Claims under statute



The relationship between participants in the construction industry is not only governed by the contract between them. Various legislation is also relevant to the relationship. The most relevant legislation is the Competition and Consumer Act 2010 (Cth) (the CCA). This legislation was previously known as the Trade Practices Act 1974 (Cth) (the Trade Practices Act). The relevant provisions of the legislation are now contained in Schedule 2 to the CCA and are known as the Australian Consumer Law. These new provisions replace similar provisions which existed in each state. The provisions are now uniform throughout Australia.

The most common claim under this type of legislation is a claim for
misleading or deceptive conduct.

Other claims that can be brought under this type of legislation are in relation to unfair contracts, unfair conduct or other types of anti-competitive actions (ie price fixing, collusion, etc). These types of claims may be limited to particular types of contracts (for example contracts for a value below a certain level or only contracts with consumers).


Australian Consumer Law



Section 18 of the Australian Consumer Law prohibits persons from engaging in conduct that is misleading or deceptive, or likely to mislead and deceive. Where one party has engaged in such conduct, the other party will be entitled to recover any loss it suffered as a result of relying on that representation.

The Australian Consumer Law operates in spite of any contractual arrangements to the contrary. Therefore, even if a contract is inconsistent with a provision of the Australian Consumer Law, the Australian Consumer Law may prevail.


CASE STUDY



Abigroup Contractors Pty Ltd v Sydney Catchment Authority (No. 3)

[2006] NSWCA 282



Facts


  • The contractor, Abigroup, tendered to construct an auxiliary spillway at Warragamba Dam for the principal, Sydney Catchment Authority.
  • In the tender documents, the principal stated that 'no plans are available of this embankment or of any outlet pipe'. The profile of the embankment and the placement of the outlet pipe was important so that the contractor could understand how much excavation would be required to construct the spillway.
  • Due to the reported lack of plans, the contractor relied on a geotechnical report prepared by the Department of Public Works in its tender.
  • The contractor was awarded the contract.
  • It was later found that the principal did in fact have plans of the embankment and the outlet pipe in its possession and that the report upon which the contractor relied was incorrect, leading to greater excavation costs than expected.
  • The contractor sued the principal for misrepresentation under the Trade Practices Act.

Result


  • In denying that it had the above plans, the principal was found to have engaged in misleading and deceptive conduct under section 52 of the Trade Practices Act.
  • The contractor proved that it incurred extra costs as a result of the principal's misrepresentation.
  • As a result, the principal was liable for the losses incurred by the contractor, even though the site risks were allocated to the contractor under the contract.

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