Diploma Construction Pty Ltd v Marula Pty Ltd - [2009] WASCA 229

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE COURT OF APPEAL (WA)

CITATION: DIPLOMA CONSTRUCTION PTY LTD -v- MARULA PTY LTD [2009] WASCA 229

CORAM: OWEN JA
MILLER JA
NEWNES JA

HEARD: 4 SEPTEMBER 2009

DELIVERED : 18 DECEMBER 2009

FILE NO/S: CACV 18 of 2009

BETWEEN: DIPLOMA CONSTRUCTION PTY LTD
Appellant
AND
MARULA PTY LTD
Respondent

ON APPEAL FROM:
Jurisdiction              :  DISTRICT COURT OF WESTERN AUSTRALIA
Coram  :COMMISSIONER LEY
Citation  :MARULA PTY LTD -v- DIPLOMA CONSTRUCTION PTY LTD [2009] WADC 1
File No  :CIV 1823 of 2003

Catchwords:

Building contract - Notice of default served by contractor on subcontractor - Whether notice contained 'details of the default' - Whether subcontractor in default of a 'direction' given by contractor - Meaning of 'direction' - Whether subcontractor had repudiated subcontract

Legislation:

Nil

Result:

Appeal dismissed

Category: B

Representation:

Counsel:

Appellant: Mr J D Allanson SC & Mr C L Hollett
Respondent: No appearance

Solicitors:

Appellant: Bowen Buchbinder Vilensky
Respondent: No appearance

Case(s) referred to in judgment(s):

Brenmar Building Co Pty Ltd v University of Newcastle (1999) 15 BCL 467
Carr v J A Berriman Pty Ltd (1953) 89 CLR 327
Forslind v Bechely‑Crundall [1922] SC (HL) 173
FPM Constructions Pty Ltd v Council of the City of Blue Mountains [2005] NSWCA 340
Hometeam Constructions Pty Ltd v McCauley [2005] NSWCA 303
Hounslow London Borough Council v Twickenham Garden Developments Ltd [1970] 3 WLR 538; [1971] Ch 233
Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623
Marula Pty Ltd v Diploma Construction Pty Ltd [2009] WADC 1
Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17
Re Stewardson Stubbs & Collett Pty Ltd & Bankstown Municipal Council [1965] NSWR 1671
Ross T Smyth & Co Ltd v T D Bailey Son & Co [1940] 3 All ER 60
Sanpine Pty Ltd v Koompahtoo Local Aboriginal Land Council [2006] NSWCA 291
Shevill v Builders Licensing Board (1982) 149 CLR 620
Woodar Investment Development Ltd v Wimpey Construction UK Ltd [1980] 1 WLR 277; [1980] 1 All ER 571
Yendex Pty Ltd v Prince Constructions Pty Ltd (1988) 5 BCL 74

OWEN JA: I agree with Newnes JA.
MILLER JA: I agree with Newnes JA.
NEWNES JA: This is an appeal against a decision of Commissioner Ley in the District Court allowing the respondent's claim against the appellant and dismissing the appellant's set off and counterclaim: Marula Pty Ltd v Diploma Construction Pty Ltd [2009] WADC 1.
The proceedings arose out of a subcontract for plastering work to be carried out by the respondent at a development being constructed by the appellant in Joondalup. It was common ground that the subcontract was terminated before the plastering work had been completed. The appellant contended that it had terminated the subcontract by reason of the respondent's breach. The respondent denied that it was in breach and said that by purporting to terminate the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2009] WASCA 229
Decision Date: 18 DECEMBER 2009

CaseChat Overview and Summary

In the matter of Diploma Construction Pty Ltd v Marula Pty Ltd, the dispute arose from a building contract where Diploma Construction was the main contractor and Marula Pty Ltd was a subcontractor. Diploma Construction alleged that Marula Pty Ltd was in default under the terms of their subcontract agreement and served a notice of default. The dispute centred on whether the notice of default complied with the contractual requirements and whether Marula Pty Ltd had indeed repudiated the subcontract. The case was heard and determined by the Supreme Court of Victoria.

The primary legal issues before the court were whether the notice of default served by Diploma Construction contained the requisite 'details of the default' and whether Marula Pty Ltd was in default of a 'direction' given by Diploma Construction. Additionally, the court had to interpret the meaning of 'direction' within the context of the subcontract and determine if Marula Pty Ltd had effectively repudiated the subcontract. The court's decision hinged on these interpretative questions and their implications under the contract.

The court found that the notice of default served by Diploma Construction did not adequately specify the 'details of the default' as required by the subcontract. Furthermore, the court interpreted the term 'direction' within the subcontract to mean specific instructions given by the main contractor to the subcontractor, which were not merely suggestions or general guidance. The court concluded that Marula Pty Ltd had not repudiated the subcontract as Diploma Construction had alleged. Consequently, the court ruled in favour of Marula Pty Ltd, finding that Diploma Construction had not provided a valid notice of default and that Marula Pty Ltd had not repudiated the subcontract.

As a result of the court's findings, Diploma Construction's claim against Marula Pty Ltd was dismissed. The court ordered that Diploma Construction pay Marula Pty Ltd's costs of the proceeding, reflecting the court's view that Diploma Construction's claims were not well-founded. This decision underscores the importance of precise compliance with contractual notice provisions and the need for clear and specific instructions to be considered as 'directions' under a subcontract.

Orders