USQ Law Society Law Review
II
Jason Audsley
Winter 2021
THE PREVENTION PRINCIPLE AND DELAYS BY THE PRINCIPAL
The application of the prevention principle arises when the principal commits an act that prevents the contractor from completing their contractual obligations by the contract completion date.2 In the seminal case of Peak Constructions (Liverpool) Ltd v McKinney Foundations Ltd,3 Salmon LJ stated: ‘I cannot see how, in the ordinary course, an employer can insist on compliance with a condition if it is partly his own fault that it cannot be fulfilled.’4 Rolfe J in his judgement in Turner Corporation Ltd v Co-ordinated Industries Pty Ltd 5 gave a comprehensive definition of the prevention principle, which was affirmed by Bailey J in Gaymark Investments Pty Ltd v Walter Constructions Pty Ltd,6 by stating: ‘Essentially it [the prevention principle] is that a party to the contract has been prevented from fulfilling its contractual obligations by virtue of conduct of the other party. The consequence is said to be that the 'preventing party' cannot rely upon the failure by the other party to comply with its contractual obligations, even if the other party is otherwise in breach so that it could not have complied with its contractual obligations in any event. It is said this flows from a generally stated principle that a party cannot benefit from its own wrong.’7 Further in Spiers Earthworks Pty Ltd v Landtec Projects Corporation Pty Ltd [No 2]8 Mc Lure P stated that: ‘The essence of the prevention principle is that a party cannot insist on the performance of a contractual obligation by the other party if it itself is the cause of the other party's non-performance.’9 His honour went on to characterise the prevention principle ‘as a particular manifestation of the obligation to cooperate implied as a matter of law in all contracts.’10
2
Jeremy Goggins, ‘The application of the Prevention Principal in Australia – Part One’ (2009) Australian Construction Law Bulletin 30. 3 Peak Constructions (Liverpool) Ltd v McKinney Foundations Ltd (1970) 1 BLR 111 (‘Peak’). 4 Ibid 121. 5 Turner Corporation Ltd v Co-ordinated Industries Pty Ltd (1994) 11 BCL 202 (‘Turner’). 6 Gaymark Investments Pty Ltd v Walter Constructions Pty Ltd (1999) 16 BCL 449, [53] (‘Gaymark’). 7 Ibid; Turner (n 5) 212; see also Damien Cremean, Michael Whitten and Michael Sharkey, Brooking on Building Contracts (LexisNexis Butterworths, 5th ed, 2014) 101, [6.8]. 8 Spiers Earthworks Pty Ltd v Landtec Projects Corporation Pty Ltd [No 2] [2012] 287 ALR 360 (‘Spiers’). 9 Ibid [47]; see also Probuild Constructions (Aust) Pty Ltd v DDI Group Pty Ltd [2017] NSWCA 151, [114] (’Probuild’). 10 Spiers (n 8) [47]; see also CMA Assets Pty Ltd (formally known as CMA Contracting Pty Ltd) v John Holland Pty Ltd [No 6] [2015] WASC 217, [863] (‘CMA Assets’).
178
