Adapt Constructions Pty Ltd v Whittaker and Luff

In this case, Adapt Constructions Pty Ltd sought damages from Whittaker and Luff, the purchasers of a property, for the cost of rectifying defective building work. The purchasers had contracted with Adapt to construct a house, but the work was substandard, leading to significant costs to correct the defects. The purchasers later sold the property, and the new owners sought to recover the rectification costs from the original purchasers. The primary issue for the court was whether the cost of demolition and rebuilding was a reasonable measure of damages and if the rate of liquidated damages, set at zero, was intended to exclude claims for unliquidated damages for delay. Additionally, the court considered whether procedural fairness and natural justice were observed, specifically the credibility of witnesses.

The court examined the nature of the contractual defects and the reasonable costs to rectify them. It considered whether the cost of demolition and rebuilding was a proportionate and reasonable measure of damages. The court also assessed the effect of the zero rate of liquidated damages on the ability to claim unliquidated damages for delay. It scrutinised the fairness of the process and the credibility of the evidence provided by both parties. The court found that the cost of demolition and rebuilding was a reasonable measure of damages. The zero rate of liquidated damages was not intended to exclude claims for unliquidated damages for delay. The court determined that the process was fair, and the credibility of the witnesses was adequately assessed.

The court concluded that the damages awarded were reasonable, and the rate of liquidated damages did not preclude a claim for unliquidated damages for delay. It found that procedural fairness and natural justice were observed. The purchasers were not liable for the cost of rectification. The court denied leave to appeal, upholding the decision that the purchasers were not responsible for the rectification costs.