February 25, 2022

The Victorian Supreme Court recently considered the scope of a contractor’s entitlement to claim acceleration costs, in the case of V601 Developments Pty Ltd v Probuild Constructions (Aust) Pty Ltd [2021] VSC 849. The relevant costs were incurred to achieve targeted completion dates where the contractor had not been granted extensions of time to which it was entitled as it progressed the works.

V601 Developments engaged Probuild Constructions (Aust) to design and construct a mixed-use development precinct in Abbotsford, Victoria. The contracted works consisted of eight separate portions, each with its own completion date, for a fixed-sum price. Under the terms of the contract, the Principal (V601) was responsible for appointing a Project Manager to act as the Principal’s agent in certain circumstances and to act as an independent assessor and certifier in other circumstances, including in relation to any contractor entitlement to an EOT.

V601 commenced proceedings in the Supreme Court to recover liquidated damages it alleged were due and payable in respect of each separate portion of the works where completion was achieved late. Probuild counterclaimed alleging the Project Manager failed to approve its full entitlement to extensions of time, which it asserted were sufficient to extinguish V601’s liquidated damages entitlement. Probuild also sought to recover the cost of accelerating work as a result of V601’s alleged breaches of contract and other costs.

Having found that the Project Manager failed to certify, in full, the extensions of time to which Probuild was entitled, Digby J turned to consider Probuild’s claim for costs incurred in accelerating the works to avoid or reduce those delays.

Probuild claimed its acceleration costs on three alternative bases:

  •    as part of the loss and damage that Probuild suffered because of the Project Manager’s failure to certify, in full, the EOTs to which Probuild was entitled;
  •    as part of the loss and damage that Probuild suffered because of V601’s breaches of:
    •    an implied obligation on V601 to require the Project Manager to exercise its functions and responsibilities as required by the contract; and
    •    an implied obligation to co-operate; and/or
  •    under the contract provision entitling Probuild to recover acceleration costs following an acceleration direction. Probuild said the direction could be implied from V601’s failure (through the Project Manager) to award Probuild its extension of time claims, thereby requiring it to complete the works by the existing completion dates.

Following a detailed review of authorities, Digby J found that Probuild was entitled to recover acceleration costs incurred to overcome and minimise delay:

  •    as damages flowing from V601’s breach, through its Project Manager, in not awarding and compensating Probuild in relation to extensions of time to which it was entitled; and alternatively
  •    as a result of V601’s breaches arising from the Project Manager’s lack of independence and V601’s undue influence on the Project Manager,

which were within the contemplation of both parties and which were reasonably incurred.

The contract contained commonly seen provisions guarding against double recovery in the event of entitlement to delay damages and/or acceleration costs. Having found that Probuild was entitled to additional extensions of time and associated delay damages, Digby J identified certain components of the acceleration costs claim which risked overlap in that regard.

The full decision can be found here.

Share on: