Adelaide Corporation v Jennings Industries Ltd

The Adelaide Corporation (the proprietor) and Jennings Industries Ltd (the builder) were parties to a building contract. The dispute arose when a nominated sub-contractor, responsible for a significant portion of the work, failed and became insolvent. The architect required the builder to complete the sub-contracted work, which the builder refused to do. The proprietor then completed the work itself and sought to recover the costs from the builder. The matter proceeded to the Full Court of the Supreme Court of South Australia, and subsequently to the High Court of Australia.

The High Court was required to determine whether an implied term existed within the building contract obliging the proprietor to nominate a new sub-contractor upon the insolvency of the original nominated sub-contractor. Furthermore, the Court had to consider whether the builder was in default by refusing to complete the work that had been sub-contracted, and consequently, whether the costs incurred by the proprietor in completing the work should be borne by the builder or the proprietor.

The High Court held that there was no implied term requiring the proprietor to nominate a new sub-contractor. The Court reasoned that the contract placed the responsibility for the sub-contractor's performance on the builder, and the builder's refusal to complete the work constituted a default under the contract. Consequently, the proprietor was entitled to complete the work and recover the costs from the builder. The appeal was allowed with costs, the order of the Full Court of the Supreme Court of South Australia was set aside, and in lieu thereof, the appeal to that Court was dismissed with costs.