Case Note on V601 v Probuild [2021] VSC 849[1]
Background
This case concerns a development of five separate buildings comprising commercial suites and residential apartments. V601 was the developer. V601 engaged Probuild to design and construct the project under an amended contract form of AS4902-2000 (Contract).
Issues
The issues concerned time-related disputes. V601 had claimed liquidated damages while Probuild claimed damages (comprising bonuses, delay damages, acceleration costs & variations) and Extension of Time (EOT). In this article, we focus on Probuild’s challenge to the independence of the Superintendent in assessing Probuild’s EOT claims.
Function and Role of Superintendent
Under the Contract:
- the Superintendent was required to act independently when assessing whether Probuild was entitled to an EOT; and
- the Superintendent may, in its sole and unfettered discretion, direct an EOT but was not required to exercise that discretion for the benefit of Probuild.
Importantly, when assessing Probuild’s EOT claims, the Superintendent:
- attended meetings with V601 and its lawyers, including discussions about V601’s tactics and strategies in dealing with Probuild’s claims;
- provided V601 with draft determinations of Probuild’s EOT claims; and
- devised with V601 strategies to delay and minimise Probuild’s claimed entitlements.
Probuild’s argument
Probuild contended that:
- the Superintendent was required to assess EOT claims independently (notwithstanding it was acting as the agent of V601); and
- the Superintendent had failed to act independently when assessing Probuild’s EOT claims.
Decision
The Court held that both V601 and the Superintendent breached their obligations under the Contract:
- V601 had interfered with the Superintendent’s duties as a certifier and colluded with the Superintendent in assessing Probuild’s EOT claims; and
- the Superintendent had failed to exercise the required level of independence that the Contract imposed.
As a result, the EOT assessments of the Superintendent were held to be void and set aside. V601’s claim for liquidated damages was dismissed and judgment was found in favour of Probuild (Judgment).
Stay application
Interestingly, in 2022, Probuild entered administration shortly after receiving the $13 million Judgment in its favour. V601 then sought leave to appeal against the Judgment and a stay of the Judgment until its Appeal was determined (Stay Application)[2]. As V601 was litigating in Victoria, V601 was required to show ‘special circumstances’ to justify its Stay Application.
In the Stay Application, V601 argued that the special circumstances were:
- if its Stay Application was not granted, V601 will enter into liquidation;
- should V601 succeed in its Appeal later, V601 is unable to restore its position prior to its liquidation; and
- as a result, this will render V601’s Appeal to be of no value.
The Court of Appeal dismissed V601’s Stay Application in full and held that there are no special circumstances.
The administrator of Probuild has not progressed this matter further in the courts and V601 has not progressed with its appeal.
Key Takeaway
A Superintendent must act independently when assessing EOT claims if independence is required under the contract. A failure to do so is a breach of Contract which will expose the Superintendent’s principal to a contractual claim.
Also, the fact an appellant will become insolvent unless a stay of judgment is granted will not necessarily be sufficient to convince a Court in Victoria to grant a stay.
If you would like to discuss this article with us further, do not hesitate to contact Brett Vincent (Partner) or Vince Yap, Associate, on (02) 9261 5900.
[1] V601 v Probuild [2021] VSC 849
[2] V601 Developments Pty Ltd v Probuild Constructions (Aust) Pty Ltd [2022] VSCA 77