Legal Dispute over Construction of New Adelaide Hospital

The Government of South Australia has taken legal action in its ongoing property dispute with the builders of the New Royal Adelaide Hospital, reports the Australian.

Completion of the project has apparently now been delayed until 2017 and is around $600 million over budget, bringing the total estimated cost of the hospital to around $2.34 billion.

The builders, SA Health Partnership, were due to hand over the building to the Government earlier this month. When this deadline passed, the Government took legal action to impose a default notice, which means the builders will be liable to pay the Government’s $1m-a-day service fee until such time as the property is ready. Further penalties may be imposed if a new completion date is not given.

According to Health Minister Jack Snelling, issuing the notice to SA Health Partnership was the most serious sanction currently available to the Government.

“The Major Default Notice has been issued to protect the state’s interests and also holds SAHP to account for the impact that this delay will have,” he explained. “It starts a legal process that requires SAHP to take immediate steps to provide a plan that explains how it proposes to cure or redress this Major Default.”

“Under the terms of the contract, the State Government will not pay one cent for the hospital until Commercial Acceptance has been achieved,” he added. “The major default notice is likely to result in very significant financial repercussions for the consortium and I expect it to provide a big motivation to them to resolve any outstanding issues as quickly as possible.”

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Sources:

http://www.theaustralian.com.au/national-affairs/state-politics/royal-adelaide-hospital-builder-slapped-with-1maday-for-delay/news-story/2b3dc47fffbbbde11a2ded9067a04689

http://www.premier.sa.gov.au/index.php/jack-snelling-news-releases/358-major-default-notice-issued-on-new-rah-build