EP Article

Contractor wedged between contract and Environment Protection Act 1993

A recent decision[1] of the Supreme Court highlights the need to align contractual obligations, statutory obligations and technical drawings, specifications and plans incorporated into works contracts. The case was described ominously by the Court as “a salutary tale for developers, engineers, and civil works contractors of a series of unfortunate events, compounded by an industry practice of deference to engineers inconsistent with statutory and contractual obligations.”[2]

Facts

The Contractor was invited by the Engineer to tender for civil construction works for the Principal who was undertaking a residential subdivision on a steeply sloping site.

The Contractor was awarded the Contract which required works to be completed in accordance with a stormwater erosion and drainage management plan (SEDMP) prepared by the Engineer (who was engaged as both the designer for the works and the Superintendent with powers to give instructions to the Contractor in the course of completing the civil works).

The Contractor was obliged under the contract to prepare a construction environmental management plan (CEMP) to address erosion and sediment control and the practical implementation of the SEDMP before commencing the civil construction works.  The Contractor carried out earthworks in accordance with the SEDMP and prepared a CEMP which was reviewed by the Engineer and the Council.

Heavy rainfall events impacted the earthworks which, in combination with an inadequate SEDMP, resulted in discharges of soil, clay, gravel and sand onto neighbouring residential properties and the Contractor was charged under the Environment Protection Act (EP Act) with causing an environmental nuisance by polluting the environment.

The Contractor pleaded guilty to that charge and the ERD Court recorded a conviction and imposed a fine. It also agreed to the publication of a notice acknowledging the offending.

The Engineer was not charged with any offences under the EP Act.

The Supreme Court dismissed the Contractor’s appeal about whether a conviction should have been recorded for the following reasons:

  1. The Contractor had both statutory and contractual obligations in its own right, regardless of the contractual circumstances with the Principal and the Engineer.
  2. The terms of the contract meant that the Contractor could not absolve itself of liability merely by relying on approvals or instructions from the Principal or Engineer. The Contractor had specific contractual obligations to prepare an adequate CEMP and a method of practical implementation of the SEDMP before commencing the works. A mere approval of the CEMP by the Engineer and the Council did not discharge the Contractors’ liability under the terms of the contract nor the EP Act.
  3. The Contractor was not being blamed for the inadequacies of the Engineer’s SEDMP nor the poor instructions of the Principal. The Contractor had its own statutory and contractual obligations to fulfil regardless of the hierarchical working circumstances created by the contract.

The circumstances leading to the offence contain the lesson; especially for civil contractors but equally for principals and engineers preparing plans, specifications and associated materials to be included in construction contracts.  Those lessons include:

For all parties

  1. Contracts should be carefully written and reviewed to make clear who is responsible for environmental compliance;
  2. Some environmental compliance obligations cannot be passed or delegated by the contract in which case the contract should be carefully written and reviewed to ensure appropriate measures are in place to enable each party to adhere to and perform their statutory duties consistent with the contractual obligations.
    For Engineers
  3. Engineers drafting documents directed to environmental performance (such as SEDMP, CEMPs) should take care to ensure which documents do in fact achieve compliance, or otherwise make clear a contractors freedom to prepare such documents properly.
    For Contractors
  4. Contractors need to carefully review the tender materials and contract documents to ensure that any contractual obligation to adhere to or implement environmental compliance plans will actually do so; and importantly, won’t cause a breach of a statutory duty.
    For Principals
  5. Principals need to carefully consider whether any non-delegable statutory duty that remains with the Principal might be breached by the Engineer, Superintendent or Contractor if they fail to meet a contractual duty even if an environmental compliance document is followed.

If you have any questions contact James Levinson, Rosie Jervis or Helen Morriss on 08 8212 9777 or at info@bllawyers.com.au or via our contact us page.


[1] DML Constructions Pty Ltd v Dolan [2023] SASC 125

[2] Ibid at [1].