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Disputing liquidated damages and delay

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Good news! Liquidated damages are not to be considered under the Building and Construction Industry Security of Payment Act 2002 (Vic) (SOPA).

Even if you are significantly delayed in disputing them.

Excluded amounts under SOPA

Some claims are ‘excluded amounts’ which cannot be taken into account when calculating the progress payments a party is entitled to, for example:

  • a claim for compensation due to an uncontrollable event, and;
  • damages for breach of contract.

Since the recent decision in Goldwind Australia Pty Ltd v ALE Heavylift (Australia) even if a company fails to immediately dispute the liquidated damages they can still “claw back” previously uncontested deductions.

So, even though the Company waited a year to dispute the damages it can still claim payment of $400,000.

What does this mean?
  • If you are experiencing a delay in your project, you can still pursue recovery under the SOPA.
  • However, we recommend strict compliance with your obligations to issue Extension of Time notices.

Contact us about minimising your liquidated damages risk,.

This is how we approach it:

  1. Negotiate the contract clauses with liquidated damages;
  2. Contract administration: set up Extension of time templates, Gantt charts/construction program and provide you with monthly assessment of your extension of time notices.

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