Know Your Con­struc­tion Con­tract — A Cau­tion­ary ​‘Time Bar’ Tale from West­con­nex M5 Motor­way Tun­nel Project Sydney

The NSW Court of Appeal has con­firmed that Own­ers Cor­po­ra­tions can seek freez­ing orders to stop devel­op­ers using SPV struc­tures from divest­ing assets, strength­en­ing recov­ery prospects in defect litigation.

Con­struc­tion con­tracts often include detailed pro­vi­sions set­ting out pre­scribed regimes for the pro­vi­sion of claims. Such regimes pro­vide for the form and detail to be includ­ed in a notice and impor­tant­ly for the pur­pos­es of this arti­cle, time­frames with­in which the claim must be sub­mit­ted. It is also com­mon for con­struc­tion con­tracts to include a term which pro­vides that if the claim is not sub­mit­ted with­in the spec­i­fied time­frame. the claim­ing par­ty (invari­ably the con­trac­tor), los­es it enti­tle­ment to bring the claim.

These pro­vi­sions are known as ​‘time bars’.

Prin­ci­pals require these time bars so they have cer­tain­ty sur­round­ing a contractor’s enti­tle­ments there­by allow­ing them to man­age any asso­ci­at­ed risks to the project accord­ing­ly and have time­ly vis­i­bil­i­ty of any time and cost claims of the con­trac­tor. which will impact the deliv­ery of the project.

Time bars apply to dif­fer­ent types of claims in con­struc­tion con­tracts such as a claim for an exten­sion of time, for vari­a­tions or for addi­tion­al cost. Time bars dif­fer from oth­er con­trac­tu­al oblig­a­tions where breach can expose the non-com­pli­ant par­ty to a claim for dam­ages suf­fered by the inno­cent par­ty as a result of the non-com­pli­ance with the onus on the inno­cent par­ty to estab­lish its suf­fered loss. 

A time bar dis­en­ti­tles the claim­ing par­ty to bring its claim even though it might have car­ried out the work (with­out defect) or legit­i­mate­ly been delayed and but for the time bar would have been enti­tled to cost or time relief. 

The Courts have upheld clear­ly draft­ed time bar claus­es so that com­pli­ance is a pre-con­di­tion to any enti­tle­ment to the claim. Non-com­pli­ance can result in a par­ty los­ing a sub­stan­tial entitlement.

Cau­tion­ary Time Bar Tale — West­Con­nex M5 motor­way tun­nel in Sydney

On 1 Decem­ber 2025 South­ern Cross Elec­tri­cal Engi­neer­ing Ltd (ASX: SXE) announced that its con­tract­ing sub­sidiary, Hey­day Pty Ltd, had been unsuc­cess­ful in its arbi­tra­tion pro­ceed­ings for addi­tion­al costs incurred in per­form­ing works on the West­Con­nex M5 motor­way tun­nel in Sydney.

Hey­day’s con­tract with CPB Dra­ga­dos Sam­sung Joint Ven­ture (CDSJV) con­tained strict terms regard­ing the notice and tim­ing for bring­ing claims against CDSJV – time bars.

The Arbi­tra­tor found that Hey­day had failed to com­ply with the notice require­ments pro­vid­ed for in the con­tract and held that Hey­day’s claims totalling $22m for delay and dis­rup­tion costs and unpaid vari­a­tions were time barred and accord­ing­ly dismissed.

Fur­ther, Hey­day was ordered by the Arbi­tra­tor to repay to CDSJV $15m it received under an ear­li­er secu­ri­ty of pay­ment claim.

Com­pli­ance with the pro­ce­dur­al require­ments of a con­tract may seem harsh, how­ev­er, they are a reg­u­lar fea­ture of con­struc­tion con­tracts. Non-com­pli­ance is harsh: it can result in a par­ty los­ing a sub­stan­tial entitlement.