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Dr Donald Charrett, “The Commercial Value of Dispute Boards under FIDIC Contracts” (2015) 1.3 Turkish Commercial Law Review 205. A Dispute Board under a FIDIC contract can speedily and economically adjudicate disputes. The commercial value of Dispute Boards is potentially far greater than as adjudicators of formal disputes. A standing Dispute Board, implemented at the start of a project and meeting regularly with the contracting parties, is able to assist them to avoid disputes. The worldwide track record of Dispute Boards shows that they are very effective in helping the parties avoid formal disputes, however if disputes eventuate, in adjudicating an outcome according to law in a timely and cost effective manner. Recent judgments reviewed in this paper have provided clarity on the mandatory requirements for Dispute Board decisions and their enforceability. This article briefly reviews Dispute Board costs in the light of the significant risk cost of disputes and concludes that the 'insurance' cost provides clear commercial value to the parties in an international construction contract. (2015) 1.3 Turkish Law Review 205 Commercial Value of DBs under FIDIC Contracts
Dr Donald Charrett, “Cost Effective Resolution of Construction Disputes” (2015) 9.33 International In-house Counsel Journal” 1. Litigation and arbitration of construction disputes have become increasingly expensive, time consuming and unappealing. Adjudication, expert determination and dispute boards (evaluative ADR) are increasingly being used to resolve disputes in a more timely and cost-effective manner than litigation or arbitration. In contrast to the compromise outcome typically negotiated by the parties in a mediation or conciliation, these evaluative methods of ADR result in a reasoned determination in accordance with the contract and the law, prepared by a third party independent neutral. Each of the alternatives has its advantages and disadvantages, canvassed in this paper. Statutory adjudication for certain types of disputes is mandated in a number of jurisdictions around the world, and although the resulting determination is only provisionally binding, in the great majority of cases it becomes de facto finally binding. Disputing parties can implement expert determination in either a binding or non-binding form, tailored to suit the circumstances of a particular dispute. Dispute boards come in two versions – an ad hoc dispute board set up to adjudicate a specific dispute, and a standing dispute board implemented at the start of a project that is not only able to adjudicate disputes if they arise, but is in a unique position to assist the parties to avoid disputes. The paper discusses the formal requirements for each of these evaluative methods of ADR, and makes some suggestions as to the types of disputes they are most suited to. (2015) IICJ 3nov Cost Effective Resolution of Construction Disputes
Dr Donald Charrett, “The Rules for Expert Evidence in Australia” (2015) 163 Australian Construction Law Newsletter 24. In a previous paper, the author reviewed various current issues involved in briefing experts, including the cases on expert evidence arising from the class action litigation on the Victorian bushfires. That paper discussed the rules relating to expert evidence in the Supreme Court of Victoria and the Federal Court.
As with many other aspects of the law in Australia, there are significant differences in the law and the rules for expert evidence between the different State, Territory and Commonwealth jurisdictions. Some jurisdictions now have Uniform Evidence Acts, whilst the common law of evidence still applies in three jurisdictions. A number of jurisdictions have explicit codes of conduct for expert witnesses, whilst the others do not. All jurisdictions have civil procedure rules that regulate expert evidence. The differences may mean that expert evidence that is complying in one jurisdiction may not necessarily comply with the rules in another jurisdiction.
This paper provides a comparison of the rules relating to expert evidence in the nine jurisdictions of the State and Territory Supreme Courts and the Federal Court. A table in the Annexure cites for each jurisdiction the specific clause references to the requirements for expert evidence in the civil procedure rules and expert witness codes of conduct. This table provides details of the requirements for expert evidence under nine categories, including procedural requirements for expert reports, the required content of an expert report, procedural rules for expert conclaves, and giving expert evidence in court.
The final section of the paper contains suggestions for the contents of an expert report that the author considers would satisfy the formal requirements in any jurisdiction, irrespective of the specific rules. Whilst this may seem to be an unnecessary counsel of perfection, this author believes there is merit in adopting a uniform approach to expert evidence that incorporates the current best practice in Australia.
(2015) 163 ACLN 24 Rules for Expert Evidence in Australia
Dr Donald Charrett, “Construction Disputes Australia” (2015) 64-15 Lawyer Monthly 52. The construction industry covers a vast collection of issues and is always subject to the potential for dispute, just like any other industry. Here, as part of Lawyer Monthly’s Specialist Advocate feature, we turn our attention to the Australian construction sector by speaking to Dr Donald Charrett, a barrister practising in construction law, and an accredited Arbitrator, Mediator and FIDIC trainer. (2015) 64.15 Lawyer Monthly, 52
Dr Donald Charrett and Philip Loots, “Challenges in achieving successful megaprojects” (2015) 10(2) Construction Law International 18. Megaprojects are increasingly common around the world. For the purposes of this paper a megaproject is a project with a capital cost in excess of US$1b. Megaprojects are large scale projects involving substantial capital expenditure and cash flow, and a correspondingly large design, procurement and construction workforce that must be appropriately managed. Further, the scale and number of interfaces in a megaproject necessarily implies a level of complexity greater than in smaller projects.
The financial significance of megaprojects to their owners is self evident – they consume large amounts of capital that is invested for anticipated future income streams (in the case of private enterprises), or for the provision of efficient public infrastructure (in the case of government enterprises). Whether publically or privately funded, project sponsors are looking for efficient deployment of capital to produce successful projects.
Notwithstanding the importance of megaprojects to their sponsoring organisations, and to the contractors who build them, there are well documented examples of unsuccessful megaprojects that have destroyed billions of dollars of capital. The scale of such capital destruction in some cases has resulted in the insolvency of the sponsoring company or the contractor.
Detailed studies of construction projects around the world have revealed a disturbing fact: the success rate of megaprojects is less than the success rate of smaller projects. These studies have identified a number of factors that have contributed to the lack of megaproject success. This paper discusses the findings of recent research in the hope that lessons can be learned from past unsuccessful projects to ensure that future megaprojects will have a higher likelihood of success.
(2015) 10.2 CLInt 18 Megaproject Challenges
Dr Donald Charrett, “Getting the most out of expert witnesses: Lessons from the Victorian Bushfires” (2015) 161 Australian Construction Law Newsletter 6. Calling an expert witness is different to calling a lay witness – the role of an expert witness is to assist the court, not the client. This paper explains when and how to brief an expert, in light of the lessons drawn from the many proceedings arising from the Victorian bushfires. It covers:
• When to brief an expert
• Ethical considerations
• Dealing with adverse opinions
• Court Rules
• How to work effectively with experts
• Matthews v SPI Electricity Pty Ltd
(2015) 161 ACLN 6 (Expert Evidence)
Philip Loots and Dr Donald Charrett, “Being Held to Ransom or ‘Wielding the Whip or the Rod’” (2014) 31(2) International Construction Law Review 211. This paper looks at the legal doctrine of economic duress in the Anglo- Australian context of construction contracts on large resource projects. Employers on large projects are sometimes put in a position where, to obtain timely completion, there seems to be no alternative but to renegotiate the commercial terms of a construction contract with a non performing contractor (and inevitably on terms that are more favourable to the contractor). Redress may however be possible by seeking curial intervention on the grounds of economic duress, to avoid the consequences of having acceded to undue pressure.
Economic duress is an action for restitution of property or money extracted under duress and the avoidance of any contract that is induced by it. It is a common law doctrine that is part of the law of contract and unjust enrichment and is closely related to the equitable doctrine of undue pressure. It is not, in and of itself, a species of tort. Economic duress is a factor which may render a contract voidable.
(2014) 31.2 ICLR 211 Economic Duress
Dr Donald Charrett, “The Use of the UNIDROIT Principles in International Construction Contracts” (2013) 30(1) International Construction Law Review 507. The Unidroit Principles of International Commercial Contracts are a set of a-national principles that apply to the formation, validity, interpretation, performance and termination of commercial contracts. They are intended to be a modern statement of a “lex mercatoria” for international contracts in which the rules are not derived from any particular national law, but nevertheless embody contractual principles which are or can be recognized by the laws of any country, whether those laws are based on the common law or the civil law.
The UP have evolved from a considerable amount of work by a number of skilled and experienced lawyers from many countries and from all the major legal systems. It is suggested that they represent a set of overarching principles that are appropriate to regulate an international contract in a manner that is:
• fair to all parties;
• straightforward to apply;
• predictable in outcome;
• independent of a particular national legal system;
• generally consistent with the contract law and principles in any country (with some exceptions).
As a set of principles, the UP may be complementary to and supportive of the specific contract which applies to a given situation, in a similar way that the common law, civil law or statute law typically applies to regulate the entry into, and execution and termination of the contract in the given legal system. However, because the UP are transnational, they do not and cannot have the legal force of a national legal system which is based on government power. Any force that the UP have, can only be derived from the parties’ contractual arrangements. Furthermore, any such power the parties themselves have invested in the role of the UP will be illusory, unless that power is supported by a relevant legal system which supports the parties’ freedom of contract.
(2013) 30(1) ICLR 88 Best method of dispute resolution
Dr Donald Charrett, “The Art of the Forensic Engineer” (2013) Paper delivered at the Fifth Structural Engineering, Mechanics and Computation, Capetown September 2013; Zingoni (ed), Research and Applications in Structural Engineering, Mechanics and Computation 2341. The first part of the paper discusses the role of the forensic engineer in investigating and determining the causes of structural failures, and how that role differs from that of the design engineer. The forensic engineer’s “deliverables” and “clients” require specialised skills directed to answering and communicating “why” the failure occurred. Recommendations are made for the appropriate engagement of a forensic engineer. The second part of the paper reviews the application of forensic engineering in the public reports of several structural failures. The direct "technical" causes of failure were accompanied by contractual and project execution deficiencies that did not prevent or detect the onset of disaster before it was too late. The “non-technical” lessons learnt include implementing the appropriate contractual mechanisms for managing the project risks, the appropriate engagement of the design and checking engineers, the designer’s involvement during the construction, and the ongoing requirement for monitoring and inspection of constructed facilities. (2013) 2341 Art of the Forensic Engineer
Dr Donald Charrett and Dr Andrew Potts, The Duty of Care in Design – Can Engineers Rely on Codes of Practice? (2013) Paper delivered at Third Society of Construction Law of Australia conference, Sydney August 2013; (2013) 152 Australian Construction Law News 6. Contracts for engineering design normally include the obligation that the services will be performed with the reasonable skill, care and diligence that would be applied by a normally skilled member of the profession in similar circumstances. The profession makes considerable use of codes of practice, or “standards”, which codify current design practice. The prevailing view of the design profession is that such standards represent the “state of the art” that they are expected to apply. But does compliance with the current applicable standard mean that the designer has discharged his/her contractual duty of care? Might something more be required? Does the designer need to anticipate how the design standards may evolve? This paper addresses these questions in the light of a recent case, in which the judge’s findings on the applicable standard of care in relation to the use of current design standards may be surprising to many designers. (2013) 152 ACLN 6 Duty of Care in Design
Dr Donald Charrett and Cherie Holland, WHS in Australia – designer’s obligations (2013) 25(6) Australian Construction Law Bulletin 101. A previous paper outlined the significant changes in work health and safety (WHS) legislation in Australia since 2011. That paper discussed in general terms that one of the significant developments In the new harmonised Work Health and Safety Act (the Act) and the Work Health and Safety Regulations (Regulations) is the formalisation of higher WHS obligations on organisations that design, manufacture, import or supply products. This paper looks in more detail at the specific new WHS obligations that have now been imposed on a design organisation. (2013) 25(6) ACLB 101 WHS - designers obligations (Charrett & Holland)
Dr Donald Charrett, “The Canterbury Earthquakes – Lessons for Construction Lawyers” (2013) 8(2) Construction Law International 36. The Canterbury earthquakes – a human tragedy in which 185 people lost their lives and severe damage was caused to the built environment – occurred near to and within the city of Christchurch, New Zealand in 2010 and 2011. Eighteen people died in one building (PGC) and 115 in another (CTV). A further 42 people died from the failure of other buildings and many more were injured. The New Zealand government subsequently implemented a Royal Commission, the terms of reference for which required recommendations to be made on:
• measures necessary or desirable to prevent or minimise the failure of buildings due to earthquakes likely to occur during the lifetime of those buildings;
• the cost of those measures; and
• the adequacy of legal and best practice requirements for building design, construction and maintenance related to managing the risks of building failures caused by earthquakes.
This article endeavours to highlight what the author considers are the most important issues and lessons learnt from the Royal Commission Report that are of interest to construction lawyers around the world.
(2013) 8.2 CLInt - June 2013 - Book Reviews
Cherie Holland and Dr Donald Charrett, “WHS in Australia – the Current State of Play” (2013) 25(3) Australian Construction Law Bulletin 46. Since 2011, work health and safety (WHS) legislation in Australia has undergone significant change through harmonisation across most Australian jurisdictions. The new legislation places a significantly higher burden of responsibility and compliance on organisations working in the construction industry than previously. The impact of the new legislation on an organisation needs to be carefully reviewed to ensure that personnel at all levels understand their duties and obligations, and that processes and procedures are updated and implemented to reflect the new regime. One of the significant developments is the formalisation of higher WHS obligations on organisations that design, manufacture, import or supply products. The focus of this paper is on the changed requirements arising from the new legislation. It should be noted however, that the following comments are not applicable in Victoria or Western Australia at present, as they have not yet implemented the harmonised WHS legislation. (2013) 25(3) ACLB 46 WHS in Australia (Holland & Charrett)
Dr Donald Charrett, “Dispute Boards and Dispute Resolution” (2013) 16(4) Inhouse Counsel 59; (2013) 25(3) Australian Construction Law Bulletin 59. This paper addresses the following issues:
• “Full term” Dispute Boards in Australia using “without prejudice” processes have been very effective in avoiding disputes.
• Dispute Boards can also provide a quick and cost effective method of ADR.
• These dispute resolution capabilities can also be used by an ad hoc Dispute Board, set up to resolve a particular dispute. · The DB process is flexible, and can be tailored to the needs of each individual dispute.
• A DB determination can be provisionally or finally binding by agreement.
(2013) 16(4) IHC 59 Dispute_boards_and_dispute_resolution
Dr Donald Charrett, “The Canterbury Earthquakes – Lessons for Construction Lawyers” (2013) 25(1) Australian Construction Law Bulletin 2. The Canterbury earthquakes in 2010 and 2011 were a tragedy that resulted in substantial loss of life and property damage. Eighteen people died in one building, and 115 in another. A further 42 people died from the failure of other buildings, and many more were injured. The New Zealand government implemented a Royal Commission that issued its final report in December 2012.
The Royal Commission report, in seven volumes, contains a wealth of information of interest to construction lawyers. This paper provides a brief overview of several of these issues, and some background technical details that are relevant to an understanding of the construction law issues.
(2013) 25(1) ACLB 2 Canterbury Earthquakes
Dr Donald Charrett, “The “best” method of resolution of construction disputes – elusive or illusory?” (2013) 30(1) International Construction Law Review 88. The argument about what is the “best” method of resolution of construction disputes has been a topic of discussion at recent construction law conferences, if perhaps somewhat tongue-in-cheek.
The paper suggests some criteria that may make the search for the “best” method of DR for a particular dispute not illusory, and hopefully a little less elusive. It is implicit in the following that the analysis must ultimately be in the context of a specific and unique dispute, and not a generalized class of disputes. In each dispute, the disputants will view the relevant factors from their own subjective viewpoint. Accordingly, it is submitted that there is no objective “best” method in the abstract, even for a generalized class of disputes.
The thesis of this paper is that the “best” method of resolution of a particular dispute from an individual disputant’s perspective is typically the one that achieves the appropriate proportionality between the competing demands of the time and cost of the process, and the “justice” it delivers. In practice, this generally involves the selection of a DR method that gives the highest priority to the most important element(s), and balances the remaining element(s) accordingly, whilst giving necessary weight to the desired features of the process.
(2013) 30(1) ICLR 88 Best method of dispute resolution
Dr Donald Charrett, “Expert Evidence in the Supreme Court of Victoria” (2012) 24(8) Australian Construction Law Bulletin 118. The following case notes refer to three rulings made by Forrest J in a case arising out of the disastrous bushfires in Victoria in 2009. The claim was brought pursuant to Pt 4A of the Supreme Court Act 1986 (Vic) by the plaintiff on behalf of group members who sustained personal injury and/or property damage, and/or economic loss as a result of one of the bushfires on 7 February 2009. The plaintiff alleged that the fire was a result of the failure of a wire conductor that formed part of an electricity distribution line. She claimed that she and members of the group suffered injury or loss as a result of negligence on the part of each of the defendants. Damages were claimed from the electricity distribution company, its contractor responsible for inspections of the distribution line, and from various State government parties.
In this large and complex case there were a number of experts giving evidence on a number of different issues. Each of these three reports relate to rulings made by Forrest J on aspects of the expert evidence process.
(2012) 24(8) ACLB 118 (Expert Evidence)
Dr Donald Charrett, “The Importance of Standard Form Contracts” (2012) 24(7) Australian Construction Law Bulletin 106. Parties entering into a contract for the construction of a major facility can use general conditions in one of: (a) a standard form contract (such as one of the AS4000 suite of contracts), (b) a standard form with some terms modified, or (c) a “bespoke” contract which has been written specifically for the particular features of the construction project at hand.
It is usually the employer (employer) who invites tenders for construction, and it is normal for such an employer to select the general conditions of contract it proposes to use for the construction contract. Many employers in Australia, perhaps the majority in respect of major resource projects, put forward bespoke con- tracts prepared by one of the major law firms experienced in construction contracting. It is suggested that such a preference for a bespoke contract is based on a view that none of the applicable standard form contracts adequately looks after the employer’s interests, and that the usual risk allocation between contractor and employer embodied in standard form contracts is unsatisfactory from the employer’s perspective. It is submitted that a substantial driver of an employer’s desire for a bespoke contract is a perception that such a contract can shift more risk to the contractor than would be the case under most standard form contracts.
The thesis of this paper is that, whilst such risk “reallocation” may have superficial attractions, the use of bespoke contracts with unbalanced risk allocation in preference to standard form (perhaps modified) contracts, generates other risks and costs for the Employer.
(2012) 24(7) ACLB 106 (Standard Form Contracts)
Dr Donald Charrett, “Managing Design Contracts” (2012) 15(10) Inhouse Counsel 317. Every construction project has a substantial element of design in it. The cost of design is generally a small proportion of the overall cost of a construction project, and a much smaller proportion of the life cycle cost of a project. However, as it is the design that determines not only the form and nature of the construction, but also the characteristics of the constructed facility that determine the ongoing operating and maintenance costs over its entire life, its importance is substantially greater than the proportion of its cost of the project. There are actions that an employer in a construction project can take to manage the design to ensure, to the greatest extent possible, that the final constructed facility will fulfill its expectations. (The term “employer” is used in this paper to refer to the entity that engages the designer, irrespective of whether the employer is an owner or a design and construct contractor.)
This paper looks at the design risks inherent in any project, and the actions an employer can take to minimize those risks. The thesis of this paper is that, because of the fundamental importance of design to the functionality and overall cost of a constructed facility, the quality of design is of overarching importance in construction contracts. The corollary of this is that the design contract should be implemented and managed to ensure that the required quality is achieved.
(2012) 15(10) InHouse Counsel 317 (Managing design contracts)
Dr Donald Charrett, “Dispute Boards in Australia – the story so far” (2012) 15 Buildlaw 10. Dispute Boards (DBs) in Australia have provided a mechanism for reducing the adversarialism in construction projects, without losing the benefits of traditional hard money forms of contract. The DB concept was first introduced into Australia in the Sydney outfall tunnels project in 1987. Although a few projects used DBs in the 1990s, they became more widely used from around 2003. This awakening of interest was the result of:
• industry wide dissatisfaction with the traditional methods of resolving disputes after they had arisen;
• the successful and expanding utilization of DBs internationally, particularly in the USA;
• and the establishment of the Dispute Resolution Board of Australasia (DRBA) as a special interest group and Chapter of the Dispute Resolution Board Foundation (DRBF) to facilitate training in and promotion of the use of DBs.
Since 1987, more than 30 DBs had been completed or are in progress in Australasia. There were only 5 DBs before 2003, with a total project value of approximately $580 million. Since 2003, the combined value of the approximately 25 projects that have had DBs exceeds $11 billion. Typically, DBs have been used in infrastructure projects such as roads, bridges, rail projects, tunnels, dams, ports, pipelines and water plants. With several exceptions, these projects have been government funded. At least 5 or 6 DBs have started or are starting in 2012 on major projects.
The use of DBs in Australia, although limited to date, has the enviable record that all disputes have been resolved within the DB process, with no disputes proceeding to arbitration or litigation. In addition, many potential disputes have either been avoided or amicably resolved within the DB process, without crystallising into formal disputes. There appear to be a number of features of this successful use of DBs that seem to be specific to the Australian experience.
(2012) 15 BuildLaw 10 (Dispute Boards)
Dr Donald Charrett and Dan Washington, “Contracts for Design Services” (2012) 15(9) Inhouse Counsel 293. This paper addresses the following issues:
• In a construction project, the design is the foundation that determines not only the construction costs, but also the entire life cycle costs including operation, maintenance and refurbishment.
• Design costs are typically no more than 1% of the life cycle costs.
• Design contracts involve different considerations to other construction contracts and subcontracts.
• Employers should ensure that the contractual arrangements for procuring the design are the most appropriate for achieving their objectives, the most important of which is to obtain a design of the required quality.
(2012) 15(9) InHouse Counsel 293 Contracts for Design Services (Charrett & Washington)
Dr Donald Charrett and Dr Andrew Potts, “Expert reports as evidence in chief – a curate’s egg? (2012) 15(8) Inhouse Counsel 266. This paper outlines the services that forensic engineers can provide, and emphasises the importance of their early and appropriate selection and engagement by the relevant legal team. A distinction is made between the roles of “clean” and “dirty” experts, and the need to clearly define the desired role to be undertaken by the expert. The responsibilities of corporate counsel in ensuring that appropriate information and support is provided to forensic engineers are highlighted. Examples are given from some case studies. The issues of the time and cost of forensic engineering services are discussed in the context of how these can be appropriately managed by corporate counsel. The tools available to forensic engineers to manage and report on their activities are noted, with particular reference to “CTRs” – schedules of the cost, time and resources required for the defined scope of the identifiable components of the required tasks. (2012) 15(8) InHouse Counsel 266 Expert reports as evidence in chief (Charrett & Potts)
Dr Donald Charrett and Dr Andrew Potts, “What corporate counsel need to know about engaging forensic engineers” (2012) 5(19) International In-house Counsel Journal 1. This paper outlines the services that forensic engineers can provide, and emphasizes the importance of their early and appropriate selection and engagement by the relevant legal team. A distinction is made between the roles of “clean” and “dirty” experts, and the need to clearly define the desired role to be undertaken by the expert. The responsibilities of corporate counsel in ensuring that appropriate information and support is provided to forensic engineers are highlighted. Examples are given from some case studies. The issues of the time and cost of forensic engineering services are discussed in the context of how these can be appropriately managed by corporate counsel. The tools available to forensic engineers to manage and report on their activities are noted, with particular reference to “CTRs” – schedules of the cost, time and resources required for the defined scope of the identifiable components of the required tasks. (2012) 5(19) IICJ 1 Engaging Forensic Engineers (Charrett & Potts)
Dr Donald Charrett, “Preparation of lay witness statements” (2012) 15(6) Inhouse Counsel 243. Given the nature of lay evidence required to record a person’s knowledge of events, and their familiarity with the relevant documents, in some cases it may be possible for a lay witness to prepare a first draft of their witness statement independently. This paper provides some guidelines that counsel could use as part of the briefing material for such a lay witness. Properly used, such a procedure has the potential to save money by minimising the time lawyers need to spend with a witness. If a lay witness follows the guidelines in this paper in preparing a witness statement, it will considerably reduce the time that he/she may need to spend with a lawyer. Provided that it is completed in the required timeframe, it is likely to be a more efficient use of a person’s time than an uninterrupted period of time committed to speaking with a lawyer and simultaneously finding the relevant documents. (2012) 15(6) Inhouse counsel 243 Lay witness statements
Dr Donald Charrett, “Construction Failures – Have We Learned the Lessons of History? (2012) 143 Australian Construction Law Newsletter 40. Failures of buildings or engineered facilities which involve collapse of structures or result in loss of life are usually scrutinised in a public inquiry such as a Royal Commission or Committee of Inquiry. This paper reviews some past public inquiries into construction failures, and highlights the lessons that, in the author’s opinion, still have contemporaneous value in respect of contractual issues that were found to have relevance to the failure. The theme of the paper is that the lessons to be learned from construction failures are not confined to the technical quality of the engineering and construction, but include the contractual, organisational and managerial aspects of project execution. Unlike most construction disputes which, at their heart, are about money and who pays how much to whom, most of the public inquiries considered here had the further dimension that the construction failure resulted in significant (and sometimes substantial) loss of life. This should be a salutary reminder to construction law practitioners that the engineer’s “art of directing the great sources of power in nature for the use and convenience of man” in every project carries with it attendant execution risks which, if they materialise, can involve significant injury and loss of life. (2012) 143 ACLN 40 Lessons from Structural Failures
Dr Donald Charrett, “Managing Design Risk – Cost, Time and Quality?” (2012) 142 Australian Construction Law Newsletter 6. This paper endeavours to identify the major design risks in a construction project, generally under the headings of scope, time, cost and quality. The fundamental importance of design in achieving a project that satisfies the manifold requirements of aesthetics, functionality, constructability, operability, maintainability and economic performance over its life cycle are emphasized.
The 1:10:100 “rule” brings into sharp focus the impact that design decisions made at the earliest stage of a project have on the ultimate outcome over its life. The corollary to this “rule” is that the most effective investment in ensuring project success is that made to obtain the most appropriate design. A “better” design, even if it costs more to produce, can reap substantial financial returns over a long period of time in the form of lower operating or maintenance costs, or a reduced requirement for upgrading or refurbishment.
The employer can manage its design risks by appropriate selection of the right designer, agreeing to reasonable and equitable terms in the design contract which protect the employer’s interests without an unreasonable or unrealistic shifting of risks to the designer, and by agreeing to reasonable remuneration and time to perform an agreed scope of work to the required quality. In addition to auditing of the designer’s compliance with the requirements of the contract, in appropriate cases it may be appropriate to engage an independent “proof engineer” to ensure the quality of the design. The employer’s best risk management will be to have an unrelenting focus on the quality of the design, and provide an appropriate contractual setting in which this has the best opportunity of being achieved.
The designer can best manage its design risks by appropriate due diligence on the employer, by not agreeing to contractual terms which place unmanageable and uninsurable risks on it, by ensuring that it will be adequately remunerated for a clear and unambiguously defined scope of work it is required to execute, and by executing that scope of work in accordance with the contractual requirements. Managing risks during execution of the design requires that adequate attention be given to resources, not only those at the “coalface” but also those required for supervision, coordination and checking. Quality certified design organizations generally have sophisticated procedures intended to achieve designs to the appropriate quality, delivered on time with an acceptable financial outcome. A designer ignores those procedures at its risk!
(2012) 142 ACLN 6 Managing Design Risk
Dr Donald Charrett, “A common law of construction contracts – or vive la difference?” Commended entry in 2011 Brooking Prize competition run by Society of Construction Law Australia; (2012) 29(1) International Construction Law Review 23. The title of this paper refers to the question of the extent to which construction law around the world is, or can be universal, and to what extent there are irreconcilable differences between legal systems and/or jurisdictions.
The world is a big place – as at 2011 there are 192 member states in the United Nations, each of which presumably has the sovereignty to enact laws that could impact on the practice of construction law, at least (but not necessarily exclusively) within its borders. The legal systems of those member states comprise a number of broadly defined “families” of law – common law, civil law, Shari’a law and socialist law, to name the most widely recognized. Each of these families has certain characteristics which distinguish it from the other members of the family. However, as suggested below, some of these differences may be more apparent than real.
Faced with this complex milieu, is it possible to identify any common threads in construction law as practiced around the world? And to what extent can contracting parties create a “common construction law”? This paper attempts, in a small way, to address these big questions. Given such a potentially limitless topic, the paper is confined to an overview of several relevant issues in the area of construction contracts in common law and civil law systems. By way of further confinement, the type of construction contracts considered in this paper are limited to those in which the object of the contract is construction of a structure fixed to the land.
(2012) 29(1) ICLR 72 A common law of construction contracts?
Dr Donald Charrett, “Australia’s Consumer Protection Law – a Potent Weapon in Construction Law Disputes” (2011) 6(3) Construction Law International 23. Arguably the most significant of its many impacts is that the Trade Practices Act 1974 (Cth) (TPA) (now, the Competition and Consumer Act 2010 (Cth) (CCA)) set norms for acceptable behaviour that impact every aspect of commercial transactions, including the negotiations that culminate in a contract. Although originally based on American legislation, the Australian TPA/CCA has no direct counterpart in the common law world in terms of the extent to which it potentially impacts upon contractual relationships.
For many purposes under this Commonwealth legislation (and equivalent State and Territory legislation), ‘consumers’ include commercial entities of all kinds and sizes. Accordingly, some aspects of the TPA/CCA are of seminal importance to the practice of construction law. Perhaps most significantly, the TPA/CCA may provide a statutory cause of action for a wrong that does not exist under the common law, or remedies otherwise unavailable under contract or tort law for damage suffered ‘by’ misleading or deceptive conduct.
Since 1974, Australia has had one of the most far-reaching ‘consumer’ laws in the world. The ambit of the TPA/CCA – is very broad, encompassing, among other things, operations of the Australian Competition and Consumer Commission and other statutory bodies that promote and monitor competition, restrictive trade practices, unconscionable conduct, consumer protection, liability for defective goods, international liner cargo shipping, a competition code and the telecommunications industry.
Knowledge of the ambit and power of the TPA/CCA is, therefore, fundamental to an understanding of the practice of construction law within Australia. Moreover, it has significant extraterritorial reach: by virtue of s 5 of the CCA, it extends to certain ‘conduct’ in breach of the prohibitions on restrictive trade practices or in breach of the Australian Consumer Law outside Australia. Commercial entities incorporated or carrying on business within Australia, and Australian citizens and persons ordinarily resident within Australia are subject to the Australian Consumer Law, even outside Australia. Thus, the CCA may provide a remedy under Australian law to a foreign entity who has suffered loss ‘by’ infringing conduct engaged in by an Australian company or resident outside Australia.
The CCA is also of interest to construction lawyers from other jurisdictions as an example of convergence, achieved via statute, between the common law and civil law. In many ways, the CCA is a legislative code that defines in considerable detail the way in which many types of commercial practice may be legally carried out. As judges have made clear in many judgments, the provisions of the TPA/CCA are not necessarily to be construed by reference to the common law; rather the specific legislative intent needs to be discerned from the words and meaning of the Act. The TPA/CCA thus operates in parallel to the common law, providing remedies for damage caused ‘by’ infringing conduct that may, or may not, parallel or overlap the established remedies for breach of contract or negligence.
(2011) 6(3) CLint 23 Australian Consumer Law
Dr Donald Charrett and Toby Shnookal, “Standard Form Contracting; the role for FIDIC Contracts Domestically and Internationally” (2011) 138 Australian Construction Law Newsletter. The paper examines the growing need for contracts to be transportable across different legal framework, both common law and code based.
Australian contractors are increasing involved in projects within jurisdictions where the Australian domestically developed contract suits are not commonly used. Through such projects some Australian contractors have become familiar with international forms of contracting. At the same time, contracts based on internationally standard forms are becoming increasingly used within Australia in some industries. With planned revisions to its relevant domestic arbitration laws, Australia looks set to more uniformly apply international contracting concepts into its domestic contracts. This article looks at the role of international standard form contracts in Australia and the Asian region with a particular focus on the forthcoming 2010 FIDIC contract suite.
(2011) 138 ACLN 6 FIDIC Contracts (Charrett & Shnookal)
Dr Donald Charrett and Matthew Bell, “Statutory intervention into the common construction law of Australia – progress or regress?” (2011) 137 Australian Construction Law Newsletter 6; (2012) Journal of the Canadian College of Construction Lawyers 11. Much of Australia’s common law does not substantially differ from the common law of England where it originated. Whilst Australia is a federation of six States and two Territories, the High Court of Australia, the country’s final court of appeal, has recently fostered the view that not only is there a “common law of Australia” but also that it is “a single and unified one”. However, as in any common-law jurisdiction, the legislators of the nine Australian jurisdictions (including the Federal) have intervened to supplement or replace the common law in many areas.
Construction law is no exception to such intervention. The major statutory incursions comprising departures from the common law which are of interest to construction lawyers are:
(1) “fair trading” legislation (primarily, the Trade Practices Act 1974 (Cth) and equivalent State and Territory statutes; these have recently been consolidated into the Australian Consumer Law;
(2) proportionate liability (Federal, State and Territory); and
(3) “security of payment” reforms designed to enforce rights to payment across the contractual chain (State and Territory).
This paper looks at the origins of each of these legislative schemes, overviews their provisions and their impact on the practice of construction law in Australia, and outlines some of the issues that the legislation has spawned. In particular, the paper highlights the differences between legislation in the different jurisdictions, notwithstanding that the local variants of each scheme were essentially promulgated to correct the same mischief.
(2012) JCCC 11 Statutory Intervention (Charrett & Bell)
PJ Murphy, L Duthie, B Bielert and Dr Donald Charrett, “Australian legal guidelines for forensic engineering experts” (2010) 11(1) Australian Journal of Structural Engineering 11. This article will guide the forensic engineering expert through all aspects of an engineering dispute in Australia. This includes investigations into the failure or non-operation of materials, products, structures or components; assisting the client and their legal teams in identifying the root cause of the failure or non-operation; and issues to consider when giving evidence to a tribunal as to the cause and potential repair or replacement options.
The first part of this article provides guidance to an expert engaged as an independent expert or a “clean expert”, and the second part provides guidance to an expert engaged as an expert consultant or a “dirty expert” in relation to their role in the critical incident response through to the hearing of the dispute.
(2010) 6(1) AJSE 11 Legal Guidelines for Forensic Engineers (Murphy, Duthie, Bielert & Charrett)
Dr Donald Charrett, “Report on the DRBF 10th Annual International Conference Istanbul 14-16 May 2010 – Construction Disputes at the Crossroads” (2010) 7 Buildlaw 73. The Dispute Resolution Board Foundation (DRBF) held its 10th international conference in Istanbul from 14-16 May 2010, preceded by two days of workshops. Donald Charrett attended the conference and workshops, and prepared a report which has been published in Buildlaw. (2010) 7 BuildLaw 73 Report on Istanbul DRBF Conference
Dr Donald Charrett, “Dispute Boards and Construction Contracts” (2010) 132 Australian Construction Law Newsletter 19; (2010) 7 Buildlaw 37. Dispute Boards are a new (for Australia) paradigm for the avoidance and resolution of disputes arising from construction contracts. They have been widely and successfully used in the USA since the 1970s and on major international projects since the 1980s. The World Bank mandates the use of Dispute Boards for construction contracts greater than $10 million. Dispute Boards have been used to a limited extent in Australia since 1988, however to date there has been no Dispute Board on a Victorian project.
The paper explains what a Dispute Board is, how it is constituted, and how it operates in practice in large projects. The key features which monitor the project, promote the avoidance of disputes and enable speedy and cost effective resolution of disputes that might occur, are highlighted. Costs of Dispute Boards are discussed, and their cost effectiveness demonstrated. The efficacy of Dispute Boards is demonstrated by reference to their use in successful projects in Australia.
(2010) 132 ACLN 18 Dispute Boards & Construction Contracts
Dr Donald Charrett, "Is Contractual Risk a Zero-sum Game in Construction Contracts (2010) 38 BDPS News 12; (2010) Society of Construction Law Australia Conference, Perth Australia. This paper endeavours to suggest answers to the question from a consideration of the nature and cause of the risks involved in construction contracts and the parties’ objectives. It is suggested that contract risk can be minimised by selecting the appropriate form of contract as that which gives primacy to achievement of the Employer’s most important objective(s).
Further, for any type of contract, contract risk is minimised by following well-established principles of balanced risk allocation.
(2010) 38 BDPS News 12 (Scope & risk in contracts)
Dr Donald Charrett, “The Engineer is dead, Long live the engineer!” (2010) 134 Australian Construction Law Newsletter 20. Traditionally, the engineer ‘wore many hats’ in connection with a construction project—as promoter, designer, project manager, contract administrator, certifier, adjudicator and sometimes even arbitrator. A number of those functions were fulfilled as ‘the engineer’ under a construction contract, in which the engineer, although engaged by the employer, was expected to act independently of both contract parties in his/her administration of the contract. It is apparent that that role is largely defunct under many modern construction contracts.
The changing role of the engineer is illustrated by reference to case law and modern construction contracts. Examples are given of major problems which have arisen from an inappropriate contractual role for the Engineer resulting from inadequate definition, execution and coordination of the various engineering functions. It is suggested that, notwithstanding the changed role of the engineer, the definition and proper execution of these functions are as important to the successful outcome of projects as ever.
(2010) 134 ACLN 20 The Engineer
Philip Loots and Nick Henchie, “Worlds Apart: EPC and EPCM Contracts: Risk Issues and Allocation” (2007) 24.3 International Construction Law Review. This paper explains how the typical EPCM contract works and, in doing so, identifies some of the key differences to the EPC contract. Although, they sound the same, there are still many people involved in construction who are not able to elucidate the differences. The authors have not come across a single article on EPCM contracts - a Google search of "EPCM" will bring up lists of EPCM contracts and EPCM contractors but virtually nothing explaining what an EPCM contract is!
In short, an EPC contract is a design and construct contract where a single contractor takes responsibility for all elements of design (engineering), construction and procurement. In contrast, an EPCM contract is a professional services contract which has a radically different risk allocation and different legal consequences. The key difference is that under an EPCM contract, other parties construct the project - the EPCM contractor is not the builder/ constructor.
(2007) 24.3 ICLR 13 EPC & EPCM Contracts