Construction Engineering (Aust) Pty Ltd v Hexyl Pty Ltd

Construction Engineering (Aust) Pty Ltd (the appellant) and Hexyl Pty Ltd (the respondent) were parties to a building contract. The dispute concerned the appellant's entitlement to an extension of time for the completion of the works. The High Court of Australia was required to determine whether the respondent had validly exercised its right to terminate the contract.

The central legal issue before the High Court was whether the respondent's purported termination of the contract was lawful. This involved considering whether the appellant had committed a breach of contract that entitled the respondent to terminate, and if so, whether the respondent had followed the correct contractual procedures for termination. The court also had to consider the appellant's claim for an extension of time and its implications for the respondent's right to terminate.

The High Court held that the respondent had not validly terminated the contract. The court reasoned that the respondent's notice of termination was premature and therefore ineffective. The contract stipulated that the respondent could only terminate if the appellant failed to proceed with the works with due diligence after receiving a notice requiring it to do so. The court found that the appellant had not been given a proper opportunity to remedy any alleged lack of diligence, as the notice was issued before the expiry of a reasonable time for the appellant to demonstrate progress. Consequently, the termination was unlawful. The court ordered that the appeal be allowed and the judgment of the Supreme Court of Victoria be set aside.