19 July 2021

Restrictions on construction and maintenance to further limit the spread of the COVID-19 Delta strain (NSW)

This article was written by Larissa Buriak and Arvin Nitchingham.

Background

The NSW Government has announced tighter restrictions to the construction sector in the Public Health (COVID-19 Temporary Movement and Gathering Restrictions) Amendment (No 8) Order 2021 made under the Public Health Act 2010 (NSW) (Order).

Section 24AB of the Order requires that from 12:01am on Monday, 19 July 2021 (Commencement Date) work is not to be carried out on a construction site in Greater Sydney, unless the work is urgently required for the following purposes:

  • to ensure the safety or security of the construction site;
  • to deal with environmental risks;
  • to maintain critical plant or equipment that would otherwise deteriorate;
  • to receive deliveries of supplies that would otherwise deteriorate;
  • to maintain public utilities;
  • to ensure the safe operation of existing transport infrastructure;
  • by or on behalf of NSW Health in response to the COVID-19 pandemic; or
  • because of an emergency,

  (together, Emergency Works).

A “construction site” under the Order is defined as a place at which work, including related excavation, is being carried out to erect, demolish, extend or alter a building or structure but not work carried out in relation to a dwelling in which a person is residing.

In light of the Order, we are anticipating contractual claims and notifications for COVID-19 related events under construction and maintenance contracts and project development agreements in NSW.

The NSW Government has also announced that from 17 July 2021, there will be an increased presence of compliance inspectors across Sydney and Regional areas to ensure businesses are complying with COVID-19 public health orders, including at construction sites.

KWM will monitor all NSW Government communications and provide further updates as the situation evolves.

What immediate action should you take?

Principals and contractors should have ensured that suitable arrangements and communications were made prior to the Commencement Date to ensure construction sites (as defined under the Order) have been safely secured and shut down.

As we have mentioned above, we expect to see an increased presence of inspectors to ensure compliance with the Order. It is therefore important that whatever action is taken, with respect to the Emergency Works, is clearly and effectively communicated to all project participants to better manage dealings with the authorities. KWM’s construction experts can assist with the interpretation of how the Order impacts your construction and maintenance obligations and the subsequent drafting of communications to project participants.

What does this mean for your contract?

Every construction contract will differ, however there may be potential avenues for a contractor to make a claim for delay (time and cost) and loss as a result of the Order. We would typically expect to see claims and notifications in relation to the following contractual heads of claim:

  • change in law relief (which is likely to be the primary avenue of relief under most building contracts);
  • Force Majeure relief; and
  • suspension or deemed suspension.

It is important for principals and contractors to undertake a detailed review of any provisions dealing with these mechanisms, including extension of time and delay cost provisions. Consideration should also be given to any work health and safety and insurance obligations which may be triggered as a result of the Order.

If you would like further information on these events, KWM has previously published an article dealing with the administration of construction contracts in light of COVID-19: https://www.kwm.com/en/au/knowledge/insights/practical-tips-for-administering-construction-contracts-during-covid-19-20200323.

We are here to help

Subject to any further changes by the NSW Government, the Order will stay in place until 11:59pm on Friday, 30 July 2021.

Contracts in the process of being drafted should ensure that COVID-19 relief provisions are suitably drafted in as this is now a well established risk.

KWM’s construction specialists provide whole-of-life project advice, including advice in relation to contractual, WHS, insurance and project financing obligations as a result of the Order. If you require any immediate support, please do not hesitate to get in touch with any of the KWM construction contacts on this article.

 

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