Key Takeaways

Background

In Clarke Energy (Australia) Pty Ltd v Alinta Energy Transmission (Roy Hill) Pty Ltd [2026] NSWSC 1124, Rees J gave judgment for the contractor in a dispute arising from the engineering, procurement and construction (EPC) of a 60 MW gas-fired power station at Newman, Western Australia. The lump sum contract price was approximately $78 million. The site was constrained between Alinta’s existing NPS1 station and BHP’s Yarnima station. Liquidated damages for delay to the Date for Practical Completion were $60,000 per day, capped at 10% of the contract price (approximately $7.8 million).

Alinta claimed liquidated damages at approximately the contractual cap. Clarke advanced four extension-of-time (EOT) claims totalling approximately 168.5 days, together with prolongation costs and a disputed variation. The Court found for Clarke on all substantive issues. For principals and contractors, the significance of the decision lies less in the outcome than in the Court’s treatment of programme float, conditions precedent and waiver by election, superintendent independence and the valuation of delay.

Float, critical path and delay analysis

The Court held that the contractor owns the float in its construction programme (at [130]–[134]). Programme contingency is therefore for the contractor’s benefit. A principal cannot treat that spare time as a project resource to be consumed before principal-caused delay affects the critical path to completion.

That conclusion does not mean that every erosion of contingency produces an EOT. The Court separately held that an extension should not include the loss of “activity float” as such: the relevant enquiry remains the effect of the delaying event on the Date for Practical Completion. [524]–[526] The distinction is practical. Ownership of float identifies who has the benefit of the programme’s flexibility; EOT entitlement still turns on delay to the critical path.

The judgment also reinforces a disciplined approach to programme evidence in delay analysis. Time impact analysis was addressed at [407]–[408]. A change of logic in a later programme may indicate that the baseline should not be used without examination [832], while the fact that work was ultimately carried out differently (an “as-built” variation) does not, of itself, answer the prospective delay question [834]. Parties should preserve the contemporaneous basis for logic, sequencing and updates rather than assume the tender or baseline programme will remain conclusive.

The duty to cooperate and the prevention principle

The contract gave Alinta sole discretion to issue the notice to proceed (cl 2.3). That notice fixed the Date for Practical Completion — the contractual completion milestone against which liquidated damages accrued — and activated the LD regime. Alinta was then obliged to give Clarke access to the site “to perform the Work” within 10 business days (cl 15.1(a)).

The discretion did not operate in isolation. At [270], the Court held that the implied duty to cooperate required Alinta, when issuing the notice to proceed, to be satisfied that it would be able to provide the required site access. Alinta issued the notice before the underground services (existing utilities beneath the site) had been removed and before that enabling work had been properly scoped. That conduct breached the duty.

The Court also addressed the prevention principle in detail (at [259], [867]–[871]). The principle holds that where a principal’s acts or omissions prevent the contractor from completing by the contractual completion date, time is set “at large” and the principal loses its entitlement to liquidated damages — it can recover only general damages for delay, if any. Alinta argued that the comprehensive EOT machinery in the contract excluded the prevention principle. The Court rejected that submission. Following Growthbuilt Pty Ltd v Modern Touch Marble & Granite Pty Ltd [2021] NSWSC 290, the Court held that the prevention principle is not excluded merely because the contract contains an EOT regime; clear words are required to displace it. Here, the EOT clause did not purport to be an exhaustive code, and Alinta’s breach of the duty to cooperate engaged the principle. A discretionary power to trigger time and liquidated damages machinery is therefore not a licence to start the clock before the principal can perform the corresponding access obligation.

The practical consequence is significant: if a principal causes delay that falls outside the scope of the EOT clause — or if the contractor’s EOT entitlement is otherwise defeated by the principal’s conduct — the prevention principle may still apply, rendering time at large and depriving the principal of its liquidated damages remedy. Principals should ensure that their EOT regimes are drafted to operate as a complete code if they wish to exclude the prevention principle, and that their conduct does not itself give rise to prevention.

Superintendent independence: a substantive, not merely formal, obligation

The contract required Alinta to ensure that the superintendent — the contract administrator empowered to certify progress, assess EOT claims and issue the Certificate of Practical Completion — acted honestly, fairly and reasonably and arrived at reasonable determinations. [19]–[21] The history of three successive superintendents illustrates the risk when the role is treated as an extension of the principal’s claims position.

• Anthony Ravi, an Alinta employee who had not previously acted as a superintendent, felt “overwhelmed” and made no determinations.
• Hamish Marshall, also an Alinta employee and with one prior appointment as superintendent, privately indicated to Alinta that he was considering a Certificate of Practical Completion. Alinta promptly replaced him.
• Brett Anderson, who was not an Alinta employee and was appointed at Alinta’s request, later determined EOT 1 and refused the extension.

The Court observed that private communication between a superintendent and one contracting party on a contentious issue “fundamentally undermines the role of a superintendent” (at [642]). It also found that removing a superintendent to forestall an unwanted determination “effectively destroys the role”. The lesson is organisational as much as contractual: appointment, reporting lines, communications and replacement decisions must all leave the superintendent genuinely able to perform the independent certifier function the contract assigns.

Superintendent negligence: no duty of care to the contractor

Clarke sued the three superintendents in tort, seeking the same economic losses it claimed against Alinta in relation to extensions of time, the disputed variation and the Certificate of Practical Completion. The Court held that no duty of care was owed by the superintendents. [910]–[912], [917]–[920]

The analysis turned on the vulnerability requirement in Woolcock Street Investments Pty Ltd v CDG Investments Pty Ltd (2004) 216 CLR 515. Vulnerability means an inability to protect oneself from the consequences of a defendant’s want of reasonable care, not merely that the plaintiff was likely to suffer loss. [913] Clarke was a sophisticated, well-resourced commercial operator with legal assistance. [917]–[920]

Three features of the contract defeated vulnerability: (i) cl 38.2 required Alinta to ensure that the superintendent acted honestly, fairly and reasonably; (ii) the contract treated the superintendent as a Principal Associate, so a negligent act or omission could constitute a Compensation Event giving rise to contractual recovery against Alinta; and (iii) either party could dispute a superintendent’s determination. In a sophisticated contractual hierarchy where the parties are well-resourced and legally advised, a superintendent who fails to perform the certification or determination role properly is not ordinarily exposed to a direct negligence claim by the contractor; the contractor’s remedy lies against the principal under the head contract. [917]–[920]

Waiver by election: conditions precedent and the limits of “no waiver” clauses

Clarke served its EOT 1 notice on Alinta but did not initially copy the superintendent as the contract required — a failure to satisfy a condition precedent to the EOT entitlement. The omission was promptly remedied. Alinta first relied on the procedural defect to reject the claim entirely, but later permitted the third superintendent to determine it on its merits.

At [761]–[766], the Court applied the doctrine of waiver by election: a party which chooses between inconsistent rights cannot later reverse that choice. By allowing a substantive merits determination to proceed, Alinta was held to have elected to treat the claim as properly before the superintendent. It could not thereafter revert to the procedural non-compliance.

The contract contained a standard “no waiver” clause — clause 41.7 — which provided that a waiver of any right under the contract must be “in writing”. Alinta argued that this clause precluded any finding of waiver by conduct. At [762], the Court rejected that argument. The doctrine of waiver by election does not depend on the communication of a waiver to the other party; it operates by the making of an informed choice between inconsistent rights. A “no waiver” clause of this kind governs contractual waiver — the voluntary relinquishment of a known right — but does not displace the equitable doctrine of election. Where a party’s conduct unequivocally demonstrates that it has chosen one right over another, the election is complete and irrevocable, regardless of whether that choice was reduced to writing.

The distinction is important. Many construction contracts contain “no waiver” or “entire agreement” provisions intended to preserve strict contractual rights. Clarke Energy confirms that these clauses will not protect a principal (or contractor) whose subsequent conduct is inconsistent with maintaining those rights. The lesson for contract administrators is that a “no waiver” clause is not a safety net: if the claim is to be rejected on procedural grounds, subsequent administration risks forfeiture of the procedural defence.

This is not a general dispensation from contractual notice requirements or conditions precedent. Contractors should still comply precisely and remedy any defect immediately. The sharper point is for principals: conduct may be inconsistent with maintaining a procedural objection, and a written “no waiver” clause will not revive a right that has already been abandoned by election. If such an objection is to be preserved, subsequent contract administration must not proceed on a basis that treats the claim as validly notified and open for determination.

Prolongation costs: overheads and profit are not automatically excluded

The EOT clause allowed recovery of “reasonable additional costs and expenses directly incurred … as a result of that delay” — the prolongation cost entitlement. Alinta argued for a narrower recovery confined to direct out-of-pocket expense, excluding any margin. The Court rejected that approach. [536]–[547]

Absent clear words, a contractor is not required to provide goods and services without gain. Clarke was entitled to its usual margin for overheads and profit as part of prolongation costs. [536]–[538], [544]–[547] For drafting and quantum purposes, the decision is a reminder to distinguish between the causal requirement — costs incurred as a result of delay — and the components properly included in the price of the additional resources or prolongation services. A principal seeking to exclude contractor margin should say so expressly.

Practical implications

• Programme and delay records: state the contractual treatment of float expressly; retain contemporaneous records explaining logic, critical path, sequencing and each programme update.
• Claim administration and waiver risk: decide whether a procedural objection is maintained before engaging on the merits of an EOT or variation claim, and keep subsequent conduct consistent with that position. A “no waiver” clause requiring waivers to be in writing may not save a party that has already elected to treat the claim as valid.
• Notices and conditions precedent: use a service checklist covering all required recipients; if a defect occurs, correct it immediately and record the response.
• Superintendent independence: establish independent communication protocols; avoid unilateral discussion of contentious certifications or determinations; document legitimate reasons for any replacement.
• Superintendent liability: a contractor’s remedy for superintendent failure ordinarily lies against the principal under the head contract, not in tort against the superintendent personally. Ensure the contract provides adequate recourse — including compensation for negligent acts by a Principal Associate — rather than relying on a direct negligence claim. [917]–[920]
• Notice to proceed and site access: do not issue a notice to proceed until the principal can meet the site access obligation that the notice triggers. If the principal causes delay that is not covered by the EOT regime, the prevention principle may render time at large and displace liquidated damages.
• Prolongation cost drafting: specify whether contractor overheads and profit are included or excluded, rather than relying on “direct cost” or “directly incurred” language to resolve the issue by implication.

The judgment is a powerful reminder that time bars, conditions precedent and contract machinery do not operate in a vacuum. Courts will examine how the programme, the superintendent and the parties’ own contract administration actually worked in practice — and will not permit a principal to rely on strict contractual mechanisms that its own conduct has undermined. Principals and contractors alike should ensure that their day-to-day project administration is consistent with the risk allocation expressed in their EPC, design-and-construct or construction contracts.

For information and does not constitute legal advice.

Adam Gregory

Chris Utton