Case Summary: Probuild Constructions (Aust) Pty Ltd v DDI Group Pty Ltd
Probuild Constructions (Aust) Pty Ltd was the head contractor on the refurbishment of the Tank Stream Hotel in Sydney and subcontracted DDI Group Pty Ltd under an amended AS 4303 subcontract.
The subcontract:
Set a Date for Practical Completion
Contained a standard extension of time (EOT) regime
Also gave Probuild a discretionary power to grant an EOT even if DDI had not made a compliant or timely EOT claim
After the Date for Practical Completion had passed, Probuild:
Directed substantial variations
Allowed the works to continue
Later sought to set off liquidated damages against DDI’s payment claim, on the basis that no EOT had been formally granted
DDI claimed payment under the Building and Construction Industry Security of Payment Act 1999 (NSW), arguing that Probuild could not rely on LDs for delay it had caused.
Adjudication and appeal
The adjudicator rejected Probuild’s LD set‑off, effectively applying the prevention principle (a party cannot insist on strict contractual time obligations where it has itself caused delay).
Probuild challenged the determination, arguing:
The adjudicator denied procedural fairness
The prevention principle had not been expressly argued by either party.
The NSW Court of Appeal dismissed the appeal.
Key findings
The Court held that:
Prevention principle applies: A head contractor cannot levy liquidated damages for delay it has caused, including delay arising from variations instructed after the contractual completion date.
Discretionary EOT powers must be exercised: Where a contract gives a discretionary power to extend time, that power cannot be ignored to manufacture entitlement to LDs.
Implied duty of good faith: The discretion to grant EOTs was constrained by an implied duty of honesty and good faith, requiring Probuild to fairly recognise delay it caused.
No denial of procedural fairness: The adjudicator was entitled to apply legal principles arising naturally from the facts, even if not labelled by the parties.
Why this case matters
This decision is a warning case for head contractors and principals who:
Instruct variations late
Let projects drift past completion
And then attempt to recover liquidated damages on technical notice failures
It confirms that commercial reality will prevail over strict formality where a party’s own conduct causes delay.
Lessons Learned
1. Principal‑caused delay still matters, even if notices are late
Even though DDI failed to comply strictly with notice requirements, the Court accepted that Probuild knew about the delay it was causing through variations and revised construction programs.
Key Takeaway
Late or imperfect EOT notices weaken your position, but they do not automatically defeat it.
2. Liquidated damages cannot coexist with prevention
A principal or head-contractor cannot:
Direct late changes
Consume float
Push work beyond the Date for Completion and then claim liquidated damages for the same period
Key Takeaways
If you are instructed to keep working past completion, carefully document:
Variation instructions
Program impacts
Site directions
These facts support a prevention argument even in fast‑track disputes.
3. Discretionary EOT clauses are not “optional”
Many contracts allow a superintendent or head-contractor to grant EOTs “at their discretion”. Probuild v DDI confirms that this discretion must be exercised honestly and fairly, not strategically.
Key Takeaways
If the contract allows discretionary EOTs:
Demand they be exercised
Point to the prevention principle
Escalate early if discretion is being used oppressively
4. “Good Faith”
The Court grounded its reasoning not just in prevention, but in an implied duty of good faith constraining how time powers are exercised.
Key Takeaways
Where a principal’s conduct appears tactical or opportunistic, good faith arguments can strengthen:
EOT claims
Defences to LDs
Security of payment adjudications
5. Security of payment is a powerful equaliser
The case arose in an adjudication context. The Court reinforced that adjudicators can apply well established legal principles.
Takeaway for contractors
In payment disputes:
Focus on facts and conduct, not just clauses
Prevention arguments are highly effective in adjudication
Do not assume technical non‑compliance is fatal
Summary Actions for Contractors
Record all late variations and directions
Track delay causation in programs
Issue EOT notices where possible, and don’t panic if they are late
Challenge LDs where principal conduct causes delay
Use prevention and good faith arguments in adjudication
At Accura Consulting, our team of experts work with clients to create a tailored solution to problems. If you have an issue and want expert support, get in touch.
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