Contact: David Rodighiero, Partner and Michael Elliott, Associate
The recent Supreme Court of Queensland decision of Grocon Constructors (Qld) Pty Ltd v Juniper Developer No. 2 Pty Ltd [2015] QSC 102 provides new authority on whether liquidated damages clauses constitute unenforceable penalties in construction contracts.
The decision is welcomed by those in the construction industry, who have been looking for industry specific guidance on liquidated damages clauses since the High Court considered penalty clauses in credit agreements in Andrews v Australia & New Zealand Banking Group Ltd (2012) 247 CLR 205. In Andrews the High Court found that late payment fees on particular credit accounts were a penalty, which arguably broadened the application of the penalty doctrine.
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