You will most likely come across the term ‘superintendent‘ in a construction contract. We know that the principal is the owner of the construction project and that the contractors are those engaged to carry out various elements of the building work. Below, we set out the superintendent’s role.
The Role of the Superintendent
The superintendent primarily administers the contract, including:
- Overseeing day-to-day operations;
- Attending meetings to ensure project aims are being met; and
- Making decisions on variables that arise under the contract.
The superintendent’s role under a construction contract, therefore, is two-fold. The principal appoints he or she as its agent and to also act as a certifier.
The Superintendent’s Functions
As an agent of the principal, the superintendent may be tasked with the following responsibilities:
- Assessing the quality of materials and workmanship to ensure they meet contract specifications;
- Reviewing and approving project programs;
- Directing the contractors and employees on behalf of the principal;
- Ordering a postponement or suspension of work; and
- Issuing variation orders.
As a certifier, the superintendent may be required to fulfil some tasks including:
- Assessing progress claims;
- Assessing claims for extensions of time;
- Assessing claims for extra payment either under the contract or as a result of variations to the contract including conducting valuations; and
- Issuing progress certificates.
The Superintendent’s Obligations: Balancing Competing Interests
The superintendent’s obligations will vary depending on the type of contract used. Some of the Australian Standards contracts require the superintendent to act honestly and fairly, and others require good faith and reasonableness. Not every contract will require the superintendent to be both the agent and independent certifier – but when they do, the importance of these obligations dramatically increases. We turn our attention below to several court cases which illustrate the importance of these duties and how they affect the decisions a superintendent can make.
Peninsula Balmain Pty Limited v Abigroup Contractors Pty Limited [2002] NSWCA 211
In this case, Peninsula Balmain (Peninsula) engaged Abigroup Contractors (Abigroup) on a townhouse and apartment residential construction project. Separately, Peninsula entered into a project management contract with a superintendent to act as their agent in the design and construction of the project.
The agreement was based on the standards of AS2124 and provided that Peninsula was to ensure a superintendent was appointed at all times. Clause 23 also required, among other things, that the superintendent acted honestly and fairly.
Clause 35.5 outlined Abigroup’s obligations regarding an extension of time. It also provided that the superintendent could unilaterally extend the time for practical completion (the time by which Abigroup must substantially complete the works, except for minor defects). Abigroup was late in completing the works, and Peninsula terminated the contract.
The key issue here was the superintendent’s unilateral power to grant extensions of time. The Court concluded that the superintendent must exercise this power in the interests of both parties, and could do so irrespective of the time limits the contract provided. Regarding the superintendent’s certifying functions, Judge Hodgson said that the superintendent must act honestly and impartially and not as the owner’s agent.Certifying functions includes assessment of variations, delay and progress certificates.
Perini Corporation v Commonwealth of Australia [1969] 2 NSWR 530
In this matter, Perini Corporation (Perini) entered into a building contract with the Commonwealth which appointed the Director of Works as the certifier. The Director of Works could, among other things, grant extensions of time for completion.
Perini made numerous requests for extensions of time, most of which the Director of Works refused due to the Department’s policy with some requests partially granted. Perini argued that this was a breach of the Director’s role as certifier for the following reasons:
- The Director was obliged to act impartially; and
- It was an implied term that the Commonwealth was obliged to ensure the Director acted impartially.
Perini based their argument on the notion that the Director’s obligations to make decisions in line with Department’s policy impeded their ability to act fairly and impartially.
The Court held that there was a duty for the Director to act fairly and to use his or her discretion in consideration of the rights of the respective parties. That duty included considering but not allowing the Commonwealth’s policy to control their decisions. This case indicates that typically if the contract does not expressly provide, Courts will imply a term importing an obligation of fairness and impartiality on the superintendent.
Walton v Illawarra [2011] NSWSC 1188
Here, the superintendent was engaged firstly as the project architect reporting to the Principal (Illawarra) and secondly, as the superintendent. Walton, the contractor, requested an extension of time and the superintendent assessed and awarded. A dispute arose regarding the superintendent’s decisions.
Again, under the contract the superintendent was required to act honestly and fairly and determine within reason when to grant an extension of time. If she did not arrive at a reasonable decision, then Illawarra would be in breach of the contract. In this case, the issue was that the superintendent was employed in dual roles on a project. This places the Principal at risk of being in breach of the contract if the superintendent fails to act honestly and fairly.
McDougall J stated that the superintendent’s employment as the project architect “put her in a position where the possibility of conflict was real, and the appearance of bias was likely to result“.
Walton successfully argued that the superintendent’s decisions did not meet this requirement. In concluding that Illawarra was therefore in breach of the contract, the court stated that the superintendent was guilty of aligning herself entirely with the interests of the Principal.
Key Takeaways
The superintendent’s role with its dual character is inevitably conflicting. It imports an obligation to act fairly or with reasonableness in consideration of the parties’ interests, which will not necessarily align. Although loyal to the Principal, especially given the Principal provides the superintendent with an income, she or he must be capable of making unbiased decisions when it comes to assessing, valuing and certifying the project variables.
Ultimately, the role of the superintendent is demanding, requiring an understanding of contract law, the scope of their responsibilities, the specific outcomes of the project, and the skill of identifying and managing conflicts. If you have any questions about your obligations under a construction contract, get in touch with our building and construction lawyers on 1300 544 755.