Builders fear post-COVID litigation

There is a fear that a wave of claims could be pursued in Victorian courts as a result of the disruption to building, construction and development sites during Melbourne’s COVID-19 lockdowns.

As a result of both restrictions and lockdowns imposed by the Victorian State Government, there have been huge delays in the completion of both large and small scale building projects for builders, developers and associated industries. A very real threat to builders as a result of these delays, is the pursuit of claims for liquidated damages (compensation) payable for delivering building jobs late.

Whilst the construction industry did continue to operate throughout 2020, the extent of the restrictions imposed (at one point only 25 per cent of the workforce allowed on job sites) has had long lasting effects. The Master Builders Association estimated that during the February 2021 five-day “circuit-breaker” lockdown, the industry lost $450 million in economic activity each day which included $63 million in lost wages. With further lockdowns being imposed by the State Government in Victoria, these losses for the industry will continue to accrue.

Further, Master Builders Association are concerned that many construction contracts do not include “act of God” or “force majeure” clauses or, although not yet determined by the Courts, that the partial restrictions on the building industry may not be considered sufficient so as to rely upon these contractual clauses.

As a result of these concerns of the building industry, the State Government is currently considering a “COVID-19 contracting framework”, which would establish a mediation model attempting to resolve disputes without the need to resort to litigation.

Our building lawyers and dispute resolution lawyers in our Property & Development and Commercial Business & Disputes Teams are able to assist in providing advice on all building, subcontractor and related contracts and any dispute you might be contemplating or involved in.

Please contact one of our Principals, Kristy Muhlhan, Meghan Warren or Rosy Dean (nee Rosy Roberts) to discuss further

Insight written by Rosy Dean (nee Rosy Roberts)


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