Dealing with the NSW Construction Industry shut down | Managing existing works

The following article was produced by Helen Kowal and the Property Team at Swaab

Sydney law firm Swaab have provided the following which may assist some members in navigating the current lockdown:

On 17 July 2021, the NSW Gov­ern­ment amend­ed the Pub­lic Health (Covid-19 Tem­po­rary Move­ment and Gath­er­ing Restric­tions) Order 2021 (the Orders) to deal with the ongo­ing out­break of the Covid-19 Delta vari­ant in the Greater Syd­ney area.

The net impact of the inser­tion of claus­es 22(4A) and 24AB is that the con­struc­tion indus­try has been brought to a stand­still until 31 July 2021.

In regard to 22(4A), this clause pre­vents a per­son who is not autho­rised from vis­it­ing a place of res­i­dence in Syd­ney to engage in work that is:

  • clean­ing or car­ry­ing out repairs;
  • main­te­nance;
  • alter­ations;
  • addi­tions; or
  • per­for­mance of any oth­er trades at the place of residence.

In respect to 24AB, the Min­is­ter has direct­ed that work is not to be car­ried out on a con­struc­tion site in Greater Syd­ney, unless the work is urgent­ly required for the fol­low­ing purposes:

  • to ensure the safe­ty or secu­ri­ty of the con­struc­tion site;
  • to deal with envi­ron­men­tal risks;
  • to main­tain and ensure the integri­ty of crit­i­cal plant, equip­ment or assets, includ­ing par­tial­ly com­plet­ed works, 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 does this mean?

All con­struc­tion relat­ed works in the Greater Syd­ney Area that do not fall under the exemp­tions cov­ered by clause 24AB (1) of the Orders set out above, must be halt­ed until at least 31 July 2021, sub­ject to fur­ther amend­ments by the Minister.

Giv­en the sever­i­ty of the Delta Vari­ant of Covid-19 and the sheer scale of the con­struc­tion indus­try along with its asso­ci­at­ed trav­el that accom­pa­nies this, the Min­is­ter’s posi­tion is that this is a nec­es­sary step to thwart the spread of the virus until prop­er sys­tems and pro­to­cols can be put in place to man­age the sit­u­a­tion in those environments.

How do I know if my works are con­sid­ered urgent and there­fore exempt from restrictions? 

If you are per­form­ing work on a ​‘con­struc­tion site’ and those works do not fall with­in the above exemp­tions, you should not be per­form­ing the works.

In con­sid­er­ing ​‘emer­gency works’, ask yourself:

Does this work need to be done now, or can it wait 2 weeks?

It is under­stand­able that giv­en the often-tight time frames that can be asso­ci­at­ed with con­struc­tion works, many Prin­ci­pals, Head Con­trac­tors and Sub-Con­trac­tors will con­sid­er their work to be urgent. But, time frames dic­tat­ed by a con­struc­tion con­tract are not suf­fi­cient, unless they fall under the cat­e­gories spec­i­fied by clause 24AB (1).

Based on the draft­ing of clause 24AB (1), it is easy to see a cer­tain amount of over­lap between each exemp­tion. We stress that when con­sid­er­ing whether your sit­u­a­tion falls with­in the exemp­tions, it must be deter­mined on a case by case basis.

In sum­ma­ry, those works must be rel­a­tive to:

  • Ensur­ing the safe­ty and secu­ri­ty to oth­er per­sons, plant, equip­ment and materials;
  • Ensur­ing the safe man­age­ment of work which may impact on the environment;
  • Man­age­ment of pub­lic util­i­ties (includ­ing man­age­ment of infra­struc­ture), crit­i­cal plant, equip­ment or assets (includ­ing those that would dete­ri­o­rate or stop oper­at­ing with­out prop­er maintenance);
  • Main­tain­ing and ensur­ing integri­ty of works that would oth­er­wise dete­ri­o­rate; and
  • Emer­gency works.

In review of the above points (1) – (5) it is safe to say that points (1) – (3) are self-explana­to­ry and that these works are rel­a­tive to pro­tec­tion of the site/​works, the envi­ron­ment and man­age­ment of core util­i­ties, plant and equipment.

If there is any risk that your site/​works in the cur­rent state may be sub­ject to theft, fire, breach of any Envi­ron­men­tal Pro­tec­tion Laws or alter­na­tive­ly, a fail­ure to prop­er­ly main­tain cer­tain plant/​equipment would cause a fault in said plant/​equipment, you should take either imme­di­ate pre­ven­ta­tive action includ­ing con­tin­ued main­te­nance cycles. How­ev­er, empha­sis should be placed on ​‘pre­ven­ta­tive action’ and only min­i­mal works should be considered.

How­ev­er, it is points (4) and (5) where con­trac­tors may take cer­tain lib­er­ties that fall out­side the ambit of the exemp­tions under the Order.

‘Main­tain­ing and ensur­ing integri­ty of works that would oth­er­wise deteriorate’ 

Defin­ing what falls under the cat­e­go­ry of ​“main­tain­ing and ensur­ing integri­ty of works that would oth­er­wise dete­ri­o­rate” is again some­thing that will need to be con­sid­ered on a case by case basis.

We pro­vide a few exam­ples as follows:

Exam­ple 1:

On Fri­day 16 July 2021, Gladys’s Paint­ing Con­trac­tors and Water Proofers applied Part A of a pro­tec­tive sealant on the roof para­pet of their cur­rent project. Sub­ject to the tech­ni­cal data sheet pro­vid­ed by the man­u­fac­tur­er, they must apply Part B with­in 4 days of the appli­ca­tion of Part A oth­er­wise Part A must be removed and re-applied. The build­ing cur­rent­ly suf­fers from exten­sive water ingress and the appli­ca­tion of mem­brane is to pro­tect against fur­ther water ingress which may cause irre­versible dam­age to the foun­da­tions of the build­ing along with poten­tial mould issues.

Exam­ple 2:

On Sat­ur­day 17 July 2021, Dan’s Earth­works and Civ­il took 48 cubic meters of soil from a site locat­ed off Crown Street in Sur­ry Hills. Adjoin­ing the site is a row of her­itage town­hous­es. After remov­ing the soil on Sat­ur­day, Dan’s Earth­works and Civ­il applied tem­po­rary shoring to the sur­round­ing sub­soil, but Gary’s Cement and Ren­der are due to per­form per­ma­nent shoring works on Tues­day 20 July 2021.

In both exam­ples, there may be suf­fi­cient rea­son to sug­gest that works should con­tin­ue in order to pre­vent any dete­ri­o­ra­tion or dam­age to the exist­ing struc­ture or adjoin­ing properties.

But note that in both exam­ples, the ini­tial part of works were per­formed pri­or to the cur­rent order being made and there­fore this pro­vides the basis upon which this part of the works can be per­formed despite the mandate.

How­ev­er, based on the exemp­tions pro­vid­ed by 24AB (1) of the Orders, it is our opin­ion that only exam­ple 1 could be jus­ti­fied as emer­gency works, pro­vid­ed that there is no alter­na­tive method to pro­tect the site or the works from fur­ther water ingress if those works were to start on or from 19 July 2021.

Alter­na­tive­ly, if the con­trac­tor in exam­ple 2 sought to com­mence its works on or from 19 July 2021 as a part of the works to be per­formed under a con­struc­tion pro­gram, this is alone in our opin­ion, an insuf­fi­cient rea­son for con­trac­tors to cir­cum­vent the Orders.

Fur­ther to exam­ple 2, we would sug­gest that pri­or to the works tak­ing place by Gary’s Cement and Ren­der, Gary first checks with the Head Con­trac­tor and/​or the site Engi­neer to query whether those works need to be per­formed or whether the tem­po­rary shoring mea­sures put in place could be utilised until the end of the man­dat­ed period.

‘Emergency Works’

In summary, “emergency works”, could be those defined as requiring immediate attention to protect the occupants or surrounding occupants of a property (whether residential or commercial) from injury or illness or in some way prevent the safe and proper use of the property for its intended purpose. It is possible to see from example 1 above, why it may also fit into this category.

It is safe to assume that under the basic definition of “emergency works”, a Contractor could not perform the installation of an outdoor speaker setting for patio area, but examples such as the unblocking of a drainage system in an apartment complex or dealing with a gas leak in an industrial kitchen would be justified “emergency works”.

It should also be noted that “emergency works” could be relative to Annual Fire Safety Audits to the extent that a Fire Safety Order has been issued on a Property. However, if the order is not to be enforced until sometime after the mandate period is over, then it is safe to say those works would not fall under the category of “emergency works”.

Grey Areas – Build­ing Con­sul­tants and Manufacturers/​Suppliers

Some­thing that has not been addressed in the Orders is whether the clo­sure to con­struc­tion sites also impacts on the man­u­fac­tur­ing side of the con­struc­tion indus­try and fur­ther, whether it also applies to spe­cial­ist build­ing con­sul­tants con­duct­ing inspections.

Sched­ule 1 of the Orders pro­vides a ​“rea­son­able excuse” for per­sons to leave their place of res­i­dence for work relat­ed rea­sons if it is not prac­ti­ca­ble for the employ­ee to work at the employ­ee’s place of residence.

In that regard, there are cur­rent­ly no restric­tions on employ­ees of man­u­fac­tur­ers or sup­pli­ers in the con­struc­tion indus­try from attend­ing their place of work pro­vid­ed those per­sons are not locat­ed in an ​“affect­ed area” and if they are in an ​“affect­ed area”, have com­plied the manda­to­ry Covid-19 test­ing require­ments and are deemed to be ​“autho­rised work­er” . Please note that if you do reside in an affect­ed area, you should check the fol­low­ing link to iden­ti­fy whether you fall under the cat­e­go­ry of an ​“autho­rised work­er” —‑1…

For per­son resid­ing out­side of an ​“affect­ed area” we would advise sid­ing with cau­tion as to whether a per­son who is not an employ­ee or a reg­u­lar sub­con­trac­tor to an organ­i­sa­tion should be attend­ing a man­u­fac­tur­ing plant to per­form work dur­ing the shut­down peri­od. While the Orders are not clear on this issue, it could be argued that it does not fall with­in the ​“spir­it” of Orders and may ulti­mate­ly result in tighter gov­ern­ment restric­tions being enforced if peo­ple seek to push the bound­aries on the exemp­tions. In that regard, as these orders are large­ly untest­ed, it is dif­fi­cult to pro­vide a clear-cut opin­ion on this issue.

With respect to spe­cial­ist build­ing con­sul­tants who may be con­duct­ing inspec­tions, it does not appear that the restric­tions extend to per­for­mance of their role or atten­dance at a pri­vate premise (i.e. premis­es which are not declared as ​‘con­struc­tion sites’). How­ev­er, this exemp­tion may only apply pro­vid­ed that the con­sul­tants are:

1. Not from, or trav­el­ing out­side of, an ​“affect­ed area”; and

2. The con­sul­tants are com­pli­ant with clause 22A and not per­form­ing any of the fol­low­ing works:

  • clean­ing;
  • car­ry­ing out repairs;
  • main­te­nance;
  • alter­ations;
  • addi­tions; or
  • per­form­ing works rel­a­tive to oth­er trades.

It is arguable that an ​“inspec­tion” at a prop­er­ty (not being a con­struc­tion site) are not ​“works” as defined above. How­ev­er, this is of course still depen­dent upon whether a res­i­dent, may be will­ing to have the con­sul­tant con­duct inspec­tions in their home. It is also to be ques­tioned, that if the inspec­tions are not urgent, whether they should be per­formed. In that regard, we also advise pro­ceed­ing with cau­tion when deter­min­ing whether inspec­tions should con­tin­ue dur­ing the shut­down period.

Man­ag­ing your Contract

If you are affect­ed by the Orders, you should con­sid­er the impact it may have on your exist­ing con­struc­tion con­tracts or agreements.

Most con­tracts con­tain time bars for per­for­mance of oblig­a­tions with heavy penal­ties for delays to the works and it is undoubt­ed that a num­ber of projects will see exten­sive delays even as a result of a poten­tial 2 week shut down. As a result, Head Con­trac­tors and Sub­con­trac­tors will be look­ing to avoid the knock-on effects from delay to con­struc­tion projects, name­ly liq­ui­dat­ed dam­ages and poten­tial con­se­quen­tial loss claims. Sim­i­lar­ly, Prin­ci­pals will be con­cerned regard­ing blow outs to time dead­lines, espe­cial­ly those rel­a­tive to the sale of res­i­den­tial hous­ing developments.

As a result, the shut­down will more than like­ly cause sig­nif­i­cant pres­sure up and down the con­trac­tor and sup­pli­er chain as to who will wear the cost of the loss caused as a result of the delay with Con­trac­tors aim­ing for vari­a­tions to their exist­ing con­tracts. At the same time Prin­ci­pals and upper tier Con­trac­tors and Head Con­trac­tors will be look­ing to on flow the loss to low­er order Con­trac­tors and Suppliers.

The first step for any Con­trac­tor is turn to their con­tract and look at the mech­a­nisms pro­vid­ed for in that con­tract in rela­tion to:

  • Delay;
  • Exten­sion of Time;
  • Vari­a­tion;
  • Leg­isla­tive provisions;
  • Notices;
  • Sus­pen­sion;
  • Unfore­seen events; and
  • Covid-19/­Pan­dem­ic clauses .

Most stan­dard form, un-amend­ed con­struc­tion con­tracts will con­tain at least 3 to 5 of the above con­di­tions (depend­ing on when the con­tract was entered into). Accord­ing­ly, it is impor­tant that you review each of these claus­es to deter­mine if you or the par­ties to the agree­ment are rely­ing on the prop­er mech­a­nisms for man­ag­ing a poten­tial exten­sion of time, sus­pen­sion or vari­a­tion claim whether you are the Prin­ci­pal, Head con­trac­tor, Sub­con­trac­tor or Supplier.

At this time, it is pru­dent for astute Con­trac­tors to be com­mu­ni­cat­ing direct­ly with their supe­ri­or Con­trac­tors or the Prin­ci­pal in order to man­age the delay caused as a result of the Orders.

While it is an unfor­tu­nate set of cir­cum­stances to find our­selves in, the eas­i­est path to nav­i­gate the sit­u­a­tion is ensure that all lines of com­mu­ni­ca­tion are open and par­ties are aware of their rights and obligations.

There are many Gov­ern­ment Finan­cial Relief Pack­ages avail­able as a result of the imposed Orders. Var­i­ous guide­lines are avail­able as to what finan­cial relief you may be enti­tled to as either a cor­po­ra­tion or an indi­vid­ual as a result.

Should you require fur­ther assis­tance with regard to the impact of the Orders on your busi­ness or the inter­pre­ta­tion of your con­tract terms, please do not hes­i­tate to reach out to either our Helen Kow­al or Chris­t­ian Marchant of our Projects team.


  1. https://www.legislation.nsw.go…
  2. Pro­vid­ed it is a place of work that falls under the exemp­tions in clause 24(1A) of the Pub­lic Health (Covid-19 Tem­po­rary Move­ment and Gath­er­ing Restric­tions) Order 2021 (the Orders)
  3. Cl 24A, 24B and 24E of the Orders
  5. Cl 22(4A) of the Orders
  6. Note that these types of claus­es are rel­a­tive­ly new and there­fore may only be includ­ed in Con­tracts entered into with­in the last 12 months.

The above advice is provided for information only. ACRA takes no responsibility for the accuracy or otherwise of the information.

Find ACRA Members

Find A Member to Help with: