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Search for stories/articles concerning legal issues in the construction industry, e.g., in newspapers or online

Assessment 1 – Part A: Summarise Two Case Studies
(10%; Due Week 2)
To complete Part A of assessment 1 you will need to

  1. Search for stories/articles concerning legal issues in the construction industry, e.g., in
    newspapers or online (construction law firm websites are a good source).
  2. Take notes on each story, noting your understanding of the facts, legal principles,
    and outcome.
  3. For each of the 2 cases researched, write brief reflections that:
    • summarise the facts of each cases;
    • explain the relevant legal issues involved;
    • identify which classification (e.g., contract law, law of tort, criminal law,
    taxation law, industrial relations law etc.) of the law the case involves;
    • briefly explain either the outcome of the case (if the case has been settled),
    or what will be happening next in the case (if the case has not yet been
    settled).
    Write no more than 600 words in total (i.e., around 300 words per case) in a word
    document and submit in Week 3.
    Advice: When preparing a summary you adopt a more descriptive stance to describe what is
    happening. Thus it helps to summarise the key points as you read each case, note the
    relevant legal issues involved and the associated ‘facts’, identify which classification is
    applicable, for example, contract law, law of tort, criminal law, taxation law, industrial
    relations law etc., and then briefly explain the outcome of the case. Point out whether the
    case was settled or what will be happening next in the case if it has not yet been settled.
    Remember:
    • Part A contributes 10% towards your final grade
    • The word count is a maximum of 600 words
    • It is due 12 noon Tuesday of Week 3
    • Review the Rubric for Assessment 1 to see how your work will be graded
    • Submit Assessment 1: Part A – Summarise two case studies (10%) as a word
    document
    • If you have any questions, please use the Course Q&A Forum.
    Assessment 1 – Part B: Regulation of Defective
    Residential Building Work (10%; Due Week 6)
    Mr and Mrs Richards entered into a contract to purchase a residential home at 2B Bevis
    Street Newton in the State of South Australia. They purchased their home from a developer,
    JJJ & A Nominees Pty Ltd. As the house was newly constructed, Mr and Mrs Richards did not
    obtain a building inspection before signing the contract of sale. Settlement and transfer of
    title took place on 15 July 2017.
    The house was built and constructed by Mr Brown and Mr Davis who were builders trading
    in partnership under the name ‘Mystyle Building Group’.
    The land had been bought and subdivided by the developer, JJJ & A Nominees Pty Ld.
    Mystyle Building Group entered into a building contract with JJJ & A Nominees Pty Ltd to
    build the house. Mr Davis and Mr Brown were not only the builders trading in partnership as
    ‘Mystyle Building Group’, but were also the company directors and shareholders of the
    developer company, JJJ&A Nominees Pty Ltd.
    The house reached practical completion on 25 May 2017. A few months after Mr and Mrs
    Richards moved in, they noticed problems with the external brickwork. The bricks appeared
    to be delaminating , leaving voids in bricks where parts of the bricks had fallen away onto
    the ground. They contacted Mystyle Building Group about their concerns about the bricks
    but their complaints were dismissed. Small pieces from the bricks started to fall away and
    drop onto the ground around the perimeter of the house. Mr and Mrs Richards grew
    increasingly concerned and engaged ‘SA Building Consulting’ to complete an inspection and
    expert report of defects with their new home.
    SA Building Consulting reported that there was spalling of the bricks and that this was a
    cosmetic defect. The expert reported that the void which is formed by parts of the
    brickwork falling away was not inconsistent with the pattern of the bricks which look like
    limestone from a distance. However, upon closer inspection there was an obvious cosmetic
    defect from the pieces that were falling out of the bricks which would likely devalue the
    property in future. SA Building Consulting also reported that as the construction of the
    house was brick veneer, the structural strength is supported by the framework, meaning
    that it was possible to remove the brick veneerand replace the bricks without affecting the
    structural integrity of the house.
    Mr and Mrs Richards then engaged a second expert, Mr Grinter, a senior consulting and
    structural engineer who had been involved with the Clay Brick and Paver Institute and
    contributed to the Australian Standards regarding masonry. Mr Grinter wrote a report
    stating that in his expert opinion, the bricks have failed to achieve the minimum durability
    standard required. Further, he was not able to say with any confidence whether a cement
    render coating would remain adequately bonded to the surface of the bricks throughout the
    service life of the building. Mr Grinter said that he believed the spalling was caused by
    calcium carbonate incorporated in the clay used to make the bricks. In his view, the
    moisture from the air was causing calcium hydroxide in the bricks to expand causing pieces
    of the brick to be pushed out of the surface. Mr Grinter referred to the 2008 Australian
    Standards for Masonry Units and said that in his view, the bricks did not accord to the
    standard provided in clause 2.5.1:
    Masonry units shall have sufficient durability to perform the required function in the
    finished structure without deteriorating under the action of environmental conditions
    of intended use.
    Following the inspection reports, Mr and Mrs Richards contacted Mr Davis several times
    both on the telephone and by email, but Mystyle Building Group refuses to acknowledge
    any responsibility for the defective bricks, claiming alleged defects are cosmetic only and do
    not affect the structural integrity of the home. Mr and Mrs Richards also attempted to
    contact the manufacturer and supplier of the bricks but found out that the company had
    gone out of business and had been placed into liquidation. A builder’s estimate obtained by
    Mr and Mrs Richards indicates that it will cost around $95,000 to remove and replace all the
    bricks.
    Advise Mr and Mrs Richards as to whether they can recover damages for the cost of
    rectification works to the house under the following two alternative scenarios:
    Scenario 1: [Recommended word count: no more than 400 words]
    On 19 May 2019, Mr and Mrs Richards send another email to Mystyle Building Group about
    the problem with the defective brickwork. They attach copies of the expert reports and
    demand that Mystyle Building Group carry out rectification works forthwith; or alternatively
    enter into a Deed of Settlement to indemnify Mr and Mrs Richards for all costs associated to
    remove and replace all the bricks. On 30th May 2019, Mystyle Building Group replies to Mr
    and Mrs Richard’s email stating that:
    • Mr and Mrs Richards were not a party to any building contract with Mystyle Building
    Group. Therefore, Mystyle Building Group are not in any way obligated to rectify any
    defects and/or damage whatsoever occurring at the house.
    • There was a limitation clause in the original building contract between Mystyle Building
    Group and the developer, JJJ & ANominees Pty Ltd, where JJJ & A Nominees agreed to
    limit the liability of Mystyle Building Group for defective building work to claims within
    12 months from the date of practical completion. Therefore, MyStyle Building Group are
    further not liable because the limitation period that was agreed between JJJ & A
    Nominees Pty Ltd in the original building contract has expired; and
    • Mystyle Building Group are not responsible for any defects unknown to them and
    outside of their control and, as such, Mr and Mrs Richards’ claim should rather be
    against the manufacturer of the bricks. Mystyle Building Group asserts they are not
    liabile with respect to rectifying any latent defects in the bricks as that they had no
    knowledge or control about the defective bricks at the relevant time that the house was
    built.
    Scenario 2: [Recommended word count: no more than 100 words]
    On 19 May 2019, Mr and Mrs Richards email Mystyle Building Group to inform them
    about the problem with the defective bricks. They attach a copy of the building
    inspector reports and requests Mystyle Building Group to carry out rectification works
    forthwith. Mr and Mrs Richards’ email, however, ‘bounces back’ with a message that the
    recipient’s email account is no longer in service. On 8 July 2019, Mr and Mrs Richards are
    advised that both Mr Davis and Mr Brown are bankrupt. Due to their insolvency,
    MyStyle Building Group has ceased trading.
    Assessment 1 – Part C: Offer and Acceptance (15%;
    Due Week 6)
    The Glenelg Town Hall is an important historic structure and a series of staged conservation
    works to preserve the structural integrity has been documented and prepared for
    tender. Request for Tender 2020 C25 calls for the supply of services and materials to
    undertake Stage 2 and an option for Stage 3 of the conservation works on the Glenelg Town
    Hall in line with the attached specification and drawings.
    Stage 2 & 3 has been identified and limited to:
    Stage 2 – Balcony Conservation Works
    Stage 3 – Conservation works to West, North and East Facades. Includes insertion of Damp
    Proof Course to East Façade.
    Works within this specification may be considered “High Risk Construction Works” and must
    be managed accordingly and in line with the City of Holdfast Bay requirements, including
    site management, inductions, access and all relevant WHS precautions.
    Tender Close Date 17 June 2020 5.00pm
    Heritage Constructs Pty Ltd submits a fixed price lump sum tender of $20.5 million to carry
    out stages 2 and 3 of the conservation works to Glenelg Town Hall, dated 17 June 2020, by
    courier. Heritage Constructs’ tender contains the following clauses:
    This tender is valid to 5pm 31 July 2020.
    Public liability insurance will be provided to the value of Ten (10) million dollars.
    During the following two weeks after Heritage Constructs’ tender, several Covid-19 cases
    are reported in South Australia and, as such, there are fears that a second wave of COVID-19
    cases may occur causing another lockdown. Concerned that their lump sum tender is too
    low to cover any delay and disruption risks that may occur during the works if a second
    wave of Covid-19 cases was to materialise, Heritage Constructs sends a letter to the City of
    Holdfast Bay on 30 June 2020 stating:
    Due to the potential for a second wave of COVID-19 cases and the associated
    commercial risks imposed on Heritage Constructs, we regret to advise that our tender
    regarding Glenelg Town Hall Stages 2 and 3 Conservation Works dated 17 June 2020
    is withdrawn with immediate effect.
    This letter arrives at the City of Holdfast Bay’s offices three days later on 3 July 2020.
    On 1 July 2020, however, the City of Holdfast Bay had mailed a letter to Heritage Constructs
    stating:
    We are pleased to accept your tender dated 17 June 2020, subject to Heritage
    Constructs increasing public liability insurance cover to Forty ($40) million dollars.
    Due to COVID-19 restrictions, please email all future correspondence to
    tenders@cityofholdfast.gov.au.
    The City of Holdfast Bay’s letter arrived at Heritage Constructs’ offices on 6 July 2020.
    Over the next two weeks, COVID-19 cases are contained, the threat to public health
    subsides and social distancing restrictions relax. Upon realising that the threat from the
    anticipated second wave of COVID-19 infections has subsided, Heritage Constructs wants to
    reinstate the deal to perform the external conservation works on the Glenelg Town Hall. On
    14 July 2020, Heritage Constructs sends an email to the email address provided by the City
    of Holdfast Bay which states:
    We have negotiated with our insurance agent to increase public liability insurance to
    forty ($40) million dollars and would now be prepared to provide our services to the
    City of Holdfast Bay in accordance with terms and conditions set out in tender dated
    17 June 2020.
    The City’s office administrative workers managing the email account, however, are working
    from home until the end of July due to the COVID-19 crisis and, as there had been technical
    issues with accessing the City of Holdfast Bay’s email account remotely during this period,
    Heritage Constructs email had been missed until it was finally read by a City of Holdfast Bay
    representative on 31 July 2020.
    On 30 July, the City of Holdfast Bay sent a letter by email to Heritage Constructs’ trade rival,
    Caldicott Builders Pty Ltd, who made a competitive tender bid on 15 June 2020 in the
    amount of $21.6 million. Caldicott’s tender incorporated public liability insurance of $Fifty
    (50) million dollars with the lump sum payable on completion of the external conservation
    works. The email sent by the City of Holdfast Bay to Caldicott’s email address stated:
    We are pleased to notify Caldicott Builders that your tender bid was successful.
    The directors of Heritage Constructs were furious when the City of Holdfast Bay advised
    them that the tender had been awarded to another contractor. Heritage Constructs asserts
    the City of Holdfast Bay is in breach of contract and threatens to take legal action.
    Advise whether a contract has been formed between Heritage Constructs and the City of
    Holdfast Bay to perform the external conservation works. Your answer should identify all
    relevant events (e.g., offer, counter-offer, revocation, acceptance etc.) and dates.

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