In Rimfire Energy Pty Ltd v BSF Co Pty Ltd (No 2) [2025] FCA 384, Justice O’Callaghan of the Federal Court of Australia considered the validity of extension of time (EOT) claims and in turn, liquidated damages entitlements, under two Power Purchase Agreements (PPAs) relating to energy assets in Darwin.

Rimfire Energy Pty Ltd entered into separate PPAs with BSF Co Pty Ltd and HCPS Co Pty Ltd (respectively) (together, the Owners), pursuant to which BSF and HCPS agreed to develop and construct a solar farm and gas fired power station and Rimfire agreed to purchase all electricity generated by each asset.

During the course of construction, Rimfire issued the Owners invoices for liquidated damages as each Owner had failed to achieve the Commercial Operation Date by the Target Commercial Operation Date under their respective PPA.

The Owners disputed the liquidated damages invoices on the basis that they had issued EOT claims which extended the Target Commercial Operation Date.  The EOT regimes in each PPA are substantially identical and include standard notice requirements, including:

• notifying the Buyer of the event or circumstance causing the delay (the ‘Extension Event’);
• providing detailed particulars of the delay, including the extent to which the delay was not caused by the contractor or Owner; and
• stating the period for which an extension is claimed.

After considering each of the claims and EOT regimes in the PPAs, his Honour concluded that the EOT notices failed to satisfy the preconditions for an EOT under each PPA.  Specifically (and without limitation) his Honour held that:

• The EOT notices did not contain detailed particulars of the extent to which the claimed delay was not caused by the contractor or the Owner.  The mere fact the EOT notices and associated project correspondence mentioned delays by a third party was not sufficient to satisfy the requirement to explain how or why those delays were not in turn caused by the contractor or the Owner.
• Contrary to the express requirements of the PPA, the Owners failed to submit the EOT notices within 10 Business Days after the full effects of the delay event had been determined by the Owner.
• The EOT notices did not identify the relevant ‘Extension Event’ the Owners relied upon as the basis for the EOT claims. In fact, the Owners did not identify the relevant Extension Event until closing submissions during the hearing.

In light of the above, the Owners were required to pay the Buyer its liquidated damages entitlements, plus interest. This decision acts as a timely reminder of the importance of strict compliance with contractual notice provisions.

The decision can be found here.