Cases - SMK Cabinets v Hili Modern Electrics

Record details

Name

SMK Cabinets v Hili Modern Electrics

Date

(1984)

Citation

VR 391

Keywords

Construction contracts - liquidated damages - variations and interference with progression of works by employer - failure to grant extension of time - delay by employer and contractor - whether contractor liable under liquidated damages clause

Summary

The defendant was an electrical contracting company which entered into a contract with the claimant to carry out the installation of cabinets to a property. Completion was required by 15 July 1980, but no extension of time clause was incorporated into the contract. The contract contained a liquidated damages provision of $35/day for every day that the works remained incomplete, which would begin to bite seven days after the completion date (i.e. after 22 July 1980). By December 1980, the works were still not complete, and the defendant sought to determine the contract. The claimant resisted the payment of liquidated damages on the grounds that the defendant company had prevented completion by 22 July 1980 as a result of variations and interference with the smooth progress of the works. On the facts, an arbitrator had found that the contractor would, in any event, have been unable to complete by the due date. The Supreme Court of Victoria held that this was irrelevant. Accordingly, the contractor was not liable to pay liquidated damages on account of the prevention, even though he would not have achieved timely completion even if the prevention had not taken place. (It is submitted that this authority is consistent with the approach of the courts in allowing an extension of time to a contractor where concurrent delay is caused by a relevant event and the contractor's own default.)