Liquidated Damages Clause In Roadworks Contract Found To Be Enforceable

On 21 December 2005 the Full Court of the Supreme Court of Tasmania (the Full Court) handed down its judgement in the State of Tasmania v Leighton Contractors Pty Ltd¹.

This case related to a contract dated 24 June 1999 between Leighton Contractors Pty Ltd (Leighton) and the State of Tasmania’s Department of Infrastructure, Energy and Resources (the State) for the design, construction and maintenance of a 13.65 km section of new highway which would in part bypass the town of Hagley in northern Tasmania (the Project). Complicated disputes arose between the parties in relation to delays and costs.

One of the arguments raised by Leighton was that the State wrongfully deducted approximately $1.832 million in liquidated damages under the Contract.