We refer to our update of 19 January 2021, which dealt with a case where a principal was held to be in breach of contract because of communications showing that the superintendent lacked independence and rubber -stamped directions of the principal.
In the very recent case of V601 Developments Pty Ltd v Probuild Constructions (Aust) Pty Ltd [2021] VSC 849, the Victorian Supreme Court found that:
- the communications between the principal and the superintendent/project manager (PM) were in breach of the contract, as they showed that the PM lacked independence and wase partial, unreasonable and disregarded the express requirements of the contract; and
- the assessments of the PM were therefore void, and the certified LD’s set aside.
The Court also took particular issue with the following actions of the PM:
- seeking and, or alternatively, acting upon the advice and recommendations of the principal’s agents, relating to its independent certification functions, or the proper exercise of those functions, and particularly in relation to the builder’s claims for extensions of time; and
- participating in meetings and telephone conversations, including being copied into correspondence between the principal regarding the defence of the builder’s EOT claims.
Subsequently, the Court found that each of the above, separately and cumulatively, established undue influence by the principal over the PM and also that the PM failed to perform the contractually required assessment, determination and certification functions, with the required degree of independence and impartiality in a fair and reasonable manner.
Key Takeaway
Ultimatley, the Court held that the PM could not communicate with the principal in a biased manner. However, there is no reason why a superintendent cannot communicate with the principal and the builder in an unbiased, independent manner and accord natural justice.
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