WALTON V ILLAWARRA [2011] NSWSC 1188
FACTS
Illawarra engaged its architect to be the Superintendent. She awarded certain extensions of
time and valued variations that Walton had to undertake. Disputes arose as to the EOTs
granted and the values given to the variations. The disputes were referred to a referee who
determined that Walton was entitled to significantly more EOTs than had been granted and
higher values for the variations. Walton then sued Illawarra for a breach of the contractual
term that required Illawarra to ensure that the Superintendent acted honestly and fairly. The
contract was an AS 2124 - 1992.
ISSUE
In the circumstances where it had been determined that Walton was entitled to more EOTs
and values for variations than the Superintendent had allowed, was Illawarra in breach of the
term of its contract with Walton that required it to ensure that the Superintendent acted
honestly, fairly and reasonably.
FINDING
The Court held that the obligations on the Superintendent were to act honestly and fairly and
determine reasonable EOTs to be granted where Walton had shown a right to them and to
determine reasonable values for the variations. She could act honestly and fairly, but if she
did not arrive a reasonable decisions in respect of EOTs and the value for variations, then
Walton had not received what it was entitled to receive under the contract and Illawarra was
in breach. Damages were the difference in values for the variations, delay costs etc arising
from the extra EOTs to which Walton was entitled.
QUOTE
McDougall J at [42]:
…the contract requires, in relation to extensions of time, both that the Superintendent's manner
of exercise of her functions must be honest and fair and that the product of her deliberations
must be reasonable. It follows that, even if the Superintendent had acted honestly and
reasonably, Walton could not be bound by her determination if that determination did not meet
the description "a reasonable extension of time". That is because, by definition, it would not
have got what it was entitled to receive.
[at 75]
It must follow that, if in any respect the Superintendent failed to arrive at a reasonable measure
or value of work, quantity or time, Illawarra has breached that obligation by not ensuring that
she do so.
IMPACT
The case shows that the obligations under cl 23 of the AS 2124 contract are not just window
dressing. If a Court determines that a contractor is entitled to more than the Superintendent
has allowed, damages will flow from a breach of cl 23. The case also highlights the nature of
the provisions which Superintendents should insist that a Principal include to protect the
Superintendent from criticism.

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