Construction Law: Acciona's Claim Regarding Sydney Light Rail Project

This report provides a comprehensive legal analysis of the dispute between Acciona and the NSW government regarding the construction of the Sydney light rail project. It begins by outlining the legal basis of Acciona's claim, focusing on contract law principles, including the Parole Evidence Rule, and the alleged misleading conduct by the Transport of NSW. The report then details the evidence and legal arguments supporting Acciona's claim, referencing the Australian Consumer Law and the concept of unconscionability. It further examines the potential opposition and counterclaims the Transport of NSW could present, considering issues of ambiguity and good faith. Finally, the report discusses the preparations required for a court hearing, including gathering information, selecting witnesses, and understanding court procedures. The analysis highlights key legal concepts such as duty of care, misleading conduct, and the importance of clear and unambiguous contract specifications, offering a thorough examination of the legal complexities involved in the case.

Construction Law
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Part A
Basis in Law for the Claim by Acciona
Since the Spanish builder and the state government had an agreement to construct the
Sydney’s $2.1 billion light rail, their agreement must adhere to the principles of a contract. For
instance, the contract must have provided the design services, the guidelines and procedures for
the construction of the light rail line, as well as, the agreement with the power company.
Apparently, this is what Acciona’s 1.2 billion claim for costs and damages against the state are
based on. Acciona accepted to build the light rail line for the state. Therefore, the two parties
must have the capability to form the legal relationship by avoiding engaging in illegal actions. It
will be automatically illegal for Acciona to tamper, without permission, with Ausgrid’s
electricity cables and their pits that are beneath the place where they plan to construct the light
rail line. Besides, it was illegal for the Transport of NSW to engage in a misleading conduct by
lying to the Spanish company that Ausgrid had reviewed and accepted the handling of its
utilities. Worst of all, they prevented Acciona from communicating with Ausgrid before signing
the contract.
According to the Common Law under the Parole Evidence Rule, in case of uncertainty of
a contract, external evidence such as commentary on specifications, the drawings, among other
written documents must be provided by both parties as evidence. Therefore, the transport of the
NSW was expected to provide a copy of the agreement with the Ausgrid company to prove that
the company had accepted the construction of the light rail line to tamper with its beneath utility
services. Unfortunately, Acciona realized that Ausgrid had not accepted them, and the guidelines
they gave to the transport sector on how the builder should handle their utilities diverged to a
significant degree from what the Transport of the NSW had directed Acciona. Acciona came to
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realize that most of Ausgrid’s utilities were unclear while 106 of them were in clear conflict.
This is clearly against the Parole Rule of Evidence (Codelfa Construction Pty Ltd v State Rail
Authority NSW, 1982). According to the Court, the evidence should not vary, contradict, add to
or subtract from the written terms. Therefore, Acciona has a right to claim for the damages
caused to it as a result of misleading conduct by the Transport of NSW.
Support for the Claim
In order for Acciona to support their claim, they will have to prove to the court that: (1)
the state had a legal duty to act in a particular way. (2) The state’s conduct was in breach of the
duty. (3) They suffered financial injury and loss as a direct result of breach of the state’s legal
duty.
With regards to the law of torts, the state had a legal duty to care for the Spanish builder
during its construction process. The court will consider if there was vulnerability and reasonable
foreseeability for it to find out if the duty of care existed or not. Of course, Acciona was reliant
on the state for it to work properly without any troubles. Acciona depended on the state to get
approval by the Ausgrid power company. Besides, the Transport of NSW was aware of the
utilities of Ausgrid Company underneath and they knew that Ausgrid had not permitted the
construction of the light rail line to go on because it could tamper with its utilities. Definitely, it
was reasonably foreseeable that if Acciona carried out their construction process, they will have
to incur some damages including financial injury.
Besides, Sections 18 and 19 of the Australian Consumer Law that is contained in
Schedule 2 of the Competition and Consumer Act 2010 (CCA) prohibits making statements in
trade and commerce that are deceptive or misleading. In contrary to this law, the Transport of
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NSW engaged in deceptive and misleading actions against Acciona when they kept it hidden that
Ausgrid did not want its utilities tampered with. The law also requires that when there is a
problem and that the guarantees given are not met, then one is entitled to a refund (Australian
Consumer Law, 2010). Therefore, Acciona is entitled to a refund of the losses and the damages
incurred during the project.
The law does not also accept unconscionability, which is an unscrupulous, unfair and an
unreasonable behavior as done by the Transport of the NSW who knew that the builder company
will find it difficult construction the light rail line but they still went ahead enforcing a contract
with them and keeping other information hidden. It is precise that unconscionable conduct is
prohibited and punishable by law (Commercial Bank of Australia Ltd v Amadio, 1983).
Therefore, there must not be unconscionability affecting consideration of a contract in any way.
Additionally, in order to overcome legal attack, the parties involved in a contract must
consistently use simple, clear and concise language throughout their specification that when read
provides unambiguous information about the whole project. Such specification should contain all
the required information with no addition or subtraction so that it can help achieve the required
results (Victoria University of Manchester v Hugh Wilson & Lewis Womersley, 1984). Of course,
if the specification is effective, the end results can be realistically achieved by the parties. Thus,
the information about the agreement with Ausgrid should have been provided clearly in the
initial stage before signing the contract with the state to prevent Acciona from getting into an
agreement that will make it incur large amounts of losses.
With regards to the Common Law, both parties entering into an agreement have a legal
duty to act with good faith towards one another. For instance, all the commercial agreements
must have the terms of good faith and reasonableness implied by the law (Burger King
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Corporation v Hungry Jack’s Pty Ltd, 2001). The test for implication in the fact consists of
conditions such as: (1) the implied term must be equitable and reasonable; and (2) the contract
must ensure business efficacy (BP refinery (Westernport) Pty Ltd v Shire of Hastings, 1977).
Article 1.7 of the Unidroit Principles is also about the implied duty of good faith. In this article,
each of the parties involved in a contract are all expected to act with good faith and fair dealings
in international trade. It is also extended in article 2.15 that calls for all parties not to negotiate in
bad faith. If a party negotiates in bad faith, he is liable for any losses caused to the other party.
Establishing an Opposition for the Claim and any Counterclaim
In order for the Transport of NSW to establish an opposition for the claim by Acciona
and any counterclaim, they will have to prove to the court that: (1) the information they provided
to the Spanish builder was true. (2) They had a duty to provide information. (3) They were
expressing their opinion.
According to the case of B and B Constructions, the court of Appeal considers the issue
of ambiguity in the information provided during contract formation (B and B Constructions
(Aust) Pty Ltd v Brian A Cheeseman & Assoc Pty Ltd, 1994). In this case, B & B engaged
Cheeseman in the works of landscaping. B& B managed to directly pay Cheeseman’s suppliers
and paid Cheeseman so that he could pay off its workers. However, the contract included
information that was not clear to both parties. As a result of this, there was a question of whether
the wording in the contract had a plain meaning that is not ambiguous if at all it is interpreted by
reference to all the four corners of the document. It could probably show that the parties had
intended to have a different meaning in their term. In turn, the court decided that extrinsic
evidence is permitted in order to clear up ambiguities if possible. Thus, the parole evidence rule
can be exempted in case of an ambiguity. This also applies in this case.
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The Transport of NSW had a duty to provide the Spanish builder with the information
they needed in order to complete their project effectively. After communication of the Ausgrid
Power Company, the transport of NSW got information about the utilities of the company though
most of what was given was not clear. This was so because Ausgrid gave guidelines with 106 of
its utilities in clear conflict while the other 927 of them were not clear. Thus, the Transport of the
NSW had this ambiguous information that did not really imply that they are prohibited from
carrying on with their construction process. Thus, since they had a duty to provide information,
they did so in good faith, and provided the other party with exactly what they got from the power
company. Besides, it was just their opinion that they can construct the light rail line in the
selected area without interfering with Ausgrid’s utilities.
Preparation for Hearing in Court
Both the claimant and the defendant will be required to decide whether they will want to
represent themselves at the hearing. The hearing is a formal and the two parties will be forced to
come up with evidence so that they can argue their case effectively. This is the time when they
will also be required to argue the points of law. The parties will have to challenge each other in
order to defend their positions. Therefore, they will first decide whether they will represent
themselves in the hearing or they will need lawyers to represent them to help them argue their
positions with reference to the law. Thus, before the hearing, the parties should gather as much
information as possible. In order to do this in an appropriate way, they can choose to sit in on
another hearing so that they can get the processes and procedures of the court process. During
this time, the court can advise the hearing that are forthcoming and if it is possible to observe
them. Aside from that, professional advice would also be relevant as the lawyers can advise them
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on the kind of questions they should expect in court and how they can answer them in best way
possible.
In addition to that, the parties should find out the kind of documents they will need in
court. For instance, there may be a few forms that will be required to be filled by both the
claimant and the defendant before trial. Sometimes, these forms are given to the judge early
enough and a copy of it to the opposing party. This copy may be needed in court for reference.
Besides, the two parties should also learn how they can handle themselves in the courts and
probably during the questioning of their witnesses. The lawyer assigned the task can guide in
this.
Still on preparation, the two parties must find out whom the other party will be using as
witnesses. Usually, there is a date set for the parties to meet and exchange witnesses’ lists with
each other. This is usually done ten days prior to the trial. If one party, however, gives out the
witnesses’ list and does not get the list from the other party, the party is expected to write a letter
to the other party requesting for the list, failure to which the party can ask the judge to forbid that
party from calling in any witnesses to court.
Lastly, they can also find out who they can call in as their witnesses. Of course, the first
witnesses are the two parties – Acciona and the Transport of NSW themselves. Then, they will
also need to have at least one person who can say what they heard about the issue in dispute.
However, they should not overdo it. Therefore, the witnesses should either be an individual in
possession of the relevant information or an expert who holds information that would be relevant
to the case. For instance, Ausgrid’s representative can serve as a good witness to prove or to
disprove the information presented in court.
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Procedures to Avoid Problems of Amendment
The case between the Spanish builder and the Transport of NSW had quite a number of
problems:
 Acciona signed a contract without the surety that Ausgrid Company permits them to go
on with the construction of the light rail line which would tamper with the utilities of the
power company. Apparently, this is what caused the problem that the builder company
faced together with the loses and damages they experienced. In future, it would be
advisable that before entering and signing a contract with another party, all the
information given must be concise and clear according to the Unidroit Principles Article
2.1 and 2.6.
 Acciona asked about the information of the Ausgrid Power Company and how they
should handle their crucial cables underneath but the Transport of NSW gave information
that they were not sure about. They made Acciona believe that Ausgrid had reviewed and
accepted the construction procedure with handling of its utilities. Such deceptive
information is punishable by law and should not be permitted in future. Therefore, people
should know the consequences of engaging in deceptive information and those who do
should not be left unpunished.
 Acciona was prevented from communicating with Ausgrid Company. Next time Acciona
is getting involved in a contract, they should demand the information from all sources
and in case they are prevented from communicating with any of them, they should not
sign the contract.
 Acciona learnt about the rejection by the Ausgrid Power Company just hours after the
financial close of their contract but they still went ahead to construct the light rail line
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which ended up causing it damages. In future, they should not continue with something
they know will not benefit but harm them. Instead, once they realized the contract
involved some deceptive information, they should stop right at that point and look for a
way out of the contract.
Part B
Payment Process under the Building Industry Security of Payment Act
In case Acciona wishes to avail itself of the payment process under the Building Industry
Security of Payment Act (Victoria) it should note that there is an existence of progress payment
which is the periodic payment made to contractors when they are carrying out a project under a
construction contract. The payments made under the Security of Payment Act are payments on
accounts. However, it is not a proof that that the progress payment is as a result of quality works.
However, it is usually known as “pay now, argue later.” Acciona may be entitled to the progress
payment under the law. According to Section 9b, one is entitled to progress payments twenty
business days after the service of the claim (SOP Act, 2002). This is however not allowed if the
contract prohibits it. With regards to section 12, the payment is due ten business days after the
payment of the claim. Section 14(4) sets out that the time for making the payment claim is either
within 3 months or within the time specified in the contract (Bitannia Pty Ltd and Anor v.
Parkline Constructions Pty Ltd, 2006; SOP Act, 2002). However, there are limits for making
multiple or repeat claims. This is put forth in section 14 from subsection (6) to (9) that there is
only one claim allowed per every reference date apart from a situation where the amount is the
issue before and was not paid in full and not adjudicated (SOP Act, 2002). Another limit is that
in case there is only one single payment, then the act will only accept one claim that is not also
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impacted by the amounts that were not previously paid by due date and not adjudicated or even
by previous claims under the agreement.
Nonetheless, it is also proper to note that the excluded amounts are not permitted in any
payment claim. The excluded amounts involve the damages that arise from the breach of contract
or in connection with the agreement, delay, latent situations, exclusions by law, changes in the
requirements of the law, the claims that are ‘otherwise at law’ and variations with an exception
of the claimable ones. Besides that, section 13 puts it clear that the principal cannot provide in a
contract that the subcontractors will be paid when the principal is paid (SOP Act, 2002).
The payments schedules are supposed to identify that all the amounts considered by
respondents are excluded amounts which cannot be included in the claimed amounts, must not be
considered when calculating the progress payment amounts entitled to a person, must be
acknowledged in the payment schedules and adjudication retorts and the ones which cannot be
considered in an adjudication determination (Dualcorp v Remo Constructions, 2009). In case the
respondent does not give the schedule of payment, the claimant then has a right to apply to the
court in order to recover from the unpaid amounts. Nonetheless, it would be mandatory for the
court to be sure that there was no payment or a part of the payment schedule provided by the
respondent. Aside from that, the respondent has no authority to raise defenses or bring any cross-
claim for matters under the construction contract. According to section 15 of the State Securities
of Payments Act, no dispute can be raised unless there is a provision of a payment schedule.
Nonetheless, the court provided that in some facts, there is a chance for defenses due to the
operation of the Trade Practices Act (TPA). According to the court, TPA is a law in
Commonwealth that relates to general misleading or deceptive conduct which applies to the
States Practices Act.
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Lastly, the adjudicator can decide whether a payment claim is valid under the Act with
little involvement of the court (Hickory Developments v Schiavello (Vic) Pty Ltd, 2009; Grocon
Constructors v Planit Concciardi Joint Venture, 2009). In addition to that, the two cases show
that the decision of adjudication can be amended to a writ of centori implying that the courts can
get involved. Thus, the decision of adjudicators can be void if there are no basic and essential
needs of the law such as a valid contract of construction, an application for adjudication, and
service for a valid progress claim, among others.
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References
Australian Consumer Law 2010 (ACL) s.18
B and B Constructions (Aunt) Pty Ltd v Brian a Cheeseman & Assis Pty Ltd [1994] 35 NSWLR
227
Bitannia Pty Ltd and Anor v. Parkline Constructions Pty Ltd [2006] NSWCA 238
BP Refinery (Westernport) Pty Ltd v Shire of Hastings [1977] UKPC 13
Building (Security of Payments) Act 2002
Burger King Corporation v Hungry Jack’s Pty Ltd [2001] 69 NSWLR 558
Commercial Bank of Australia Ltd v Amadio [1983] HCA 14
Cordelia Construction Pty Ltd v State Rail Authority NSW [1982] HCA 24
Dualcorp v Remo Constructions [2009] NSWCA 69
Grocon Constructors v Planit Cocciardi Joint Venture [2009] VSC 339
Hickory Developments v Schiavello (Vic) Pty Ltd [2009] VSC 156
Victoria University of Manchester v Hugh Wilson & Lewis Wormsley [1984] 2 Con LR 43 at 75
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