Clarke Energy v Alinta Energy Transmission (Roy Hill) Pty Ltd [2026] NSWSC 1124: Superintendent conduct, assessing EOTs and the prevention principle

The NSW Supreme Court's decision in Clarke Energy (Australia) Pty Ltd v Alinta Energy Transmission (Roy Hill) Pty Ltd [2026] NSWSC 1124 provides important guidance on the role of superintendents, extension of time (EOT) claims, delay costs, and the limits of a party insisting upon strict performance of a contractual obligation by the other party when it is the cause of the other party’s non-performance.

Background

Alinta (the Principal) engaged Clarke Energy (the Contractor) under a $78 million Engineering, Procurement and Construction contract (the Contract) for a remote power station in Western Australia (the Project). Over the course of the Project, the Contractor encountered various significant delays, and the parties fell into dispute over various aspects of performance of the Contract, including site-readiness, directions issued by the superintendent, and dealing with delays to the Project.

The Contractor alleged that the Principal had failed to ensure that the site was ready for the Project, had failed to ensure that the superintendent(s) remained independent in administering the contract, and that the Principal’s entitlement to liquidated damages was set-off by the Contractor’s entitlement to delay costs arising out of the Principal’s own breaching conduct. Ultimately, the Court held that the Contractor had succeeded in the majority of its claims (particularly in respect of delays caused or largely contributed to by the Principal’s own conduct), and therefore, the Principal’s contractual entitlements were significantly set-off in favour of the Contractor.

Key Takeaways

Superintendent Independence Matters

The Court strongly criticised conduct that interfered with the superintendent's independence, reinforcing the principle that superintendents must be permitted to perform their functions free from influence by either contracting party.

Rees J observed that private communications between a superintendent and one contracting party undermined the superintendent's independent role. The Court also criticised the Principal’s decision to replace a superintendent to prevent a determination that they did not want.

The Court reemphasised that contractual obligations requiring the Principal to ensure that the superintendent acts honestly, fairly and reasonably are enforceable against the Principal. On the question of negligence, the Court found no duty of care owed and that the Contractor was not sufficiently "vulnerable" because the parties were sophisticated entities that had negotiated a comprehensive contract allocating their respective rights, risks and responsibilities.

EOT Entitlements

The Contractor was awarded a total extension of 142 days, including:

• 92 days (EOT 1) for delays caused by the Principal's failure to remove underground services before commencement of the works.
• 27.5 days (EOT 4) for COVID-19 border restrictions that affected labour mobilisation and constituted a force majeure event.
• 16 days (EOT 11) resulting from the Principal's failure to arrange the electrical isolations necessary to ensure the health and safety of the persons carrying out the work.
• 6.5 days (EOT 12) caused by the Principal's failure to make the electricity network available for commissioning.

The judgment demonstrates the Court's willingness to revisit superintendent determinations when it is challenged in litigation, and to also utilise evidence and material that may not have been before the superintendent at the time of determination.

Delay Costs Recoverable Where Delay Is a Compensation Event

The Contractor successfully recovered delay costs exceeding $1 million, including $541,247.59 for EOT 1; $379,445.76 for EOT 11; and $140,128.00 for EOT 12.

The Court confirmed that where a delay constitutes a Compensation Event (an event brought about by someone other than the contractor, being, generally, the principal), contractors may recover delay costs, reduced to the extent that the contractor caused or contributed to the delay.

Administrative Error Held to be Non-Fatal Due to the Prevention Principle

Although the Principal sought to rely on the Contractor’s administrative error of not copying the superintendent on its EOT claim as a bar, the Court held that this administrative error was not fatal.

Applying the prevention principle, Rees J found that the Principal could not insist upon strict compliance with the EOT notice requirements where its own conduct had contributed to the delay and it had itself failed to comply with contractual obligations, including failing to provide site access as contemplated by the contract, failing to remove underground services before works commenced, and failing to administer the EOT process within the contractual timeframes.

The decision is a reminder that a party may lose the ability to rely on technical contractual requirements where its own conduct is inconsistent with insisting upon strict compliance.

Why the Decision Matters

For contractors and principals alike, this decision reinforces the importance of the superintendent's independence in administering the contract between the parties and ensuring that each party’s contractual functions are exercised in accordance with the contract.

Parties to building contracts should also be wary that all aspects of their conduct are open to judicial scrutiny, and they may be prevented from relying on strict performance of a contract by the other party, where their own conduct contributed to any alleged breach by the other party.