Deal­ing with the NSW Con­struc­tion Indus­try shut down — man­ag­ing exist­ing works

On 17 July 2021, the NSW Gov­ern­ment amend­ed the Pub­lic Health (Covid-19 Tem­po­rary Move­ment and Gath­er­ing Restric­tions) Order 2021 (the Orders) to deal with the ongo­ing out­break of the Covid-19 Delta vari­ant in the Greater Syd­ney area.

The net impact of the inser­tion of claus­es 22(4A) and 24AB is that the con­struc­tion indus­try has been brought to a stand­still until 31 July 2021. 

In regard to 22(4A), this clause pre­vents a per­son who is not autho­rised from vis­it­ing a place of res­i­dence in Syd­ney to engage in work that is: 

• clean­ing or car­ry­ing out repairs; 
• main­te­nance;
• alter­ations;
• addi­tions; or 
• per­for­mance of any oth­er trades at the place of residence.

In respect to 24AB, the Min­is­ter has direct­ed that work is not to be car­ried out on a con­struc­tion site in Greater Syd­ney, unless the work is urgent­ly required for the fol­low­ing purposes: 

• to ensure the safe­ty or secu­ri­ty of the con­struc­tion site; 
• to deal with envi­ron­men­tal risks; 
• to main­tain and ensure the integri­ty of crit­i­cal plant, equip­ment or assets, includ­ing par­tial­ly com­plet­ed works, that would oth­er­wise deteriorate; 
• to receive deliv­er­ies of sup­plies that would oth­er­wise deteriorate, 
• to main­tain pub­lic utilities; 
• to ensure the safe oper­a­tion of exist­ing trans­port infrastructure; 
• by or on behalf of NSW Health in response to the COVID-19 pan­dem­ic; or
• because of an emergency. 

What does this mean?

All con­struc­tion relat­ed works in the Greater Syd­ney Area that do not fall under the exemp­tions cov­ered by clause 24AB (1) of the Orders set out above, must be halt­ed until at least 31 July 2021, sub­ject to fur­ther amend­ments by the Minister. 

Giv­en the sever­i­ty of the Delta Vari­ant of Covid-19 and the sheer scale of the con­struc­tion indus­try along with its asso­ci­at­ed trav­el that accom­pa­nies this, the Min­is­ter’s posi­tion is that this is a nec­es­sary step to thwart the spread of the virus until prop­er sys­tems and pro­to­cols can be put in place to man­age the sit­u­a­tion in those environments.

How do I know if my works are con­sid­ered urgent and there­fore exempt from restrictions? 

If you are per­form­ing work on a ​‘con­struc­tion site’ and those works do not fall with­in the above exemp­tions, you should not be per­form­ing the works.

In con­sid­er­ing ​‘emer­gency works’, ask yourself:

Does this work need to be done now, or can it wait 2 weeks?

It is under­stand­able that giv­en the often-tight time frames that can be asso­ci­at­ed with con­struc­tion works, many Prin­ci­pals, Head Con­trac­tors and Sub-Con­trac­tors will con­sid­er their work to be urgent. But, time frames dic­tat­ed by a con­struc­tion con­tract are not suf­fi­cient, unless they fall under the cat­e­gories spec­i­fied by clause 24AB (1).

Based on the draft­ing of clause 24AB (1), it is easy to see a cer­tain amount of over­lap between each exemp­tion. We stress that when con­sid­er­ing whether your sit­u­a­tion falls with­in the exemp­tions, it must be deter­mined on a case by case basis. 

In sum­ma­ry, those works must be rel­a­tive to: 

• Ensur­ing the safe­ty and secu­ri­ty to oth­er per­sons, plant, equip­ment and materials;
• Ensur­ing the safe man­age­ment of work which may impact on the environment;
  
• Man­age­ment of pub­lic util­i­ties (includ­ing man­age­ment of infra­struc­ture), crit­i­cal plant, equip­ment or assets (includ­ing those that would dete­ri­o­rate or stop oper­at­ing with­out prop­er maintenance);
• Main­tain­ing and ensur­ing integri­ty of works that would oth­er­wise dete­ri­o­rate; and
• Emer­gency works.

In review of the above points (1) – (5) it is safe to say that points (1) – (3) are self-explana­to­ry and that these works are rel­a­tive to pro­tec­tion of the site/​works, the envi­ron­ment and man­age­ment of core util­i­ties, plant and equipment. 

If there is any risk that your site/​works in the cur­rent state may be sub­ject to theft, fire, breach of any Envi­ron­men­tal Pro­tec­tion Laws or alter­na­tive­ly, a fail­ure to prop­er­ly main­tain cer­tain plant/​equipment would cause a fault in said plant/​equipment, you should take either imme­di­ate pre­ven­ta­tive action includ­ing con­tin­ued main­te­nance cycles. How­ev­er, empha­sis should be placed on ​‘pre­ven­ta­tive action’ and only min­i­mal works should be considered. 

How­ev­er, it is points (4) and (5) where con­trac­tors may take cer­tain lib­er­ties that fall out­side the ambit of the exemp­tions under the Order. 

‘Main­tain­ing and ensur­ing integri­ty of works that would oth­er­wise deteriorate’ 

Defin­ing what falls under the cat­e­go­ry of ​“main­tain­ing and ensur­ing integri­ty of works that would oth­er­wise dete­ri­o­rate” is again some­thing that will need to be con­sid­ered on a case by case basis. 

We pro­vide a few exam­ples as follows: 

Exam­ple 1:

On Fri­day 16 July 2021, Gladys’s Paint­ing Con­trac­tors and Water Proofers applied Part A of a pro­tec­tive sealant on the roof para­pet of their cur­rent project. Sub­ject to the tech­ni­cal data sheet pro­vid­ed by the man­u­fac­tur­er, they must apply Part B with­in 4 days of the appli­ca­tion of Part A oth­er­wise Part A must be removed and re-applied. The build­ing cur­rent­ly suf­fers from exten­sive water ingress and the appli­ca­tion of mem­brane is to pro­tect against fur­ther water ingress which may cause irre­versible dam­age to the foun­da­tions of the build­ing along with poten­tial mould issues. 

Exam­ple 2:

On Sat­ur­day 17 July 2021, Dan’s Earth­works and Civ­il took 48 cubic meters of soil from a site locat­ed off Crown Street in Sur­ry Hills. Adjoin­ing the site is a row of her­itage town­hous­es. After remov­ing the soil on Sat­ur­day, Dan’s Earth­works and Civ­il applied tem­po­rary shoring to the sur­round­ing sub­soil, but Gary’s Cement and Ren­der are due to per­form per­ma­nent shoring works on Tues­day 20 July 2021. 

In both exam­ples, there may be suf­fi­cient rea­son to sug­gest that works should con­tin­ue in order to pre­vent any dete­ri­o­ra­tion or dam­age to the exist­ing struc­ture or adjoin­ing properties. 

But note that in both exam­ples, the ini­tial part of works were per­formed pri­or to the cur­rent order being made and there­fore this pro­vides the basis upon which this part of the works can be per­formed despite the mandate. 

How­ev­er, based on the exemp­tions pro­vid­ed by 24AB (1) of the Orders, it is our opin­ion that only exam­ple 1 could be jus­ti­fied as emer­gency works, pro­vid­ed that there is no alter­na­tive method to pro­tect the site or the works from fur­ther water ingress if those works were to start on or from 19 July 2021. 

Alter­na­tive­ly, if the con­trac­tor in exam­ple 2 sought to com­mence its works on or from 19 July 2021 as a part of the works to be per­formed under a con­struc­tion pro­gram, this is alone in our opin­ion, an insuf­fi­cient rea­son for con­trac­tors to cir­cum­vent the Orders. 

Fur­ther to exam­ple 2, we would sug­gest that pri­or to the works tak­ing place by Gary’s Cement and Ren­der, Gary first checks with the Head Con­trac­tor and/​or the site Engi­neer to query whether those works need to be per­formed or whether the tem­po­rary shoring mea­sures put in place could be utilised until the end of the man­dat­ed period. 

‘Emer­gency Works’ 

In sum­ma­ry, ​“emer­gency works”, could be those defined as requir­ing imme­di­ate atten­tion to pro­tect the occu­pants or sur­round­ing occu­pants of a prop­er­ty (whether res­i­den­tial or com­mer­cial) from injury or ill­ness or in some way pre­vent the safe and prop­er use of the prop­er­ty for its intend­ed pur­pose. It is pos­si­ble to see from exam­ple 1 above, why it may also fit into this category.

It is safe to assume that under the basic def­i­n­i­tion of ​“emer­gency works”, a Con­trac­tor could not per­form the instal­la­tion of an out­door speak­er set­ting for patio area, but exam­ples such as the unblock­ing of a drainage sys­tem in an apart­ment com­plex or deal­ing with a gas leak in an indus­tri­al kitchen would be jus­ti­fied ​“emer­gency works”.

It should also be not­ed that ​“emer­gency works” could be rel­a­tive to Annu­al Fire Safe­ty Audits to the extent that a Fire Safe­ty Order has been issued on a Prop­er­ty. How­ev­er, if the order is not to be enforced until some­time after the man­date peri­od is over, then it is safe to say those works would not fall under the cat­e­go­ry of ​“emer­gency works”.

Grey Areas – Build­ing Con­sul­tants and Manufacturers/​Suppliers

Some­thing that has not been addressed in the Orders is whether the clo­sure to con­struc­tion sites also impacts on the man­u­fac­tur­ing side of the con­struc­tion indus­try and fur­ther, whether it also applies to spe­cial­ist build­ing con­sul­tants con­duct­ing inspections.

Sched­ule 1 of the Orders pro­vides a ​“rea­son­able excuse” for per­sons to leave their place of res­i­dence for work relat­ed rea­sons if it is not prac­ti­ca­ble for the employ­ee to work at the employ­ee’s place of residence.

In that regard, there are cur­rent­ly no restric­tions on employ­ees of man­u­fac­tur­ers or sup­pli­ers in the con­struc­tion indus­try from attend­ing their place of work pro­vid­ed those per­sons are not locat­ed in an ​“affect­ed area” and if they are in an ​“affect­ed area”, have com­plied the manda­to­ry Covid-19 test­ing require­ments and are deemed to be ​“autho­rised work­er” . Please note that if you do reside in an affect­ed area, you should check the fol­low­ing link to iden­ti­fy whether you fall under the cat­e­go­ry of an ​“autho­rised work­er” — https://www.nsw.gov.au/covid‑1…

For per­son resid­ing out­side of an ​“affect­ed area” we would advise sid­ing with cau­tion as to whether a per­son who is not an employ­ee or a reg­u­lar sub­con­trac­tor to an organ­i­sa­tion should be attend­ing a man­u­fac­tur­ing plant to per­form work dur­ing the shut­down peri­od. While the Orders are not clear on this issue, it could be argued that it does not fall with­in the ​“spir­it” of Orders and may ulti­mate­ly result in tighter gov­ern­ment restric­tions being enforced if peo­ple seek to push the bound­aries on the exemp­tions. In that regard, as these orders are large­ly untest­ed, it is dif­fi­cult to pro­vide a clear-cut opin­ion on this issue. 

With respect to spe­cial­ist build­ing con­sul­tants who may be con­duct­ing inspec­tions, it does not appear that the restric­tions extend to per­for­mance of their role or atten­dance at a pri­vate premise (i.e. premis­es which are not declared as ​‘con­struc­tion sites’). How­ev­er, this exemp­tion may only apply pro­vid­ed that the con­sul­tants are:

1. Not from, or trav­el­ing out­side of, an ​“affect­ed area”; and 

2. The con­sul­tants are com­pli­ant with clause 22A and not per­form­ing any of the fol­low­ing works:

• clean­ing;
• car­ry­ing out repairs;
• main­te­nance;
• alter­ations;
• addi­tions; or 
• per­form­ing works rel­a­tive to oth­er trades.
  

It is arguable that an ​“inspec­tion” at a prop­er­ty (not being a con­struc­tion site) are not ​“works” as defined above. How­ev­er, this is of course still depen­dent upon whether a res­i­dent, may be will­ing to have the con­sul­tant con­duct inspec­tions in their home. It is also to be ques­tioned, that if the inspec­tions are not urgent, whether they should be per­formed. In that regard, we also advise pro­ceed­ing with cau­tion when deter­min­ing whether inspec­tions should con­tin­ue dur­ing the shut­down period. 

Man­ag­ing your Contract

If you are affect­ed by the Orders, you should con­sid­er the impact it may have on your exist­ing con­struc­tion con­tracts or agreements. 

Most con­tracts con­tain time bars for per­for­mance of oblig­a­tions with heavy penal­ties for delays to the works and it is undoubt­ed that a num­ber of projects will see exten­sive delays even as a result of a poten­tial 2 week shut down. As a result, Head Con­trac­tors and Sub­con­trac­tors will be look­ing to avoid the knock-on effects from delay to con­struc­tion projects, name­ly liq­ui­dat­ed dam­ages and poten­tial con­se­quen­tial loss claims. Sim­i­lar­ly, Prin­ci­pals will be con­cerned regard­ing blow outs to time dead­lines, espe­cial­ly those rel­a­tive to the sale of res­i­den­tial hous­ing developments.

As a result, the shut­down will more than like­ly cause sig­nif­i­cant pres­sure up and down the con­trac­tor and sup­pli­er chain as to who will wear the cost of the loss caused as a result of the delay with Con­trac­tors aim­ing for vari­a­tions to their exist­ing con­tracts. At the same time Prin­ci­pals and upper tier Con­trac­tors and Head Con­trac­tors will be look­ing to on flow the loss to low­er order Con­trac­tors and Suppliers. 

The first step for any Con­trac­tor is turn to their con­tract and look at the mech­a­nisms pro­vid­ed for in that con­tract in rela­tion to:

• Delay;
• Exten­sion of Time;
• Vari­a­tion;
• Leg­isla­tive provisions; 
• Notices;
• Sus­pen­sion;
• Unfore­seen events; and 
• Covid-19/­Pan­dem­ic clauses . 

Most stan­dard form, un-amend­ed con­struc­tion con­tracts will con­tain at least 3 to 5 of the above con­di­tions (depend­ing on when the con­tract was entered into). Accord­ing­ly, it is impor­tant that you review each of these claus­es to deter­mine if you or the par­ties to the agree­ment are rely­ing on the prop­er mech­a­nisms for man­ag­ing a poten­tial exten­sion of time, sus­pen­sion or vari­a­tion claim whether you are the Prin­ci­pal, Head con­trac­tor, Sub­con­trac­tor or Supplier. 

At this time, it is pru­dent for astute Con­trac­tors to be com­mu­ni­cat­ing direct­ly with their supe­ri­or Con­trac­tors or the Prin­ci­pal in order to man­age the delay caused as a result of the Orders. 

While it is an unfor­tu­nate set of cir­cum­stances to find our­selves in, the eas­i­est path to nav­i­gate the sit­u­a­tion is ensure that all lines of com­mu­ni­ca­tion are open and par­ties are aware of their rights and obligations.

There are many Gov­ern­ment Finan­cial Relief Pack­ages avail­able as a result of the imposed Orders. Var­i­ous guide­lines are avail­able as to what finan­cial relief you may be enti­tled to as either a cor­po­ra­tion or an indi­vid­ual as a result.

Should you require fur­ther assis­tance with regard to the impact of the Orders on your busi­ness or the inter­pre­ta­tion of your con­tract terms, please do not hes­i­tate to reach out to either our Helen Kow­al or Chris­t­ian Marchant of our Projects team.

Foot­notes:

1. https://www.legislation.nsw.go…
2. Pro­vid­ed it is a place of work that falls under the exemp­tions in clause 24(1A) of the Pub­lic Health (Covid-19 Tem­po­rary Move­ment and Gath­er­ing Restric­tions) Order 2021 (the Orders) 
3. Cl 24A, 24B and 24E of the Orders
4. https://www.nsw.gov.au/covid‑1…
5. Cl 22(4A) of the Orders 
6. Note that these types of claus­es are rel­a­tive­ly new and there­fore may only be includ­ed in Con­tracts entered into with­in the last 12 months.