05 February 2026
7 min read
#Construction, Infrastructure & Projects
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A recent decision of the UK Privy Council reminds Australian construction participants that strict compliance with contractual variation procedures remains critical, even where additional work has plainly been performed and even where the superintendent appears to be on board.
In Uniform Building Contractors Ltd v The Water and Sewerage Authority of Trinidad and Tobago [2026] UKPC 2, the Privy Council overturned a substantial award in favour of a contractor, holding that none of the claimed items were variations and that, in any event, the contractor had failed to comply with mandatory contractual procedures for claiming additional payment.
Although the decision arises out of Trinidad and Tobago, it will feel very familiar to Australian contractors, principals and superintendents, particularly those working under FIDIC-style or Australian Standard contracts.
Uniform Building Contractors Ltd (UBC) was engaged by the Water and Sewerage Authority of Trinidad and Tobago (WASA) to design, supply and install approximately 28.4km of pipeline under a lump sum contract based on the FIDIC Yellow Book (1999).
The contract appointed an engineer, performing a role akin to an Australian superintendent.
Following disputes and eventual termination, UBC claimed payment for the alleged variations, including:
Although the trial judge dismissed UBC’s claims, the Court of Appeal of Trinidad and Tobago later allowed the claims and awarded nearly TT$14 million (approximately AUD $3 million), largely on the basis that the engineer had treated the works as variations and that it would be ‘unfair’ for WASA to receive the benefit of the work without paying for it.
WASA appealed to the Judicial Committee of the Privy Council, who disagreed, reversing the Court of Appeal’s decision.
If the contract envisages the work, it is not a variation
The Court reviewed the specifications and bill of quantities and concluded that all four items claimed by UBC as variations were expressly contemplated and priced under the lump sum contract. The Court emphasised that this question must be answered by looking at the contract documents as a whole, rather than by how the work was later described or administered on site.
By way of example, one of UBC’s key claims was the cost of laying pipelines in the roadway rather than in the verge. UBC pointed to early design material showing the pipeline in the verge and argued that the later requirement to install it in the roadway represented a change to the original scope of work and therefore a variation.
The Privy Council rejected that argument. Under the contract, UBC was responsible for both the preliminary and final design. The specifications expressly contemplated cutting through asphalt, excavating beneath the roadway and reinstating the road surface. The bill of quantities also included separate priced items for excavation in asphalt and for road reinstatement. In those circumstances, installing the pipeline in the roadway did not involve a change to the contract scope – it was work UBC had already agreed to carry out for the lump sum price.
The same reasoning applied to the claimed costs of disposing of unsuitable material and importing suitable backfill. The contract required excavation “in whatever material might be found” and expressly required UBC to dispose of unsuitable material and import replacement fill where necessary. Because those risks were already allocated to UBC, the additional cost of encountering unsuitable material could not be recharacterised as a variation.
Practical takeaway: Parties should test any claimed variation against the contract as a whole. If the specifications, employer’s requirements or bill of quantities already envisage the work, the contractor bears the risk and cannot recover additional payment by recharacterising the work as a variation.
Superintendents and engineers cannot waive contractual requirements
A central error in the Court of Appeal’s reasoning was its assumption that the engineer’s conduct could waive compliance with contractual procedures.
The Privy Council made it clear that:
This is consistent with Australian authority emphasising that superintendents must act within the limits of their contractual powers. The position may be different where the person appointed as superintendent is expressly authorised to act as the principal’s agent for the relevant conduct. In that case, the superintendent’s actions may bind the principal, depending on the scope of the authority given.
Practical takeaway: Even well-intentioned conduct by a superintendent or engineer does not excuse non-compliance with contractual preconditions for payment.
Superintendent inaction and conditions precedent: Why contractors must still act
A key feature of the Privy Council’s decision was its treatment of UBC’s response to the engineer’s failure to comply with the contractual variation process, and how that failure interacted with the condition precedent to payment.
UBC argued that it could not progress its claims because the engineer failed to issue written variation directions and failed to make the determinations required under the contract. The Privy Council rejected that argument, holding that the engineer’s inaction did not relieve UBC of its own contractual obligations.
The contract contained a claim mechanism in clause 20.1, which required UBC to submit a formal claim within 28 days of becoming aware of the event giving rise to additional cost. That clause was found to be drafted as a true condition precedent to entitlement. Its purpose was to provide certainty and to ensure that disputes were surfaced and addressed promptly, rather than years later.
Crucially, the Court held that clause 20.1 was UBC’s safety valve where the superintendent or engineer failed to act. If the engineer did not issue a written instruction or make a determination, UBC was still required to protect its position by issuing a compliant claim within time. Failure to do so meant that no entitlement to payment ever arose.
The Privy Council also rejected the notion that termination changed this outcome. Termination does not remove accrued rights and obligations, nor can it revive claims that were already time-barred. Where the condition precedent was not satisfied before termination, the claim was lost permanently.
For Australian contractors, this underscores a critical point – condition precedent clauses apply even when the superintendent fails to perform their role properly. Informal understandings, ongoing discussions or reliance on future determinations will not excuse non-compliance with mandatory notice and claim regimes.
Practical takeaway: For principals and superintendents, the decision highlights the commercial effectiveness of condition precedent clauses and the importance of clear and disciplined administration. Where the contract prescribes a pathway for claims, the courts will expect parties to follow it strictly.
‘Unfairness’ does not trump the contract
The Court of Appeal had been persuaded that it was unfair for WASA to receive additional works without paying for them.
The Privy Council firmly rejected that approach, holding that:
Commercial hardship or hindsight fairness could not justify rewriting the bargain struck.
Practical takeaway: Courts will not rescue parties from bad bargains or procedural failures based on fairness alone.
The decision reinforces several points that regularly arise in Australian construction projects:
The Privy Council’s decision is a clear endorsement of contractual certainty in construction projects. It confirms that courts will enforce risk allocation, condition precedents and limits on superintendent authority, even where that produces a harsh result.
Although not binding in Australia, the decision is likely to be persuasive given the close alignment between the contractual mechanisms considered and those commonly used in Australian construction contracts.
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Disclaimer
The information in this article is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.
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