repossess a site and exercise their right of access to that site. Should this occur the principal may also exclude a contractor from any further possession of the site. Any attempt by a contractor to access a site after a principal has revoked access is likely to be regarded by the Courts as an act of trespass.
If access through a neighbouring property is needed it is important that the contract clearly addresses the question of who is responsible for obtaining access and whether there are any conditions that could affect access.
Unless a contract provides otherwise responsibility for obtaining access through or across a neighbouring property will rest with the principal. However, in circumstances where a principal has put in place a means of reasonable site access and a contractor’s desire to gain access through a neighbouring property is simply a matter of convenience rather than necessity, any such access will be at a contractor’s risk.
Is a contractor responsible for damages for delay if site access if denied?
If a neighbour denies a contractor access to a property and delays flow from the lack of access, the question of whether the contractor will have to pay damages for delay will turn on the particular contractual provisions that apply to the site. This is another reason why site access should be addressed as a matter of priority.
Can neighbours obtain an injunction to prevent site access?
If a neighbouring property contains buildings or is in some other way endangered by building activities on your site it is entirely possible that your neighbours may seek and obtain an injunction to protect their property from damage. Neighbouring properties do not need to show that actual damage has occurred only that their land is being interfered with and what the interference is. Interference can include interference with neighbouring airspace
Each site and project will have its own special features and challenges. With careful planning and proper advice it is possible to limit the risks and costs faced by both principals and contractors and we welcome the opportunity to assist you in this regard.
If you or someone you know wants more information or needs help or advice, please contact us on 02 9601 1403 or email info@emprise.law.
