Clarke Energy (Australia) Pty Ltd v Alinta Energy Transmission (Roy Hill) Pty Ltd [2026] NSWSC 1124 (21 September 2026)

Andrew Hales | Sannan Tariq | Alison Hwang

Key takeouts

• A principal that asserts a time bar in correspondence may still waive it, for example by asking the superintendent to determine the claim on its merits or by its representatives indicating that a variation request will follow. A ‘no waiver’ clause does not prevent waiver by conduct and is itself capable of being waived by conduct.
• A principal’s ‘reserve power’ to extend time in its absolute discretion does not displace the prevention principle. That power must still be exercised honestly and fairly, unless the clause also states that the principal is under no obligation to extend, or to consider whether to extend, time.
• Private communications between a principal and the superintendent undermine the superintendent’s role. An unqualified contractual right to replace the superintendent cannot be used to prevent a determination the principal does not want; doing so destroys the parties’ contractual bargain.
• A superintendent does not ordinarily owe a sophisticated, well-resourced contractor a duty of care for pure economic loss. The contractor’s practical recourse lies in contractual claims against the principal, and not in a negligence claim against the superintendent for breach of duty of care.
• Where the contract requires extension of time (EOT) assessments to disregard whether the contractor can still meet the date for practical completion, the contractor owns the float. But loss of non-critical ‘activity float’ alone does not justify an EOT or delay costs; only delay to practical completion counts.
• A delay cost clause covering ‘reasonable additional costs and expenses directly incurred’ by the contractor as a result of the delay extends to the contractor’s overheads and usual margin. A principal wishing to exclude overheads or margin from delay cost recovery must include clear drafting to that effect.
• Care is required when drafting EOT and programming clauses. Delay assessment methodologies (such as time impacted analysis) should be defined, and parties should expect that a genuine, bona fide revision to the construction program may displace the original baseline for delay analysis, even if the work is not ultimately carried out in accordance with the revised program.

Facts

In May 2020, Alinta Energy Transmission (Roy Hill) Pty Ltd (principal) and Clarke Energy (Australia) Pty Ltd (contractor) entered into a $78 million engineering, procurement and construction contract (contract) to build a new 60MW gas-fired power station in Western Australia (project). The initial date for practical completion was 9 March 2022. The superintendent granted an EOT to extend that date to 20 April 2022.

The Project experienced substantial delays arising from, among other things, existing underground services, the impacts of COVID-19, work within an operational power station and the principal’s failure to make the electricity network available for testing and commissioning. The contractor submitted claims seeking EOTs, delay costs and variations. The principal rejected the contractor’s claims and sought to recover approximately $7.8 million in liquidated damages for delay.

In April 2023, the contractor commenced proceedings in the Supreme Court of New South Wales, seeking EOTs, delay costs, payment of the disputed variation and relief from liquidated damages. It also pursued alternative Australian Consumer Law and estoppel claims concerning the principal’s pre-contractual representations, and negligence claims against the 3 people who had fulfilled the role of superintendent.

Decision

Rees J found substantially in favour of the contractor, granting it a 142-day EOT from the 168.5 days the contractor claimed and $7,192,414 plus interest. Her Honour extended the date for practical completion from 20 April 2022 to 9 September 2022, which significantly reduced the principal’s entitlement to liquidated damages. In reaching that conclusion, her Honour made a number of significant findings concerning the party responsible for removal of the underground services, waiver, the prevention principle, superintendent independence, float ownership, delay costs and delay analysis methodology. The key findings are discussed further below.

Underground services

The Court held that the principal, rather than the contractor, was responsible for removing existing underground services and reinstating the affected areas. The drafting of the contract, the pre-contractual discussions between the parties, and the assumptions mentioned in the contractor’s tender supported the conclusion that the principal was obliged to remove the underground services. The principal’s failure to do so was a compensable cause of delay and formed the foundation of the contractor’s successful EOT and delay cost claims in respect of EOT 1 and its corresponding relief from liquidated damages.

Australian Consumer Law and estoppel claims

The Court rejected the contractor’s misleading or deceptive conduct and estoppel claims concerning the principal’s pre-contractual representations about removing underground services. However, the contractor succeeded in estoppel in relation to its variation claim. Having directed the contractor to relocate its site amenities and indicated that a variation proposal would be requested, the principal was estopped from relying on the contractual requirement for a written variation order.

Waiver by conduct

Although the contractor had not strictly complied with the procedural requirements under the contract for EOT 1, which concerned delays arising from the principal’s failure to remove existing underground services, the Court found that the principal had waived its right to rely on that failure through its own conduct. This was because the contractual regime for handling EOT claims had broken down entirely, with none of the required timeframes for determination of the EOT claims being met.

Further, by asking the superintendent to determine EOT 1 on its merits, the principal acted inconsistently with the position it had maintained throughout its correspondence that EOT 1 should have been rejected outright.

The Court also found that a clause requiring waiver to be in writing did not stop a waiver arising from the principal’s conduct and that the requirement itself could be waived by conduct.

The prevention principle

In the alternative to waiver, the contractor argued that the principal’s acts of prevention required it to exercise its discretion to extend time.

The Court found that the prevention principle was not excluded by a clause of the Contract giving the principal absolute discretion to extend time. Although the clause permitted the principal to grant an extension for any reason, it did not expressly provide that the principal was under no obligation to extend time, or even to consider whether an extension should be granted. As a result, the principal was required to exercise its discretion honestly and fairly, having regard to the prevention principle.

Her Honour considered that the early stages of the project were marked by acts of prevention by the principal and held that, had the contractor not succeeded on waiver, the principal would have been required to exercise its discretion to extend time.

Limits on replacing a superintendent

The Court held that the principal could not rely on its apparently unqualified contractual right to replace the superintendent so as to prevent a determination it considered unfavourable to its interests.

Her Honour found that the second superintendent’s private communications with the principal, and the principal’s subsequent decision to replace him after he indicated that he was minded to issue a certificate of practical completion, undermined the superintendent’s independent role and the parties’ contractual bargain. Although the Contract permitted the principal to replace the superintendent at any time, that power was required to be exercised consistently with the principal’s implied duty to cooperate and did not extend to removing a superintendent simply because he was going to make a determination favourable to the contractor. The Court relied on these findings in its waiver analysis as further evidence that the principal had not adhered to the contractual EOT regime.

Superintendent’s duty of care

The Court dismissed the negligence claims brought by the contractor against each of the 3 superintendents personally because the contractor was not ‘vulnerable’ in the relevant sense. The contractor was a sophisticated, well-resourced commercial party which had legal assistance in drafting and negotiating the contract. Further, the contract itself provided the contractor with contractual recourse if the superintendent failed to perform its role properly.

Float ownership

The Court found that on a proper construction of the contract, the contractor owned the float in its program because the contract required EOT assessments to disregard whether the contractor could still achieve practical completion by the contractual completion date without an extension. However, the loss of ‘activity float’ on a non-critical activity did not establish the contractor’s entitlement to an EOT or delay costs. The contractor still had to show an actual delay to practical completion, since the contract’s EOT and delay costs provisions were tied to delay on the critical path to practical completion.

Delay costs include overheads and margin

The parties disputed the scope of a clause in the contract requiring the principal to pay the contractor ‘the reasonable additional costs and expenses directly incurred’ by the contractor as a result of compensable delay. In contrasting that formulation for a delay costs entitlement with different drafting considered in other judgments, the Court rejected the principal’s narrower interpretation that this wording was limited only to the contractor’s actual bare costs. 

Her Honour concluded that where a delay was caused by an event the contractor did not cause and could not have avoided, it was commercially unrealistic to expect the contractor to pass on its costs to the principal without also recovering its overhead costs and usual margin under the wording of the delay costs clause considered in this case. On that basis, the Court allowed the contractor’s claimed labour rates (inclusive of margin), a 15% contractor margin on flights, accommodation, and equipment hire, and the cost of extending bank guarantees.

Extension of time and delay costs methodology

The Contract required the effects of an ‘extension event’ to be assessed using a ‘time impacted analysis’ but did not define that term. The Court adopted the description in the Society of Construction Law’s Delay and Disruption Protocol, which explains that time impacted analysis assesses the effect of a delay event using a prospective approach, assessing the effect of the delay event on the contractor’s intentions for the future conduct of the work, in light of the progress actually achieved at that time.

The Court further held that a genuine revision to the construction program may show that an earlier baseline program was not reasonable, achievable, or appropriate. In such a case, the baseline program was not to be relied on for a time impacted analysis, regardless of whether the work was ultimately carried out in accordance with the revised program. Here, the revision remained in place for 6 to 12 months and followed safety workshops and consultation with the principal, rather than being made to inflate the effect of a delay event.

Practical implications

For principals, the decision highlights the importance of administering contracts consistently with the positions taken under them. Principals should be cautious when relying on contractual time bars, refusing to exercise discretionary EOT powers, or interacting with superintendents, as conduct may undermine otherwise available contractual rights.

For contractors, the decision demonstrates that relief may still be available notwithstanding non-compliance with contractual procedures where a principal’s conduct is inconsistent with strict enforcement. The case also reinforces the importance of carefully documenting delay events, variation instructions and the factual basis for EOT and delay cost claims.