Al Builders Pty Ltd v Fatseas

Al Builders Pty Ltd brought an action against Fatseas, seeking payment for work completed under an alleged fixed price contract. The case was heard in the Supreme Court of Queensland. The primary dispute was whether the contract between the parties was a fixed price agreement or a costs plus arrangement, and if the former, whether the contract was enforceable despite not being in writing. The crux of the matter was whether the Domestic Building Contracts Act 2000 applied to the oral agreement, and if so, what implications this had for the enforceability of the contract and the availability of the court's discretion under section 55(4).

The court needed to determine whether the contract was a fixed price agreement or a costs plus contract, and if the former, whether it was enforceable despite not being in writing. It was also necessary to consider whether the Domestic Building Contracts Act 2000 applied to the oral agreement and the implications of this on the enforceability of the contract and the court's discretion under section 55(4). Additionally, the court had to address the issue of whether the parties had agreed on a costs plus contract, and if so, whether that agreement was enforceable. The court was also required to consider whether the applicant had failed to mitigate its losses and whether this impacted the quantum of the respondent's entitlement.

The court found that the parties had entered into a costs plus contract and that the written contract was a sham. The court held that the Domestic Building Contracts Act 2006 applied to the oral agreement, but this did not affect the enforceability of the costs plus contract. The court also found that the applicant had failed to mitigate its losses and, as a result, the quantum of the respondent's entitlement was reduced. The court exercised its discretion under section 55(4) of the Act and dismissed the applicant's claim. The court allowed the respondent's counterclaim and ordered the applicant to pay the respondent $205,624.20 by 4.00 pm on 31 July 2015. The court also directed that written submissions, if any, in respect of costs be filed by the respondent by 1 June 2015 and any reply, by the applicant, by 14 June 2015.