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Superintendents are important actors under a range of building, construction and civil works contracts. The duties of these superintendents involve some of the most controversial and complex aspects of contract administration, namely the assessment of payment claims, extension of time requests, variations, amongst many others. Notwithstanding this, you seldom find a superintendent as a respondent or defendant in building litigation. This article discusses why this is the case and canvasses the various duties and responsibilities of superintendents. By way of disclaimer, much of this article focusses on the general provisions found in Australian Standards AS4000-1992 and AS2124-1992, and in any specific case regard must be had to the specific provisions of the contract setting out the functions and duties of the superintendent for a particular project, whether that be a modified standard form or a totally custom contract.

What is a Superintendent?

Superintendents are a creature of contract. They are a representative of the Owner and are retained by the Owner but are required, somehow, to be “independent” and “impartial”. In the noteworthy case of Peninsula Balmain v ABI Group Contractors (2002) 18 BCL 322, 338 it was therefore stated that “a Superintendent is not an agent in the traditional sense.” This is a bit like a building surveyor, then, although a Superintendent could not truly be said to owe its fundamental duty to the public at large – but perhaps the “project at large”.

A superintendent administers the contract to issue directions to the contractor under the contract, ensure that progress claims are assessed, extensions of time are assessed, and variations are properly regularised, amongst other things. The superintendent is often conferred substantial discretions associated with these key features under the contract.

This means that Superintendents are central to contract administration in building contracts and a responsible for decisions that have immense implications for the progress of the contract. The decisions of Superintendents can expose parties to substantial loss, and where these decisions are made wrongfully, then it is only natural that parties shall wish to recoup that loss through appropriate dispute resolution.

What Contracts include a Superintendent?

Superintendents appear on projects where the quantum for the project and its complexity justifies their involvement. They are as common on large residential projects as they are on commercial or infrastructure builds.

A range of standard form contracts incorporate provisions in relation to Superintendents, including the often-used AS4000-1992 and AS2124-1992 standard forms of contract. Some other forms of contract refer to superintendents as the “principal’s agent”, “principal’s representative”, or “senior officer”, amongst many other titles. Whilst these standard forms are often amended by legal firms to suit their clients needs, it is less common for the provisions in relation to “superintendent” to be amended. These are tried and tested provisions which mean the jurisprudence provides ordinarily more clarity and parties know what they are signing up for.

The most peculiar aspect relating to the Superintendent is that they are not a signing party to the building contract and are therefore not directly bound by its terms. The superintendent has a retainer with the principal, but there is no contract for the contractor to directly enforce its rights in respect of assessment of the matters referred earlier against the superintendent.

Enforcing the Superintendent’s Compliance with the Contract

If the superintendent is not a party to the contract, then it begs the question of how the contractor can take action in respect of a superintendent who is unreasonable, does not grant a reasonable period of time for or value of work, or otherwise derelicts their duty.

This depends on the contract provision on point, but, ordinarily, the contract shall provide something along the lines that (and we quote from AS2124-1992, clause 23):

“the Principal must ensure that, at all times, there is a person appointed to act as the Superintendent”

and

“the Principal must ensure that the Superintendent:

a) acts honestly and impartially;

b) acts within the time prescribed by the Contract, or where no time is prescribed, within a reasonable time; and

c) arrives at a reasonable measure or value of work, quantities or time.”

This means that the Contractor has recourse against the Principal where the Superintendent fails to comply with its obligations under the Contract. It means that the reasonableness of a range of decisions which the superintendent may make may be assessed by a Court, and if the Court determines that a superintendent has not been reasonable, the Court may substitute its own determination of what should have been allowed by the Superintendent.

In the AS2124-1992 standard form of contract, it has also been argued that the Principal may be in breach of the Contract even where the Contractor has not requested an extension of time, but the superintendent has acted unfairly or unreasonably by not exercising its power to unilaterally extend time. Clause 35.5 of AS2124 provides that:

“Notwithstanding that the Contractor is not entitled to an extension of time, the Superintendent may at any time and from time to time before the issue of the Final Certificate by notice in writing to the Contractor extend time for Practical Completion for any reason.”

Given the overarching obligation of the superintendent to act reasonably in exercising its functions, which include the general unilateral discretion to extend time, and that this obligation is attached to the Principal, the Principal assumes substantial risk under this clause.

Impartiality and Independence in Practice

This can play out quite interestingly in practice, as Principals and their advisors, whether they be lawyers or otherwise, sometimes shrug their shoulders at the hearing of a complaint by a Contractor regarding a decision of the Superintendent. Indeed, it is not uncommon for the Principal to state to the Contract that, on the basis that the Superintendent must be “impartial” and “independent”, the Principal cannot intervene or involve themselves with the superintendent in exercising their duties, full stop.

It is submitted that, with due respect to those who harbour this view, such a position directly contradicts the express wording of clauses like clause 20 of the AS4000-1992 and AS4902-2000, or clause 23 of the AS2124-1992 standard forms of contract.

If it can be legitimately argued that a superintendent is not exercising their function “reasonably and in good faith” or “honestly and impartially”, as the wording varies between standard forms, then under contracts like the Australian Standard forms, the Principal has a positive obligation to ensure that its superintendent remedies its default. In this respect, there very much is a positive obligation on the principal to intervene and ensure that the superintendent exercises its functions in accordance with the tenor of the contract. The Principal cannot absolve itself of responsibility and say to the Contractor “I can’t intervene, as the Superintendent is an impartial and independent officer.”

Principal’s who take this approach to contract administration, risk exposure themselves for a breach of an express contract term that may sound in damages. The very purpose of clauses such as clause 20 in AS4000 and AS4902 and clause 23 in AS2124 is to ensure that the Contractor has some recourse against an errant Superintendent who, at the end of the day, is retained by the Principal, and against whom the Contractor has no direct contractual recourse.

Indeed, in certain contractual scenarios, a contractual claim via the Principal may be the only recourse available in light of both Woolcock Street Investments and Brookfield and a failing of the vulnerability requirement for establishing a duty of care.

Conclusion

It follows that it is incredibly important for both Principals and Contractors to understand the role of the superintendent in contract administration. Both parties need to carefully study the contract terms and comprehend them to understand the particular “rendition” of superintendent that applies under the specific contract. Some superintendent clauses are more extensive than others.

Principals need to remain mindful of their obligations owed to Contractors in respect of the exercising of functions by their superintendents, and should not allow loose and unnuanced perceptions of “impartiality” and “independence” to prevent them from intervening when it is plain that a superintendent is not complying with its obligations under the Contract. This is wholly different from a Principal “directing” or “controlling” the Superintendent.

Contractors, on the other hand, need to be aware of their rights against Principals for the failure of Superintendents to exercise their functions in accordance with the contract.

Regardless of the specific duties regarding the fairness and impartiality of the superintendent, the superintendent is an actor who exercises substantial discretion and is vital for the progress of a construction project.

If you are involved in a project or dispute where you need advice in relation to the functions of a superintendent, it is essential you contact experienced construction lawyers.

 

This article is not legal advice and discusses its topic in only general terms. Should you be in need of legal advice, please contact Lovegrove and Cotton Lawyers and our experienced lawyers will assist you based on the facts and circumstances of your case.

By  Jordan Davies, Law Graduate, Lovegrove & Cotton – Construction and Planning Lawyers. Jordan has worked at the firm and been involved with construction law matters for over 5 years. During his coursework at Melbourne Law School, Jordan received high distinctions in the Juris Doctor’s Construction Law subject and in the Melbourne Law Masters’ Construction Dispute Resolution course. He intends to publish two of his research papers focusing on new consumer protections in New South Wales on the Design and Building Practitioners Act 2020, and on expert evidence impartiality and civil procedure for construction disputes in Australia.

This article has been checked by Professor Kim Lovegrove.