Liquidated Damages in NSW Construction Contracts
Last reviewed: 21 September 2026
Jurisdiction: New South Wales, Australia
Watch item: The Building (Approvals and Practitioners) Act 2026 (NSW) received Royal Assent on 14 August 2026. Its building-approvals and practitioner-registration framework will commence on dates to be proclaimed and is intended, over time, to repeal and replace significant legislation, including the Design and Building Practitioners Act 2020 (NSW) ("DBP Act") and elements of the Home Building Act 1989 (NSW). Until commencement proclamations and regulations are in force, the Home Building Act timing warranty in section 18B(1)(d), the proceedings limitation rule in section 18E and the anti-contracting-out rule in section 18G remain the residential overlay on liquidated damages. Confirm the status of those provisions before you act.
Key takeaways
A liquidated damages clause in a New South Wales construction contract does not, by itself, shut out common law delay damages. After Carbone v Fowler Homes Pty Ltd [2024] NSWCA 192, a $1, nil, blank or otherwise negligible rate needs clear words before it will be treated as the owner's entire remedy.
Residential work sits in a different legal world. Sections 18B(1)(d) and 18G of the Home Building Act make a nominal liquidated damages cap unstable, because a clause that converts the statutory timing warranty into a $1-a-day right is at risk of being read down or void.
A high rate is not automatically a penalty. After Paciocco v Australia and New Zealand Banking Group Ltd [2016] HCA 28; (2016) 258 CLR 525, the question is whether the stipulated sum is out of all proportion to the legitimate interest protected. The calculation file usually saves or kills the clause.
Prevention and failed extension-of-time machinery can destroy an otherwise enforceable levy. A principal who causes delay, or who guts its own EOT clause, can put time at large and lose liquidated damages entirely.
Unquantified liquidated damages in a NSW payment schedule are routinely discarded at adjudication. Under section 14 of the SOP Act, the rate, the days and the contractual basis have to be in the schedule itself.
Which situation are you in?
Liquidated damages problems arrive in one of four shapes. Use this to jump to the part of the analysis that fits your file, then read the worked scenario at the end that matches it.
You are the owner or principal wanting to levy. Confirm the trigger (date passed, no covering EOT, certificate or notice if required), quantify the days and the rate, and check the clause is not a penalty. Start at "How principals levy LDs" and the worked scenarios.
You are the contractor who has just been levied. Your first questions are whether there is any delay at all, whether an EOT was due, whether the principal caused the overlap, and whether the deduction was properly quantified. Start at "How contractors defeat or reduce an LD claim."
You are drafting or filling in the annexure. The rate, the exclusive-remedy words and the cap are decided now, not in the dispute. Start at "How to set a rate that survives attack" and "How to draft and negotiate the LD regime."
You are a subcontractor facing a back-to-back levy. Your exposure is only as good as causation and the flow-down wording. Start at "Actual-loss cross-check, failure to mitigate, proportionate liability and passing LDs down a subcontract."
Introduction
A Housing Industry Association house contract, schedule left blank, liquidated damages defaulting to $1 a day. The job is six months late. The owner is in rental. The builder's answer is $180.
That is not a hypothetical. It is the fact pattern sitting under the current New South Wales Court of Appeal authority, and it is why liquidated damages in a New South Wales construction contract are no longer a simple annexure entry. The clause is doing one of three jobs, and only one of them is the job most parties think they bought: compensating delay at an agreed rate, capping delay at a token figure, or leaving general damages untouched while looking like a cap.
This is the liquidated damages map for directors, principals, contracts administrators and licensed contractors who have to set a rate, levy it, defend it, or work out whether the $1, nil or N/A in the schedule actually does what the special conditions assume. If the issue is already live, early construction law advice can help classify the delay, contract machinery and forum before positions harden. The construction contract still allocates time risk. The Building and Construction Industry Security of Payment Act 1999 (NSW) ("SOP Act") still decides whether you can take the money now. Neither instrument tells you whether the liquidated damages clause is a penalty, an exclusive remedy, or a dead letter.
What liquidated damages actually do in a NSW construction contract
Delay LDs versus general damages, prolongation, disruption and other agreed sums
Liquidated damages for delay are a pre-agreed sum, usually a daily or weekly rate, payable if the contractor fails to reach practical completion (or a sectional completion date, key date or separable portion) by the contractual date, as adjusted by any valid extension of time. They are compensation for late completion, not a fine, not a delay-analysis shortcut, and not an automatic deduction from the next progress claim.
They are a different animal from the other money that delay throws off. Treating all of them as "LDs" is how principals double-recover and how contractors concede the wrong claim.
Five buckets need to be kept apart:
Bucket | What it compensates | Who claims it |
Delay liquidated damages | Late completion, at a pre-agreed rate, without proof of actual loss | Owner/principal |
General delay damages | Actual, proven loss from late completion: holding costs, rent, lost rent, finance charges, Hungerfords interest (interest awarded as damages for being kept out of money), lost sales, interface costs with the next trade or contract | Owner/principal |
Prolongation | The contractor's own time-related on-site overhead when the principal has caused delay | Contractor |
Disruption | Lost productivity — not late completion | Contractor |
Performance LDs, abatement, defects liquidated sums | Different breaches entirely (performance shortfall, service failure, defects) | Varies |
The commercial point of a genuine delay rate is certainty. The owner does not have to prove actual loss. The contractor can price the exposure. The superintendent can certify a number. That bargain only holds if the clause is enforceable, the trigger has been met, and the words actually make the rate the remedy for that breach.
The contract as the source of entitlement, with Dunlop, Paciocco, Baese, Cappello and Carbone as the overlay
Entitlement starts in the contract. The Acts and the cases then adjust the edges. The penalties doctrine — running from the House of Lords decision in Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79 through the High Court decisions in Ringrow Pty Ltd v BP Australia Pty Ltd [2005] HCA 71, Andrews v Australia and New Zealand Banking Group Ltd [2012] HCA 30, and Paciocco — decides whether the stipulated sum is an unenforceable penalty. The New South Wales exclusive-remedy line — Baese Pty Ltd v RA Bracken Building Pty Ltd (1990) 6 BCL 137, Cappello v Hammond & Simonds NSW Pty Ltd [2020] NSWSC 1021, and Carbone — addresses whether a liquidated damages regime excludes or preserves common law delay damages and, in particular, whether token, nil or otherwise insignificant rates leave general damages available. Multiplex Constructions Pty Ltd v Abgarus Pty Ltd and Another (1992) 33 NSWLR 504 remains an important New South Wales authority on what a principal may legitimately protect when setting a construction liquidated damages rate, including holding and finance costs on a development.
Two propositions are easy to overstate. First, Paciocco did not make every high rate safe. It confirmed that the central question is whether the stipulated sum is out of all proportion to the innocent party's legitimate interest in performance, rather than whether it is simply a genuine pre-estimate of loss. Second, Carbone did not hold that every liquidated damages clause needs express exclusive-remedy words. It held that a trifling rate, measured against the contract price, will not abrogate the owner's basic right to damages without clear language and, in the circumstances of the appeal, also noted procedural difficulties arising from Fowler Homes seeking to rely on the liquidated damages clause for the first time by notice of contention.
Where the Home Building Act, the SOP Act and the ACL change the bargain
Residential building work and commercial work are different legal worlds. The Home Building Act implies a warranty that the work will be done with due diligence and within the time stipulated, or within a reasonable time if none is stipulated (s 18B(1)(d)). Section 18E sets the period within which proceedings for breach of that statutory warranty must be commenced. Section 18G voids a provision that purports to restrict or remove rights in respect of a statutory warranty. Ball J in Cappello treated a $1-per-working-day clause, if read as an exclusive remedy, as converting a substantial warranty right into a nominal one. That is why a residential $1 clause is not a contractor's liability shield.
The SOP Act does not create liquidated damages and does not destroy them. It decides whether a respondent can withhold the money in a payment schedule and survive adjudication. The operative machinery is in sections 8 (right to a progress payment), 13 (payment claims), 14 (payment schedules), 15 (consequences of not paying where no schedule is provided), 17 (adjudication applications), 20 (adjudication responses) and 22 (the adjudicator's determination) of the SOP Act. Section 14(3) requires the schedule to indicate why the scheduled amount is less and the reasons for withholding payment. The regulator’s security of payment resources also summarise key claim, schedule and adjudication deadlines. An uncalculated liquidated damages set-off is treated as no reason at all. Section 12 of the SOP Act renders pay-when-paid provisions of no effect.
The Australian Consumer Law ("ACL") in Schedule 2 of the Competition and Consumer Act 2010 (Cth) adds a further overlay on standard-form consumer and small-business contracts. Part 2-3 of the ACL (ss 23–28) is the unfair contract terms regime: section 23 renders an unfair term in a standard-form consumer or small-business contract void; section 24 supplies the meaning of “unfair”; section 25 gives examples; section 27 deals with standard-form contracts; and section 28 identifies contracts to which the Part does not apply. Since the Treasury Laws Amendment (More Competition, Better Prices) Act 2022 (Cth) reforms (in force from 9 November 2023), proposing, applying, relying on or purporting to apply or rely on an unfair term is itself prohibited and can attract substantial civil pecuniary penalties (see ACL s 224). That risk is acute on HIA and MBA residential forms and on take-it-or-leave-it subcontracts, not on a fully negotiated GC21 or AS 4902 between sophisticated commercial parties.
What LDs are not: a fine, a delay-analysis shortcut, an automatic deduction, or a covered insurance loss
Liquidated damages are not payable because the job "feels" late; they run from a contractual date, as adjusted, to a defined end point. They are not proved by a global delay claim, and they are not a substitute for an extension-of-time determination. Nor are they self-executing — most forms still require a certificate, a notice, or at least a contractual set-off that identifies the days and the rate.
They are also not, in the ordinary case, an insured loss. Public liability and contract works policies respond to defined injury and damage, not to a contractual delay levy. Professional indemnity may respond to a design-caused delay claim against a consultant; it will not usually fund a head contractor's liquidated damages bill to the principal. Delay-in-start-up cover is a specialist product, not a default. Price the rate, the cap and the flow-down on the assumption that the company, not the insurer, will pay.
When liquidated damages start, pause and stop
Date for practical completion, sectional completion, key dates and separable portions
The levy is only as good as the date it runs from. Identify, in this order: the date for practical completion; any sectional completion dates or separable portions; any key dates or milestone dates that carry their own rate; and the machinery that adjusts those dates (EOT clause, variation clause, superintendent's direction). A single rate against a single PC date on a staged apartment or hospital job is how principals under-recover on an early stage and over-reach on a later one.
Practical completion is a contractual state, not a feeling that the owner has moved in. If the contract requires a certificate, the certificate (or its wrongful withholding) is part of the trigger. Occupation, keys, and "we are using the building" can start LDs running, stop them, or amount to taking possession, depending on the words. Read the possession and PC clauses against each other before anyone levies a day.
Certificates, notices, time bars, waiver and estoppel as preconditions to a levy
Standard forms often condition liquidated damages on a superintendent's certificate, a notice to the contractor, or both. Baese turned, in part, on an architect who had a discretion to invoke the contractual machinery that triggered liquidated damages. Giles J treated that machinery as operating for the proprietor's benefit and reasoned that, where it was not invoked, the proprietor was not thereby deprived of its common law right to damages for late completion. Giles J was unwilling to treat the clause as exhausting the proprietor's rights if that notice was never given. The lesson for a contracts administrator is not that every certificate is optional. It is that if the form makes a certificate or notice a gateway, missing it can kill the levy — or, in a Baese analysis, leave general damages alive.
Waiver and estoppel do the same work more quietly. A principal who keeps paying the full certified amount, issues no delay notices, and tells the contractor "we will sort time at the end" can find itself arguing about election long before it argues about the rate. Diarise the first day LDs could accrue. If you are not levying, record why.
Occupation, taking the works out of the contractor’s hands, and whether LDs keep running after termination
On termination of a construction contract, most modern forms stop liquidated damages on the earlier of practical completion, the owner taking possession, or the contract being ended. That is the structure considered in Oxford (its clause 30.1), and it is why termination is not a delay-damages free-for-all. Accrued liquidated damages up to termination are usually recoverable as a debt. Delay loss after termination is usually completion-cost and extra-finance territory, not a continuation of the daily rate, unless the contract says the rate survives.
Taking the works out of the contractor's hands, occupancy of a separable portion, and partial possession each need their own reading. A principal that occupies level 1 while the façade on level 8 is unfinished cannot assume the full-project rate keeps running against the whole contract sum. Split the rate by portion, or expect an argument that the levy is penal or misapplied.
Accrued LDs versus damages to complete, re-let costs and double recovery
The three pots after a late and then terminated job are easy to conflate: liquidated damages accrued to termination; the extra cost of completing the works through others; and delay loss that continues because completion is still late (finance, lost rent, holding costs). The first pot is the clause. The second is completion damages. The third is general delay loss, and it is only available if the liquidated damages clause is not an exclusive remedy for that loss.
Double recovery is the principal's unforced error. You cannot take the daily rate for the same days you also claim as actual lost rent, and you cannot claim completion extras that already include the delay prelims sitting inside the rate. Contractors defending a termination account should force the principal to allocate each dollar to a pot and to a period.
When a liquidated damages clause is an unenforceable penalty
Genuine pre-estimate, legitimate interest and the out-of-all-proportion test after Paciocco
The old shorthand — "is it a genuine pre-estimate of loss?" — remains useful drafting language and the traditional Dunlop indicators still assist in assessing penalties. They no longer exhaust the legal inquiry. Andrews confirmed that the penalties doctrine can reach collateral stipulations, not only payments triggered by breach. Paciocco then asked whether the stipulated sum is out of all proportion to the innocent party's legitimate interest in performance of the primary obligation.
For construction delay, that interest is wider than the rent on the building. Multiplex v Abgarus treated holding and finance costs on a development as legitimate. Operational disruption, interface with following contractors, reputational and service obligations on a hospital or road, and liquidated preliminaries of the owner's own team can all sit inside the interest, if they are real and evidenced. What the doctrine still will not tolerate is a figure chosen to terrorise: a round number copied from the last job, a rate that dwarfs any conceivable delay loss, or one sum payable for a one-day slip and a one-year collapse alike with no graduation and no cap.
One rate covering trivial and serious delay, and who bears the burden of proof
A single daily rate for every day of delay is normal and not, without more, a penalty. The attack that sometimes works is that the same rate applies to a trivial breach (one day, no actual loss) and a serious one, and is extravagant at the trivial end. Australian courts after Paciocco are slow to strike down a commercial construction rate on that ground alone. The party alleging a penalty carries a heavy burden. Contractors should not run the argument as a first strike. If it succeeds, the clause is unenforceable and the owner may be left to prove actual loss without a cap.
That is the strategic trap. Killing the rate can uncap the claim. On a residential job where actual rent and alternative accommodation dwarf $1 a day, the contractor already faces general damages. On a commercial job with a real rate and a 10 per cent cap, a successful penalty argument can be a gift to the principal.
The calculation file and other evidence that saves a rate, versus copied schedules, round numbers and extravagance that destroy it
The document that matters is the one created before tender, not the one assembled for the affidavit. A calculation file that starts with the owner's likely delay heads — holding costs, rent or lost rent, extra consultants, finance, interface, liquidated owner prelims — and arrives at a daily figure the annexure then rounds, is what Paciocco and Abgarus are looking for. A figure that matches 0.5 per cent of the contract sum because "that is what we always use" is not.
Evidence that destroys a rate is familiar: no file, a number reused from an unrelated project, a rate that exceeds the contract sum over a plausible delay period with no cap, and internal emails calling the clause a stick. Evidence that saves it is equally familiar: a dated spreadsheet, a financier's holding-cost letter, a rental appraisal, a program showing interface with a following contractor, and a cap that shows the parties contemplated a ceiling.
What happens if the clause is a penalty, and why running that argument can uncap general damages
If the clause is a penalty, it is unenforceable. The owner then proves general damages in the ordinary way, subject to causation, remoteness and mitigation, and subject to any separate limitation of liability. There is no automatic conversion of a penal rate into a reasonable one. There is also no automatic preservation of the contractor's cap, unless a stand-alone cap survives independently of the liquidated damages clause.
Before a contractor pleads penalty, it should quantify the owner's actual delay loss. If that loss exceeds the rate and any cap, the penalty case is a jurisdiction in which the contractor can win the clause and lose the war. The better first attacks are usually no delay, prevention, an uncertified EOT, a failed notice gateway, or a token-rate exclusive-remedy problem.
When a $1, nil or N/A rate still leaves general damages open
The NSW exclusive-remedy question after Baese, Cappello and Carbone
New South Wales does not follow the English Court of Appeal decision in Temloc Ltd v Errill Properties Ltd (1987) 39 BLR 30, under which a £nil rate can be read as an agreement that there will be no damages for delay at all. Australian courts require clear words before they will treat a liquidated damages clause as abrogating the owner's common law right.
Case | Rate | What the court did |
Baese (1990) 6 BCL 137 | "Nil" | Absent clear words, the LD regime did not exhaust the proprietor's right to recover common law damages for delay |
"NIL DOLLARS ($00.00)" | Nil was consistent with disapplying the LD clause and leaving unliquidated damages | |
Cappello [2020] NSWSC 1021 | $1 per working day | Not an exclusive remedy; Ball J reasoned that an exclusive $1-per-working-day reading would engage ss 18B(1)(d) and 18G of the Home Building Act because it would reduce a substantial statutory warranty right to a nominal one. His Honour used that conclusion as a reason to prefer a non-exclusive construction of the clause, leaving proven general damages available. The reasoning approved in Carbone drew support from this HBA analysis, although the Court of Appeal ultimately resolved the issue on construction and procedural grounds rather than by directly holding the clause void under s 18G. |
Carbone [2024] NSWCA 192 | HIA default $1 where the schedule was "$0.00" / nothing stated | A trifling rate, negligible against the contract price, does not abrogate the basic right without clear language |
Oxford (NSW) Pty Ltd v KR Properties Global Pty Ltd trading as AK Properties Group ABN 62 971 068 965 [2023] NSWSC 343 | $200 per working day on a ~$2 million job | The clause provided that the owners were "entitled to" liquidated damages. In the absence of clear and unequivocal exclusive-remedy wording, the Court held that the clause did not preclude the owners' claim for Hungerfords interest. The subsequent appeal in Kazzi did not determine whether clause 30 was an exclusive remedy and did not review that aspect of the primary judge's reasoning. |
Reduced to a decision path, the New South Wales question runs as follows:
Is the rate blank, nil, N/A or trifling (for example $1)? If yes, it will not confine the owner to that figure. General delay damages remain open unless clear words say there are to be no delay damages at all (Baese, J-Corp, Cappello, Carbone). On residential work, sections 18B(1)(d) and 18G make an exclusive reading even harder to sustain. Go to step 4.
Is the rate substantial but the clause only says the owner is "entitled to" liquidated damages? "Entitled to", without more, did not shut out the owners' claim for Hungerfords interest in Oxford and may support the preservation of other common law remedies where the contract lacks clear exclusive-remedy wording. Go to step 4.
Is the rate substantial and does the clause use clear, unequivocal exclusive-remedy words with a cap? If yes, it will usually be treated as the sole delay remedy.
Are general damages therefore open? If so, the owner must still prove actual loss, subject to causation, remoteness and mitigation — and the contractor loses the certainty of a cap.
The dollar figure is the wrong thing to stare at. The words are what decide it.
J-Corp remains the cleanest commercial explanation of a nil entry: the parties struck out liquidated damages and left the owner to prove actual loss. Cappello and, later, Carbone extend that caution to $1 and to the HIA "if nothing stated, then $1" default, with the Court of Appeal expressly approving Ball J's reasoning while deciding the appeal on broader construction and procedural grounds. Oxford is the warning for contractors who think a "real" rate is enough. $200 a day was not nothing, and it did not prevent the owners' claim for Hungerfords interest because clause 30 said the owner was "entitled" to liquidated damages and contained no clear unequivocal abandonment of other remedies. The decision was specifically concerned with the owners' claim for Hungerfords interest against Oxford. The later Court of Appeal decision in Kazzi addressed causation and the recovery of Hungerfords interest against Mr Kazzi personally, rather than the exclusivity or otherwise of Oxford's contractual liquidated damages regime. The subsequent Court of Appeal decision in Kazzi v KR Properties Global Pty Ltd (t/as AK Properties Group) [2024] NSWCA 143 did not address whether clause 30 was an exclusive remedy or whether the contractual liquidated damages regime excluded other delay-related claims. Accordingly, the primary judge's reasoning on that issue was neither overturned nor expressly affirmed by the Court of Appeal.
Why “clear words”, not the dollar figure, now decide whether general delay damages are shut out
Carbone at [105] put the point in language contracts administrators can use: a liquidated damages clause in a trifling amount, whether $0 or $1 a day, is utterly negligible compared with the contract price, and the law therefore requires clear language before the entirety of a party's basic right is treated as having been abrogated. The Court's reasoning was directed specifically to nominal or trifling amounts rather than every liquidated damages regime.
Two cautions sit on top of that sentence. First, J-Corp itself said that where the contract provides for a positive, substantial liquidated amount, it is unlikely the parties intended the proprietor to have both liquidated and unliquidated damages for the same delay. Second, Victorian commercial authority such as Hacer Group Pty Ltd v Euro Façade Tech Export Sdn Bhd [2022] VSC 373 treated a substantial and mandatory liquidated damages regime as the exclusive delay remedy even without express "sole remedy" wording, reflecting the traditional view that an enforceable liquidated damages provision fixes the parties' rights in respect of delay. In that case, the Court inferred exclusivity from the combination of a positive liquidated damages rate and mandatory contractual language requiring payment of liquidated damages for delay.
The New South Wales working rule is therefore practical, not theological. A blank, nil, N/A or $1 rate will not cap delay loss. A substantial rate, on a commercial job, will often be treated as the delay remedy — but Oxford shows that "entitled to" drafting, without clear exclusive-remedy words, may not exclude a Hungerfords interest claim and may leave scope for arguments that other common law remedies remain available. The later Court of Appeal decision in Kazzi concerned the availability and quantification of Hungerfords interest against Mr Kazzi under s 37 of the DBP Act, rather than whether Oxford's contractual liquidated damages clause restricted the owners' contractual delay claims. If the deal is a cap, say it is a cap. If the deal is a genuine pre-estimate and the only delay remedy, say that too.
HIA and MBA $1-per-day clauses, Home Building Act warranties, and NCAT versus court
Trap: HIA NSW Residential Building Contract for New Dwellings clause 32.1, read with the schedule item and the "if nothing stated, then $1" default, is now a known failure point. Leaving the item blank does not create a $1 cap. Inserting $1 does not create a $1 cap. Inserting a genuine weekly rent figure, without exclusive-remedy words, may still not create a cap on residential work because of sections 18B(1)(d) and 18G.
That last point is the one volume builders keep missing. Even a "real" residential rate that is intended to be the owner's only delay remedy may encounter difficulty because of the statutory timing warranty and the reasoning applied in Cappello and approved in Carbone. The safer residential structures are a genuine rate that is not expressed as a sole remedy, or an honest nil with the owner left to prove loss. The unsafe structure is the one Carbone and Cappello were built on: a token figure used as if it were a limitation of liability.
For volume and residential builders specifically, the practical drafting choice is therefore between two honest positions, not the illusory one. Either insert a genuine rate that reflects the owner's likely delay loss and do not dress it up as a sole remedy, accepting that the timing warranty sits behind it; or insert an honest nil, tell the owner in plain terms that delay is dealt with as damages at law, and program and price the job on the footing that lost rent is live. What does not work is the middle path the standard forms invite — a $1 or blank item treated internally as a cap. Carbone demonstrates the risk in that approach, but does not establish that all liquidated damages regimes require express exclusive-remedy wording.
Forum follows the work. Residential delay and defect claims of the kind Cappello and Carbone concerned are commonly run in the Consumer and Commercial Division of the NSW Civil and Administrative Tribunal (NCAT), established under the Civil and Administrative Tribunal Act 2013 (NSW). Section 48K of the Home Building Act confers the Tribunal’s jurisdiction in relation to building claims, presently capped at $500,000; section 48L makes the Tribunal chiefly responsible for resolving building claims that fall within that jurisdiction. Where the delay loss, lost rent and rectification together push the claim above the section 48K limit, the matter belongs in a court, not the Tribunal — so quantify the whole exposure before choosing the forum, because splitting a claim to fit the limit is rarely a good idea. Commercial exclusive-remedy fights, Hungerfords claims and high-value termination accounts go to the District Court or Supreme Court litigation in the Technology and Construction List. Classify the work before you pick the NCAT building dispute pathway or a court pathway.
AS 4000, AS 2124, AS 4902, GC21 and ABIC annexure traps, and why English nil-rate cases do not apply
The commercial forms fail in a more ordinary way: someone types "nil", "N/A", "$0" or leaves the liquidated damages item in the annexure blank, intending to signal "we are not using LDs", and then the special conditions still talk about liquidated damages as the delay regime. On the J-Corp reading, nil means the LD clause is of no effect and general damages remain. On a Temloc reading, which is not New South Wales law, nil means no damages at all. Do not import English nil-rate advice onto an AS 4000 or GC21 annexure.
The forms differ in where the rate lives, but the failure points are the same across all of them:
Form | Where the rate sits | Common failure point |
AS 2124 / AS 4000 / AS 4902 | Annexure, with the delay LD clause in the general conditions | Blank, nil or N/A item; special condition says "sole remedy" while the annexure says nil; one rate on a separable-portion job |
GC21 / Transport for NSW | Same structure, with more principal-favouring machinery | As above, plus over-reliance on principal-favouring drafting that still lacks clear exclusive-remedy words |
ABIC | Appendix, tied to the architect's administration | As above, plus a certificate/notice gateway that is missed |
In every case the recurring traps are a blank item, a nil item, a special condition that says "sole remedy" while the annexure says nil, and a separable-portion job with one rate.
If the commercial deal is that there will be no delay damages of any kind, the contract needs those words in the operative clauses, not only a blank cell. For the broader risk-allocation framework, see our guide to construction contracts in NSW. If the deal is general damages only, say that liquidated damages do not apply and that the principal's delay remedy is damages at law. If the deal is a genuine rate as a cap, fill in the rate, add exclusive-remedy and no-double-recovery words, and put a ceiling on the total.
How to set a rate that survives attack
Building the calculation file before tender: holding costs, rent, extra prelims, finance, lost revenue and interface costs
Build the file before the annexure is filled in. Start with the delay the owner actually cares about: not being able to occupy, sell, let, operate or hand the asset to the next contractor.
Quantify, as at contract date:
holding costs and land finance
rent or lost rent, including alternative accommodation on residential work
extra owner-side prelims and consultants
delayed revenue (hospital beds, tolls, rooms, production)
interface and delay costs payable to others
liquidated internal management time, if it is real
Divide by a plausible delay period, then decide whether a flat daily rate, a declining rate, or staged rates better match the interest. Record the assumptions. Keep the file. The number in the annexure should be reconcilable to that file on affidavit, not merely "in the range".
Residential, commercial, infrastructure, PPP, fitout and apartment base-build rate builds
The legitimate interest changes with the asset. A house is rent and alternative accommodation. A warehouse is holding costs and delayed lease commencement. A hospital or PPP is service-commencement delay, abatement exposure and financier cover. An apartment base-build is holding costs, delayed settlements, sunset-date risk and separable-portion occupancy. A fitout is rent on the landlord's programme and liquidated prelims of the occupier.
Copying a hospital rate onto a warehouse, or a house $1 default onto a dual occupancy intended for investment, is how clauses start looking punitive or illusory. Set the rate from the asset and the funding, not from the form.
Daily and weekly rates, declining rates, overall caps, GST and indexation on long jobs
Daily rates suit short residential and trade contracts. Weekly rates reduce argument about working days versus calendar days, which is a live issue on HIA "per working day" drafting. Declining rates can answer the "same sum for trivial and serious delay" attack. An overall cap — commonly expressed as a percentage of the contract sum, often in the order of 5 to 15 per cent depending on the sector and the funding — is the commercial ceiling financiers understand, and it is often better protection for the contractor than a token daily rate. The hospital and apartment scenario below carries a 10 per cent cap for exactly this reason: it tells a court the parties contemplated a ceiling, and it lets the contractor price the worst case.
On long D&C and infrastructure jobs, a rate fixed in year 1 and levied in year 5 is a stale number. If the interest is finance and prelims, indexation or a restated rate at a defined milestone is more defensible than a five-year freeze. Do not leave GST to be implied; state whether the rate is inclusive or exclusive.
Multiple rates for portions, stages and key dates, and why a modest genuine rate beats nil
Separable portions without separable rates are a gift to the party who wants a fight. Give each portion a date, a rate and an end point. Key dates that matter operationally — power on, weather-tight, access for a following trade — need their own modest rates, not a single balloon payment at PC.
A modest genuine rate, exclusive-remedy words, and a cap will almost always beat nil. Nil does not hide the exposure. In New South Wales it advertises that general damages are still on the table, and it leaves the contractor unable to price the risk. The $1 residential default is worse: it looks like a cap, behaves like an invitation to prove lost rent, and trains the builder to ignore delay until the construction dispute is already on foot.
How prevention, EOTs and time at large kill an LD claim
Principal-caused delay, the prevention principle, and when time goes at large
Liquidated damages cannot be levied for delay the principal caused, if the contractor has been denied a means of extending time for that delay. That is the prevention principle in operational form. Time then goes at large: the contractor's obligation is to complete within a reasonable time, and the liquidated damages machinery falls away. General damages for delay beyond a reasonable time may still be available. The rate is not.
The principal's own conduct is the usual source: late access, late drawings, late variations in a critical area, nominated-subcontractor failure, and certification delay. A principal who has stripped the EOT clause in special conditions, or who has made the notice window impossible, is the party most at risk of putting time at large. That is why time bars and liquidated damages have to be read as one system, not two clauses.
Concurrent delay, float and whether LDs still run
Concurrency is a drafting problem before it is a programming problem. If the contract grants an EOT for principal-caused delay even where a contractor-caused delay is concurrent, liquidated damages cannot run for the EOT period. If the contract is silent or contractor-friendly concurrency is not granted, the principal who levies through the concurrent period invites a prevention argument.
Float is not a principal's resource unless the contract says so. A contractor who consumes its own float and then hits a principal-caused delay is not automatically in culpable delay. Conversely, a contractor who was already off the critical path cannot treat every principal instruction as an EOT and an LD holiday. The program evidence has to show actual critical-path impact, which is the same discipline the extension of time regime requires.
Time-barred EOT claims, and when a unilateral power to extend time must be used
New South Wales courts enforce clear EOT time bars. A contractor who misses the notice window can remain exposed to liquidated damages even where the principal caused the delay — unless prevention, a duty to act honestly and reasonably in administering time, or a unilateral power to extend time fills the gap.
Many Australian standard forms give the superintendent a power to extend time whether or not a compliant claim has been made. Whether that power must be used when the principal is in delay is a live construction question on the particular words. Principals who sit on the power, levy liquidated damages, and later say "no compliant EOT notice" are running the prevention and good-faith gauntlet. Superintendents who treat the power as optional when their client caused the delay are creating the record for that fight. The superintendent's dual role — agent and certifier — is exactly why impartiality on time is not a courtesy.
Practical completion wrongly certified or wrongly withheld, acceleration, wet weather and extraordinary events
A progress certificate dispute is often where this surfaces: wrongful withholding of practical completion keeps the LD clock running and is its own breach. Wrongful early certification can stop the clock against the principal's interest and start the defects period. Both are certificate problems, not rate problems.
Acceleration directed to avoid liquidated damages is a variation if the principal required it, and a contractor risk if it was unilateral. Constructive acceleration — the contractor accelerates because a rightful EOT was refused — is an evidence-heavy claim and a poor substitute for running the EOT. Wet weather, force majeure and defined qualifying causes of delay only pause LDs if they are EOT events under the contract. COVID-era and wet-weather disputes taught the same lesson: the dictionary definition of "delay" does not move the date. The clause does.
How principals levy LDs through set-off, payment schedules and security
Contractual set-off versus a standalone delay claim
The clean commercial path is a contractual right to deduct certified liquidated damages from amounts otherwise due. That path still requires the trigger to have been met: PC date passed, no covering EOT, notice or certificate if required, rate applied to identified days. The alternative is a standalone delay claim — liquidated or general — which is slower, but sometimes cleaner where set-off is restricted or the SOP Act timing is about to land.
Do not mix the paths in a way that conceals the calculation. A set-off that just says "delay" is not a levy. It is a prompt for the contractor to adjudicate.
Deducting LDs in a payment schedule (NSW): the rate, the calculation and why an unquantified deduction dies
Under the SOP Act the sequence is time-critical and cannot be stretched by contract. The claimant serves a payment claim under section 13. The respondent may reply with a payment schedule under section 14: by section 14(4), the schedule must be provided within the time required by the contract or within 10 business days after the claim is served, whichever expires earlier. Section 14(2)–(3) require the schedule to identify the claim, state the scheduled amount, and — if that amount is less than the claimed amount — indicate why and the reasons for withholding payment. If no schedule is served in time, section 14(4) makes the respondent liable for the full claimed amount. If the respondent then fails to pay, section 15 allows recovery of that amount as a debt or by adjudication and, in debt proceedings, strips away the ability to raise reasons — including any liquidated damages set-off — as a defence to that liability. If a schedule is served but the scheduled amount is less than the claim, the claimant may proceed to adjudication under section 17 within the statutory window; any adjudication response is governed by section 20 and the determination by section 22. The practical point for liquidated damages is blunt: the entire delay deduction has to be built, quantified and in the schedule inside that section 14 window, or it is gone for that round. If liquidated damages are to be withheld, the schedule itself must identify the clause, the rate, the period, the number of days, the arithmetic, and why no EOT covers those days. Urgent payment claim advice is usually most useful before the section 14 window closes. "LDs pending assessment" is not a section 14(3) reason. Adjudicators discard it.
The security of payment pathway is interim. That interim “pay now, argue later” structure is reflected in High Court authority such as Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd. Winning the deduction in adjudication does not finally establish the levy. Losing it because the schedule was hollow can still be repaired later in court, but the cash has gone. Treat every incoming payment claim as time-critical on the day it arrives, and quantify the liquidated damages before the statutory clock runs out.
If a levy or a payment claim is landing this week — the first 48 hours. Diarise the date the payment schedule is due and count backwards from it, not forwards. Pull the contract to confirm the date for practical completion, any EOT determinations and whether a certificate or notice is a precondition. Identify the exact days you say are culpable, exclude any covered by an EOT or by principal-caused delay, apply the correct rate (calendar or working day) and write the arithmetic into the schedule itself. Keep the delay program, the EOT register and the calculation in one bundle. If you are the party being levied, do the mirror image: check the trigger, the days and the quantification, and preserve your notices. Whichever side you are on, get the clause and the delay file read against the New South Wales authorities before the schedule is served — after the statutory clock runs out, the options narrow and the cash has usually already moved. Merlo Law can pressure-test a levy, a schedule or an annexure on that timeframe.
Calling retention and bank guarantees for LDs, and recoupment in the final certificate
Retention and unconditional undertakings are cash-flow tools, not a substitute for the underlying entitlement. Call them for liquidated damages only if the contract permits a call for that purpose and the levy has crystallised. A disputed delay is not, without more, a licence to convert security. Contractors seeking to restrain a call still face the high bar described in the dispute-resolution pathway: fraud, unconscionability, or a contractual restriction on calling.
Recoupment belongs in the final certificate. If LDs were over-deducted, they come back. If they were under-deducted, the principal who has released security without a reservation is funding the shortfall from its own pocket.
Mid-project adjudication, insolvency and whether an LD levy survives collapse
A mid-project adjudication application in New South Wales, on a schedule that deducts liquidated damages, will turn on the quality of the reasons, not on the ultimate merits of the delay case. Keep the delay program, the EOT register and the arithmetic in the adjudication bundle.
Insolvency changes the recovery analysis, not the contractual mathematics. Accrued liquidated damages are an unsecured claim unless they have already been set off or supported by security. Under the Corporations Act 2001 (Cth), the automatic stay in section 440D limits proceedings against a company in administration, and the ipso facto stay in section 451E restricts enforcement of contractual rights that are triggered merely because the company has entered administration or by its financial position during administration (with parallel stays elsewhere in the Act, including sections 415D–415G for schemes of arrangement and sections 434J–434M for the appointment of a managing controller of the whole or substantially the whole of a corporation’s property (including many receivership and controllership appointments)). Do not call a guarantee reflexively on the day the administrator is appointed; the timing of crystallisation matters. Completion contractors, novation and the account after termination are a different job from running the daily rate through a collapsed company.
How contractors defeat or reduce an LD claim
No delay, already complete, or practical completion already achieved
The first defence is factual. Practical completion was achieved, or should have been certified, on a date that leaves no culpable delay. The separable portion was complete. The owner took possession. The days levied include Sundays on a working-day rate, or working days on a calendar rate. Force the principal to particularise every day.
Prevention, concurrency, uncertified EOTs, waiver, estoppel and time agreed by variation
The second defence is time. Qualifying delays were notified. EOTs were due and not granted. The superintendent's unilateral power should have been used. Principal-caused delay overlaps the levied period. A time bar clause defeated a variation claim, or variations moved the date and nobody adjusted the annexure. Conduct after the delay — continued performance to a new date, promises that "time will be sorted out", payment of amounts that could have been set off — supports waiver or estoppel.
These defences live in the notice register and the program, not in the pleading. A contractor who has not issued EOT notices is arguing prevention with one hand tied.
Penalty, unfair terms, failed certification machinery, and the owner claiming general damages over a token rate
The third defence is the clause. The rate is penal. The unfair contract terms regime under the ACL can void the term on a standard-form small-business or consumer construction contract. The notice or certificate gateway was not satisfied. Or, inverted, the owner is not confined to the $1 or nil rate and is claiming general damages — which is not a contractor defence at all, and is the Carbone problem the builder thought it had bought its way out of.
On residential work, do not assume the HIA default is a cap. Price and program as if lost rent is live. On commercial work, do not assume a $200 rate is exclusive. Read Oxford against the actual words.
Actual-loss cross-check, failure to mitigate, proportionate liability and passing LDs down a subcontract
Even where general damages are open, the owner must prove them. Failure to mitigate — empty holding of a completed building, delayed leasing, delayed appointment of a completion contractor — cuts quantum. Proportionate liability may be available where delay was caused by concurrent wrongdoers (designer, certifier, nominated subcontractor), subject to the contract's contracting-out position and Part 4 of the Civil Liability Act 2002 (NSW). Section 34 defines apportionable claims and concurrent wrongdoers; section 34(3A) provides that this Part does not apply to a claim in an action for damages arising from a breach of statutory warranty under Part 2C of the Home Building Act and brought by a person having the benefit of the statutory warranty; section 34A excludes certain wrongdoers from the benefit of apportionment; section 35 is the operative proportionate-liability rule; and sections 35A–39 deal with joinder, contribution and related machinery. Always check the contract’s proportionate-liability position before assuming an apportionment defence will hold, including whether Part 4 has been excluded or modified and whether the claim is of a kind outside Part 4 under section 34(3A).
Downstream, a head contractor who has been levied should not wait. A back-to-back construction contract passes the head-contract time risk down the chain, but a flow-down clause is only as good as causation: the trade that actually put PC back, not the trade that was merely on site. An indemnity for "all delay loss" can be wider than the head-contract rate and can be attacked as a penalty or as an uncommercial flow-down if it dwarfs the subcontract sum. Contingent "pay when levied" drafting also has to live with section 12 of the SOP Act, which provides that a pay-when-paid provision of a construction contract has no effect in relation to any payment for construction work or related goods and services. Pass down the time obligation, the notice obligation and a calibrated rate or actual-loss indemnity, not a photocopy of the head-contract annexure.
If you are the subcontractor who has just been levied, the order of attack is the same as any contractor's, with one addition. First, force the head contractor to show that your works, not another trade, actually put practical completion back — a back-to-back levy is only as good as that causal link. Second, test the flow-down wording: an indemnity for "all delay loss" that dwarfs your subcontract sum is exposed to a penalty argument and to an uncommercial-flow-down argument. Third, check that any "pay when levied" mechanism is not in truth a pay-when-paid provision rendered ineffective by section 12 of the SOP Act. Do not simply pass the head-contract number down the chain, and do not pay it up the chain, until each of those three points has been tested.
How to draft and negotiate the LD regime
Operative clause: trigger, rate, calculation period, superintendent discretion and notice
The operative clause should state, in order: the obligation to complete by the date for practical completion (and each portion date); the rate, and whether it is per calendar day or working day; the start date and the end date; whether a certificate or notice is a condition; whether the superintendent may, or must, extend time; and how the sum is recovered (debt, set-off, security). Ambiguity on any of those points is later litigation.
Do not leave the rate to a default. Fill the annexure. If the rate is nil because that is the deal, say in the operative clause that liquidated damages do not apply and what, if anything, replaces them.
Words that make LDs an exclusive remedy and a cap, versus words that preserve general damages
If liquidated damages are to be the only delay remedy, the contract has to say so in clear, unequivocal words: that the rate is a genuine pre-estimate of the principal's delay loss; that it is the sole and exclusive remedy for late completion; that the principal cannot also recover general damages, Hungerfords interest or lost rent for the same delay; and that the total levy is capped. "Entitled to liquidated damages" is not that sentence. Oxford is a clear example of the point.
If general damages are to be preserved, say that too: liquidated damages are an optional, alternative or additional remedy, or do not apply, and the principal retains its rights at law. On residential work, exclusive-remedy language aimed at the section 18B(1)(d) warranty is the language section 18G is built to kill. Do not draft a residential cap you cannot enforce.
Interaction with EOT, prevention, time bars, separable portions, security and early-completion bonus
Draft time as a system. The EOT events must cover principal-caused delay. The notice window must be workable. The superintendent's power to extend time should be capable of curing a missed notice where the principal is at fault, if that is the intended allocation. Separable portions need dates and rates. Security calls for liquidated damages should be limited to amounts that have accrued. An early-completion bonus, mirroring the rate, is not legally required, but it is commercial evidence that the figure was a priced interest rather than a stick.
Time bars that destroy EOT claims while leaving liquidated damages on foot are the prevention-principle factory. If you tighten one, recast the other.
Principal, contractor, subcontractor, financier and residential-owner bargaining positions, including back-to-back flow-down
Principals want a genuine rate, exclusive-remedy words, a workable certificate, security and a coherent dispute strategy. Financiers want the same, plus a cap that still covers holding costs through a realistic delay. Contractors want a genuine modest rate, a cap, a prevention-safe EOT clause, and no general-damages overlay. Subcontractors want a rate or indemnity that matches their actual critical-path exposure, not the head-contract annexure. Residential owners want more than $1 a day if the builder is late; volume builders want the opposite, and after Carbone they cannot get it by leaving the HIA item blank.
The negotiation that usually creates value is not "LDs or no LDs". It is: a real rate, a real cap, exclusive words on commercial work, no exclusive words that fight the Home Building Act on residential work, and a flow-down that follows causation.
How liquidated damages play out on real NSW jobs
$1-per-day HIA house, months late, owner in rental
The owner signs an HIA new-dwellings contract. Item 11 is left as "$0.00" or blank. The form defaults to $1. The building period is 48 weeks. Completion is six months late. The owner has been in rental throughout.
Carbone is the authority. The $1 default does not confine the owner to $180. Lost rent is in play if causation and proof are there. Section 18B(1)(d) is the statutory backbone if the case is run as a warranty claim. The builder who programmed and priced as if delay cost $1 a day has not priced the job. The owner's mistake is waiting until handover to particularise the rent; the documents should have been kept from the first week of overrun.
AS 4000 annexure left “nil”, commercial warehouse late
A construct-only warehouse on AS 4000 has "nil" in the liquidated damages item because the contractor "doesn't do LDs" and the principal's lawyer did not pick it up. The warehouse is four months late. The principal has been paying holding costs and has a delayed lease.
On a J-Corp reading, nil disapplies liquidated damages and leaves unliquidated damages. On a Temloc reading, which is not the New South Wales reading, nil would have meant no delay damages at all. The principal claims actual holding costs. The contractor discovers that the blank annexure was not a limitation of liability. The special conditions, which still refer to "liquidated damages as the delay regime", do not save it. The fix was one line in the annexure, or one exclusive-remedy clause that actually matched the cell.
High genuine rate on a hospital or apartment job with concurrent principal delay
A D&C hospital or apartment base-build carries a substantial daily rate, a 10 per cent cap, and exclusive-remedy words. Design access is late. The contractor is also late on façade procurement. Liquidated damages are levied through the overlap.
The rate will likely survive a penalty attack if the calculation file is real. The levy may not survive the overlap. If the EOT clause grants time for principal-caused delay, LDs cannot run for that period. If the superintendent refuses time because of concurrency and the notice was compliant, prevention and the unilateral power to extend time become the contractor's case. The principal who wants the rate to hold should grant the EOT for its own delay and levy only the remaining culpable days. The contractor who wants the levy to fail should not treat concurrency as a solvent for its own critical-path default.
Termination at 80% complete with LDs already running, and a mid-project SOP deduction of LDs
The contractor is in delay. Liquidated damages have been certified for 40 days. The principal terminates at 80 per cent complete, calls the guarantee, and engages others. In parallel, the last payment schedule deducted 40 days of LDs without setting out the arithmetic. The contractor adjudicates.
Two clocks, two results. The adjudication is likely to ignore an unquantified deduction, so the cash moves to the contractor on an interim basis. The termination account is a different document: accrued LDs to termination, completion costs, and any general delay loss only if the clause is not exclusive. If the principal occupies the completed portions, the rate should have been split. If the termination notice was bad, the LD claim can sit inside a repudiation case running the other way. None of that is solved by the daily rate alone. It is solved by the construction contract machinery, the SOP schedule, and the termination notices being run as one file.
Conclusion
Liquidated damages in a New South Wales construction contract are only as good as three things: a rate that can survive Paciocco, words that actually state whether general damages are in or out, and time machinery that does not put the levy offside the prevention principle. A $1, nil or blank annexure is not a cap. A substantial rate without exclusive-remedy words may not be a cap either. A residential token rate sits under sections 18B(1)(d) and 18G of the Home Building Act and under Cappello and Carbone. An unquantified deduction in a payment schedule is not a levy.
The parties who come out of delay with the number they thought they had bought are the ones who filled in the annexure on purpose, kept the calculation file, issued or determined EOTs in time, and particularised every day they later asked an adjudicator or a court to value.
If a live levy, a $1 HIA default, a nil AS 4000 item or a threatened set-off is already running, early construction law advice is cheaper than reconstructing the program after the certificate has been issued. Contact Merlo Law to have the clause, the annexure and the delay file read against the New South Wales authorities before the next progress claim or show-cause notice lands.
Related reading: for the payment mechanics behind a deduction, see security of payment and adjudication in New South Wales. To choose between the tribunal and a court, see our guide to NCAT and the Building Commission in NSW.
FAQs
What are liquidated damages in a NSW construction contract?
They are a pre-agreed sum, usually a daily or weekly rate, payable if the contractor fails to achieve practical completion (or a stated portion or key date) by the contractual date as adjusted by any valid extension of time. They are meant to compensate delay without proof of actual loss. They are not a fine, and they are not payable unless the contractual trigger — date, certificate, notice, and absence of a covering EOT — has been met.
Can the owner still claim general damages if liquidated damages are $1 or nil?
In New South Wales, yes, unless the contract uses clear words to take that right away. Baese, J-Corp, Cappello and Carbone all treat a nil, blank or $1 rate as a weak foundation for an exclusive remedy. Carbone requires clear language before a trifling rate, negligible against the contract price, will abrogate the owner's basic right to damages for delay.
Does the Home Building Act stop a $1 clause from capping delay damages?
On residential building work, it is a serious obstacle. Section 18B(1)(d) implies a warranty that the work will be completed in time. Section 18E sets the period within which proceedings for breach of that warranty must be commenced. Section 18G voids provisions that restrict or remove rights in respect of that warranty. Ball J in Cappello reasoned that construing a $1-per-working-day clause as an exclusive remedy would convert a substantial statutory warranty right into a nominal one and would therefore engage section 18G. That conclusion informed his preference for a non-exclusive construction of the clause. Do not price residential delay as if the HIA default is a limitation of liability. Carbone approved that reasoning, but the Court of Appeal did not itself decide the appeal by directly holding the clause void under section 18G.
When is a liquidated damages rate an unenforceable penalty?
When the stipulated sum is out of all proportion to the principal's legitimate interest in timely completion, assessed as at the date of contract. Paciocco confirms that the enquiry is not confined to whether the amount was a genuine pre-estimate of loss. Separately, on a standard-form consumer or small-business contract, an LD term may also be void as unfair under ACL ss 23–24 (and proposing or relying on it may attract penalties under the post-9 November 2023 regime). A genuine calculation file covering holding costs, rent, finance and interface costs, especially with a cap, is the best protection against a penalty finding; a round number copied from another job, with no supporting file, is the most common way a rate is struck down.
Can a principal deduct liquidated damages from a NSW payment claim?
Yes, if the contract allows set-off and the deduction is particularised in a valid payment schedule under section 14 of the SOP Act, served within the time required by section 14(4). The schedule must identify the rate, the days, the arithmetic and the contractual basis, consistently with section 14(3). Unquantified "LDs pending review" are treated as no reason. Failure to serve a schedule in time engages section 14(4) (liability for the claimed amount) and, on non-payment, section 15 (debt recovery or adjudication, without contract defences in debt proceedings). The claimant’s path into adjudication is section 17; the determination is made under section 22. The SOP Act pathway is interim; it does not finally determine the delay account.
What happens to liquidated damages if the principal caused the delay?
If the contractor is entitled to an EOT for that delay, liquidated damages cannot run for the EOT period. If the contract gives no effective way to extend time for principal-caused delay, the prevention principle can put time at large and destroy the levy. A missed EOT notice is not the end of the analysis where the superintendent has a unilateral power to extend time or the principal's own conduct caused the overrun.
Do liquidated damages keep running after termination?
Usually not, unless the contract says so. Accrued liquidated damages to the date of termination are typically recoverable. After termination the claim shifts to completion costs and, if the clause is not an exclusive delay remedy, general delay loss. Taking possession, occupying a portion, or ending the contract is often an express stop date in the LD clause itself.
Is “nil” or “N/A” in an AS 4000 annexure a cap at zero?
Not in New South Wales. Australian authority treats a nil entry as consistent with disapplying liquidated damages and leaving the owner to prove actual loss, unless clear words say there are to be no delay damages of any kind. The English Court of Appeal decision in Temloc Ltd v Errill Properties Ltd (1987) 39 BLR 30 treated £nil as an exhaustive agreement that no delay damages were payable at all; that reasoning is not the New South Wales rule. If the commercial deal is no delay damages at all, the operative clauses have to say so.
This page is for informational purposes only and does not constitute legal advice. For advice tailored to your specific circumstances, please contact Merlo Law.
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