The Prevention Principle in QLD Construction

John Merlo
Jan 25
14 min read

Imagine this common scenario on a Brisbane construction site: a project is running behind schedule. The homeowner, frustrated by the delay, wants to charge the builder liquidated damages for every day the project is late. The builder, however, argues that the homeowner caused the delay by failing to supply specific materials on time and changing their mind about the kitchen layout halfway through. Who is right? This is where the Prevention Principle comes into play.

The Prevention Principle is a fundamental legal doctrine that addresses this very situation. In simple terms, it states that a party (the principal, e.g., a homeowner or developer) cannot enforce a contractual obligation against another party (the contractor) if they have prevented that party from performing that obligation. It’s not a loophole; it's a principle of fairness rooted in common law, designed to stop a party from benefiting from their own wrongdoing or breach of contract. While it is a common law principle, its application is seen every day in disputes governed by legislation like the Queensland Building and Construction Commission Act 1991.

Key Takeaways

The Core Rule: The Prevention Principle stops a principal (e.g., a homeowner or developer) from claiming liquidated damages for a delay that they themselves caused.
Contracts are Crucial: A well-drafted construction contract with clear Extension of Time (EOT) clauses is the primary defence against the Prevention Principle being invoked.
"Time at Large": If the principle applies and there's no EOT mechanism, the completion date can become void. The contractor is then only required to finish within a "reasonable time," making liquidated damages unenforceable.
Documentation is Key: Both contractors and principals must meticulously document all communications, instructions, and causes of delay to support their position in a potential dispute.

Understanding the Prevention Principle: A Core Concept in Construction Law

The Prevention Principle is a cornerstone of construction law, acting as a shield against unfair penalties when project delays occur. It ensures that liability for a delay is assigned to the party actually responsible, preventing a principal from enforcing a completion date they made impossible for the contractor to meet. Understanding this concept is vital for avoiding costly disputes over liquidated damages and potential breaches of contract.

What is an 'Act of Prevention'?

An "act of prevention" is any action—or failure to act—by a principal that directly hinders the contractor's ability to complete the works by the specified date for practical completion. These acts can be varied and are not always obvious.

Clear examples include:

Failing to provide the contractor with timely access to the site.
Not supplying owner-specified materials (like tiles, appliances, or fittings) by the agreed-upon date.
Interfering with the contractor's established sequence of work.
Providing incorrect or incomplete plans and specifications that require significant rework.
Instructing variations to the work without allowing a corresponding extension of time.
Failing to have necessary services (like power or water) connected to the site.

For the principle to apply, the act must have a direct causal link to the delay in achieving practical completion.

The Link Between Prevention and Liquidated Damages

Liquidated damages are a pre-agreed sum of money, specified in the contract, that a contractor must pay the principal for each day the project is completed late. Their primary purpose is to provide a genuine pre-estimate of the principal's losses due to the delay, avoiding the need to prove actual damages in court.

However, the enforcement of this clause is entirely contingent on the contractor being solely responsible for the delay. An act of prevention by the principal breaks this chain of responsibility. It becomes legally and ethically unjust to penalise the contractor for a delay that the principal contributed to or wholly caused. The Prevention Principle, therefore, acts to nullify the principal's right to claim liquidated damages in such circumstances.

Is This Principle Recognised Across Australia?

Yes. The Prevention Principle is not unique to Queensland. It is a long-standing common law doctrine that is recognised and applied by courts in all Australian states and territories. Its foundation in the principles of fairness and equity within contract law makes it a fundamental and well-established concept in Australian construction jurisprudence.

Professional bodies like the Queensland Law Society recognise its importance in ensuring contracts are administered justly, and it forms a key consideration in many construction disputes, from small residential renovations to large commercial projects.

How Do Acts of Prevention Trigger the Principle?

Triggering the Prevention Principle isn't automatic; it hinges on specific actions and the contractual framework in place. An act of prevention, such as a delay caused by the principal, sets off a chain of events that can fundamentally alter the contract's time-related obligations, impacting everything from delay costs to the contractor's fundamental rights.

Illustrative Example: Builder Bob's Tile Trouble

Consider a contractor, "Builder Bob," who is working on a residential extension on the Gold Coast. The contract clearly states the homeowner is responsible for supplying specific imported Italian tiles for the two new bathrooms by a set date. However, due to shipping issues, the homeowner delivers them six weeks late. Bob immediately realises he cannot complete the bathrooms on schedule, which has a significant knock-on effect, delaying the final plumbing fit-off, electrical finals, and painting.

When the project inevitably finishes late, the homeowner attempts to claim liquidated damages. Bob's lawyer swiftly points to the tile delay as a clear act of prevention. Because the homeowner's failure to perform their obligation directly caused the delay, their claim for liquidated damages is rendered void.

Who Carries the Burden of Proof?

The burden of proof typically falls on the party seeking to rely on the Prevention Principle—in most cases, the contractor. When a principal claims liquidated damages, the contractor must use the Prevention Principle as a defence.

This means the contractor must provide clear evidence demonstrating two key things:

An act of prevention (an action or an omission) by the principal actually occurred.
This act directly caused or contributed to a delay in the works, impacting the contractor's ability to meet the date for practical completion.

This is why meticulous record-keeping, including site diaries, emails, and formal notices, is absolutely critical for contractors.

Understanding the Role of an Extension of Time (EOT) Claim

A well-drafted construction contract anticipates delays and provides a mechanism to manage them: the Extension of Time (EOT) claim. When a delay occurs (whether caused by the principal, inclement weather, or another specified reason), the standard process requires the contractor to submit a formal EOT claim according to the contract's terms.

This claim should detail the cause of the delay and the extra time required. If the claim is approved, the date for practical completion is officially adjusted. This contractual mechanism, when used correctly, effectively neutralises the Prevention Principle. It provides a formal way to manage a principal-caused delay without voiding the completion date, allowing the contract to proceed on a revised schedule.

What if the Principal Denies a Valid EOT Claim?

Warning: Wrongfully denying a valid EOT claim can be considered an act of prevention in itself. When a contractor submits a legitimate claim for a delay caused by the principal, and the principal rejects it without proper grounds, they are effectively preventing the contract's own machinery from working as intended. By refusing to grant a merited extension, the principal is holding the contractor to an original completion date that the principal themselves has made impossible to achieve.

This action can backfire spectacularly, leading to the very outcome the principal wants to avoid: the contract's completion date being voided and time becoming "at large."

The Critical Role of Your Construction Contract

The written contract is the single most important tool for managing project delays and avoiding disputes related to the Prevention Principle. A well-drafted agreement, whether it's a standard form from Master Builders Queensland or a bespoke document tailored to the project, provides the rulebook for how both parties must act. It should contain clear, unambiguous mechanisms for dealing with delays, variations, and notices.

Proper contract administration is not just about paperwork; it's about preserving rights and managing risk, a core tenet of Queensland's building and construction law.

Why EOT Clauses Are Your First Line of Defence

EOT clauses are the contractual antidote to the Prevention Principle. These clauses are specifically designed to provide a pre-agreed procedure for extending the date for practical completion when a qualifying delay occurs, including—crucially—a delay caused by the principal. As long as this contractual remedy exists and is followed correctly by both parties, the Prevention Principle is not triggered.

The contract's own machinery allows the completion date to be validly adjusted, preserving the principal's right to claim liquidated damages for any subsequent delays that are the contractor's fault. Without effective EOT clauses, any act of prevention by the principal can put the entire completion date, and the associated liquidated damages, in jeopardy.

The Danger of "Time Bar" Clauses

Warning: Contractors must be extremely wary of "time bar" clauses within their construction contracts. These clauses impose a strict deadline by which a contractor must notify the principal of a delay to be entitled to an EOT.

For example, a clause might state, "The contractor must provide written notice of any event causing delay within 3 business days of the event occurring, or the contractor shall forfeit any right to an Extension of Time." Failing to comply with such a strict notice requirement, even for a delay clearly caused by the principal, can mean the contractor loses their entitlement to an EOT.

This creates a perilous situation where the contractor could be exposed to liquidated damages for a delay they did not cause, simply because of a failure in contract administration.

Are Verbal Agreements or Instructions Enough?

Verbal agreements are a recipe for disaster in construction. While a quick chat on-site might seem efficient, it creates enormous risk. When a dispute arises, proving what was said, when it was said, and who agreed to it becomes a difficult "he said, she said" argument.

Formal, written notices, as required by most construction contracts, create an undeniable, time-stamped record. This documentation is essential for substantiating an EOT claim, defending against a claim for liquidated damages, or justifying actions when it comes to complex issues like terminating construction contracts or enforcing your legal payment rights.

Always follow a verbal instruction with a written confirmation.

What Happens When Time Becomes "At Large"?

The legal concept of "time at large" is a critical consequence of the Prevention Principle. It occurs when a contract's fixed date for practical completion is rendered void and unenforceable.

This situation typically arises when there has been an act of prevention by the principal, and the contract either lacks a mechanism to grant an Extension of Time for that delay, or the existing mechanism was not administered properly (e.g., a valid EOT claim was wrongfully denied). When the fixed date is gone, the entire timeline of the contract shifts.

The New Obligation: Completion Within a "Reasonable Time"

Once time is at large, the contractor's strict obligation to complete the project by a specific date is replaced by a new, less defined obligation: to complete the work within a "reasonable time." The concept of "reasonable" is not fixed; it is determined by the specific facts and circumstances of the case. Factors that a court or tribunal would consider include the nature and complexity of the remaining work, the impact of the initial delay, resource availability, and general industry standards for similar projects. This ambiguity can create further uncertainty and potential for disputes.

Can a Principal Still Claim Liquidated Damages?

Once time is at large, the principal's right to claim liquidated damages is extinguished. This is a crucial point in contract law. Liquidated damages are intrinsically tied to a specific, contractually agreed-upon date for practical completion. Without that fixed date, there is no benchmark from which to calculate the daily damages. The clause becomes inoperable.

This does not mean the principal is left without any remedy. They may still be able to claim general damages for the delay, but this is a much higher hurdle. To claim general damages, the principal must prove their actual, quantifiable financial losses resulting from the delay (e.g., lost rent, additional storage costs, extra accommodation fees).

Unlike the simple calculation of liquidated damages, proving general damages is often a more complex, costly, and time-consuming legal process. This is a common issue seen by any experienced building and construction lawyer.

Navigating the QBCC Framework and Delays

Understanding the Prevention Principle at a conceptual level is essential, but in Queensland, the practical application of these rights occurs within a specific regulatory framework. Most residential building disputes don't begin in a courtroom—they start with the Queensland Building and Construction Commission (QBCC).

In Queensland, while the Prevention Principle is a common law doctrine, the practical reality is that most residential building disputes are initially filtered through the state's primary regulator, the QBCC. The QBCC Act and the regulated contracts it governs provide the specific framework within which these disputes often play out.

Note that Queensland's Building Regulation Renovation (Building Reg Reno) reforms, which commenced in February 2025 and continue rolling out through 2026, have streamlined various licensing and compliance processes, though the core common law Prevention Principle remains unchanged.

With industry pressures mounting and recent data showing detached houses taking approximately 36% longer and apartments up to 80% longer to build than 15 years ago, the effective management of delays and understanding your rights under this framework are more critical than ever for both builders and homeowners.

Does the QBCC Act Address the Prevention Principle Directly?

The QBCC Act does not explicitly name or define the "Prevention Principle." Instead, its influence is felt indirectly through the Act's various requirements and the statutory warranties implied into domestic building contracts. For instance, the Act mandates that regulated contracts must be in writing and state a completion date.

Furthermore, the Building Industry Fairness (Security of Payment) Act 2017 and the Building Act 1975 contain specific provisions for how contract variations and delays must be managed in Queensland construction contracts. When a principal's actions prevent a builder from meeting the completion date, it can intersect with the builder's statutory warranty to carry out work with reasonable diligence, creating a complex dispute that the QBCC framework must address.

How the QBCC's Dispute Resolution Process Works

When a dispute over delays arises, either a homeowner or a contractor can lodge a formal complaint with the QBCC. The first step in the QBCC's dispute resolution process is typically facilitation. A Dispute Resolution Officer may be assigned to the case, attempting to help the parties reach a mutual agreement. This can involve reviewing contract documents, facilitating communication, and sometimes conducting site inspections to assess the situation. If an agreement cannot be reached, the QBCC may issue a Direction to Rectify Defective Work or, in some cases, a Direction to Complete the contract.

However, if the matter is legally complex and revolves around contractual principles like prevention and the enforceability of liquidated damages, the QBCC may determine it is outside its jurisdiction to decide. The matter must then be escalated for a formal decision at the Queensland Civil and Administrative Tribunal (QCAT). If you receive a QBCC direction you disagree with, seeking guidance from a QBCC lawyer is essential to understand your rights of review.

What if the Dispute Goes to QCAT?

QCAT is the independent tribunal where many building disputes in Queensland are formally heard and decided. Unlike the QBCC's facilitation process, QCAT operates like a court and has the jurisdiction to hear arguments based on contract law, including the Prevention Principle.

This is the official forum where a contractor would formally argue that a principal's actions prevented them from completing on time, and therefore, the claim for liquidated damages is unenforceable and time should be considered "at large." Presenting a case at QCAT requires clear evidence, a strong understanding of legal principles, and adherence to the tribunal's procedures.

Successfully navigating this process is a key part of resolving matters through QCAT.

Proactive Steps to Avoid Prevention Principle Disputes

The best way to deal with the Prevention Principle is to avoid triggering it in the first place. This requires proactive risk management, clear communication, and diligent contract administration from both contractors and principals throughout the entire project lifecycle. Investing time in good project management is far cheaper and less stressful than seeking expert advice on a construction dispute after a relationship has broken down.

For Contractors: The Documentation Imperative

For contractors, the mantra must be: "document everything." When you receive an instruction that will cause a delay or notice an issue caused by the principal (like late material supply), the clock starts ticking.

The first step is to immediately document it in writing, even a simple email confirming a verbal conversation creates a record.

The next, crucial step is to formally submit an Extension of Time claim strictly in accordance with the contract's requirements, paying close attention to any time bar clauses. This creates a clear, undeniable paper trail that demonstrates you have followed the contractual process, which is your strongest defence if a dispute arises later.

For Principals/Homeowners: Your Duty to Not Impede

Principals and homeowners have an implied duty to cooperate and not impede the contractor's progress. To fulfil this duty and avoid causing a preventable delay, you should take several key actions. Respond to the contractor's requests for information (RFIs) promptly. Ensure the contractor has unimpeded access to the site at all times. Make your selections for fittings, fixtures, and colours by the dates agreed in the schedule. If you are supplying materials, ensure they arrive on time. Finally, when you receive an EOT claim from your contractor, assess it fairly and in good faith. A cooperative approach is fundamental to the success of projects governed by legislation like the Building Act 1975.

When Should You Seek Legal Advice?

The best time to seek legal advice is early, not as a last resort when a dispute has already escalated. A construction litigation lawyer can provide immense value by reviewing a construction contract before it is signed, ensuring the clauses for delays, variations, and EOTs are fair, clear, and protect your interests.

If a significant, principal-caused delay occurs during the project, getting advice early can help you navigate the contractual maze correctly, preserve your legal rights, and prevent a manageable issue from spiralling into a costly and protracted QCAT battle.

Conclusion

The Prevention Principle is more than just legal jargon; it is a fundamental rule of fairness that underpins construction contracts in Queensland and across Australia. It ensures that a party cannot profit from their own failure to perform by penalising a contractor for a delay they helped create.

For contractors, understanding this principle is a vital shield against unfair liquidated damages, but this shield is only effective when backed by meticulous documentation and strict adherence to the contract's notice requirements.

For principals and homeowners, it serves as a crucial reminder of their duty to cooperate and not impede the works, as a failure to do so can result in the loss of their right to claim damages for late completion.

Ultimately, the key to avoiding disputes over delays and the Prevention Principle lies in a well-drafted contract, clear communication, and proactive administration. By understanding your rights and obligations from the outset and seeking expert legal advice when complexities arise, both parties can work towards the shared goal: a successfully completed project delivered without the cost, stress, and uncertainty of a legal battle.

FAQs

Can a contractor waive their right to rely on the Prevention Principle?

It is possible for a contract to be drafted in a way that attempts to "contract out of" the Prevention Principle. This is typically done through very specific and stringent EOT and time bar clauses that place a heavy onus on the contractor to notify of any delay within a short timeframe, regardless of the cause. However, courts and tribunals may still view such clauses unfavourably if they lead to a particularly harsh or unfair outcome, especially if the principal's act of prevention was clear and significant.

Does the Prevention Principle apply to variations requested by the principal?

Yes, absolutely. Instructing a variation to the scope of works, especially one that clearly requires additional time to complete, is a classic act of prevention if a corresponding EOT is not claimed by the contractor and granted by the principal. A well-drafted contract will have variation clauses that work in tandem with EOT clauses, ensuring that when the scope changes, the timeline can be adjusted accordingly. Failure to follow this process can easily lead to time becoming at large.

What is the difference between general damages and liquidated damages?

Liquidated damages are a specific, pre-agreed amount of money for late completion that is written into the contract (e.g., "$500 per day"). They are intended to be a genuine pre-estimate of the principal's loss. General damages, in contrast, are the actual, provable losses a principal suffers due to a delay. If time becomes at large, a principal loses their automatic right to the pre-agreed liquidated damages. They can still try to sue for general damages, but this requires them to provide detailed evidence to a court or tribunal to prove their actual financial losses, which is a more complex and often more difficult legal task.

How does the defects liability period relate to project delays?

The defects liability period is the period after practical completion during which the contractor is obliged to return to the site and rectify any defects that become apparent. While not directly linked to the Prevention Principle (which deals with delays before completion), significant delays can sometimes lead to disputes about when the defects liability period officially starts. The date of practical completion is the trigger, so any dispute that alters this date can have a knock-on effect on other contractual timelines.

What should be my first step if I believe an act of prevention has occurred?

If you are a contractor and believe the principal has caused a delay, your first step is to check your contract. Identify the notice requirements and time bar clauses for EOT claims. Immediately provide a formal written notice to the principal detailing the act of prevention and its likely impact on the schedule. If you are a principal and a contractor raises such an issue, review the claim in good faith and respond in accordance with the contract. In either case, if the situation is complex or the potential financial impact is significant, seeking prompt legal advice is the most prudent course of action.

This guide is for informational purposes only and does not constitute legal advice. For advice tailored to your specific circumstances, please contact Merlo Law