NSW Public Health Order closes construction sites in parts of NSW – implications for construction contracts

On 17 July 2021 the NSW Government announced further restrictions affecting parts of NSW in response to the ongoing COVID-19 outbreak primarily affecting the Greater Sydney area.

Of particular concern to the construction industry, the amendments made have forced the closure of construction sites in Greater Sydney[1] as well as the local government areas of the Central Coast, the City of Shellharbour and the City of Wollongong from the start of 19 July 2021.

Clause 24AB of the Public Health (COVID-19 Temporary Movement and Gathering Restrictions) Order 2021 (NSW) (the “Order”) prohibits work being carried out on a construction site in the specified area unless the work fits within one of the limited exceptions specified in the Order, being urgently required:

• to ensure the safety or security of the construction site,
• to deal with environmental risks,
• to maintain critical plant or equipment 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 about construction sites outside of Greater Sydney and the LGAs of the Central Coast, City of Shellharbour and City of Wollongong? As the Order stands, it does not have the effect of directly prohibiting work outside of Greater Sydney and the LGAs of the Central Coast, City of Shellharbour and City of Wollongong. However, it is not hard to envisage circumstances where a construction site located outside of the relevant area is significantly adversely impacted.

Clause 24E of the Order prohibits a person who resides in the City of Fairfield, or the City of Liverpool and Canterbury-Bankstown, from travelling outside of that person’s local government area for the purposes of work. As an example, if key personnel or a large proportion of a contractor or sub-contractor’s workforce resides in in the City of Fairfield, or the City of Liverpool and Canterbury-Bankstown, a situation may well arise where delays or disruption to work on site occur because those individuals are not able to attend work at a site outside of the area prescribed for the purposes of clause 24AB.

Action items for impacted parties

The question of whether or not parties impacted by the Order (as above or otherwise) are entitled to an extension of time or additional remuneration will depend on the risk allocation of the relevant construction contract (e.g. a contractor may be entitled to an extension of time, or its obligation to perform under the contract may be temporarily suspended if there is an applicable force majeure provision).

Affected parties should carefully examine their individual construction contract(s) for each affected project to ascertain what relief may be available, as well as any steps they are required to take in order to obtain such relief. If there is any ambiguity or uncertainty then parties ought to seek legal advice as a matter of urgency.

As a starting point, it would be sensible for affected parties to look at their contract’s provisions relating to:

• time for completion and extensions of time,
• force majeure (if any such provision has been included),
• change of law, and
• variations.

to ascertain what forms of relief are available to them (or is most favourable where they are potentially entitled to relief under multiple provisions).

Contractors and subcontractors seeking to claim ought to ensure that compliant contractual notices are issued as soon as possible to avoid the effect of contractual time bars. Similarly, employers and their representatives under the contract should prepare themselves to respond to anticipated contractual claims to ensure proper and timely assessment of contractual claims (and/or consider exercising a unilateral power to extend time where such a power exists and it is appropriate to do so).

Despite rumours in the Australian press media on 19 July 2021, it appears that the NSW Government has no present intention to water down or revoke the restrictions set out in clause 24AB of the Order. As things stand, clause 27 of the Order provides that the Order will be repealed at the start of 31 July 2021.

[1]The “Greater Sydney Region” is defined in the Greater Sydney Commission Act 2015 as the map in Schedule 1 of the Greater Sydney Commission Act 2015 (the regulations may amend Schedule 1 to extend or reduce the Greater Sydney Region). These local government areas include Bayside, Blacktown, Blue Mountains, Burwood, Camden, Campelltown, Canada Bay, Canterbury-Bankstown, Cumberland, Fairfield, Georges River, Hawkesbury, Hornsby, Hunter’s Hill, Inner West, Ku-ring-gai, Lane Cove, Liverpool, Mosman, North Sydney, Northern Beaches, Parramatta, Penrith, Randwick, Ryde, Strathfield, Sutherland Shire, Sydney, the Hills Shire, Waverley, Willoughby, Wollondilly and Wollahra.