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Eddy Lau Constructions Pty Ltd v Transdevelopment Enterprise Pty Ltd

Eddy Lau Constructions Pty Ltd v Transdevelopment Enterprise Pty Ltd

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Case Copied 7 April 2004 70 min read

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CITATION: Eddy Lau Constructions Pty Ltd v Transdevelopment Enterprise Pty Ltd [2004] NSWSC 273

HEARING DATE(S): 08/03/04, 09/03/04

JUDGMENT DATE:
7 April 2004

JURISDICTION:
Equity Division
Technology and Construction List

JUDGMENT OF: Barrett J

DECISION: Short minutes to be brought in

CATCHWORDS: CONTRACT - building, engineering and related contracts - residential premises - whether contract breached by builder's failure to effect insurance under Home Building Act - whether "requirement" to obtain such insurance - whether proprietor validly terminated builder's employment - whether purported termination by proprietor was repudiation as against builder - builder's statutory claim to quantum meruit - whether quantum meruit recovery "just and equitable" - relevance of terminated contract to quantum meruit claim - relevance of actual costs - relevance of defects and cost to rectify - MORTGAGES - mortgages and charges generally - bank guarantees lodged by builder as security for performance of building contract - right to recover guarantees after contract terminated

LEGISLATION CITED: Home Building Act 1989
Home Building Legislation Amendment Act 2001

CASES CITED: Cominos v Cominos (1972) 127 CLR 588
Cope v Rowlands (1836) 2 M&W 149
Ebrahimi v Westbourne Galleries Ltd [1973] AC 360
Eddy Lau Constructions Pty Ltd v Transdevelopment Enterprise Pty Ltd [2001] NSWSC 1136
Loch v John Blackwood Limited [1924] AC 783
Pavey & Matthews Ltd v Paul (1987) 162 CLR 221
Premier Pacific Pharmaceutical Industries Ltd v Australian Stock Exchange Ltd (1995) 17 ACSR 426
Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17
Ray Somerville Surveys Pty Ltd v Logan City Council [1994] 1 Qd R 440
Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234
Riverside Motors Pty Ltd v Abrahams [1945] VLR 45
Ruxley Electronics and Construction Ltd v Forsyth [1996] AC 344
Stephenson v State Bank of New South Wales (1996) 39 NSWLR 101
Sullman v Sullman [2002] NSWSC 169
Super Pty Ltd v SJP Formwork (Aust) Pty Ltd (1992) 29 NSWLR 549
Re Switzerland Insurance Australia Ltd and Capricornia Electricity Board (unreported, QSC, Demack J, 7 February 1997)
Thomas v MacKay Investments Pty Ltd (1996) 22 ACSR 294
Walker v Jones (1866) LR 1 PC 50
Walter Construction Group Ltd v Walker Corporation Ltd (2001) 47 ATR 48

PARTIES :

Eddy Lau Constructions Pty Limited - Plaintiff
Transdevelopment Enterprise Pty Limited - Defendant
Transdevelopment Enterprise Pty Ltd - First Defendant

FILE NUMBER(S): SC 55035/01; 55009/02

COUNSEL: Mr G J McVay - Plaintiff
Mr J B Simpkins SC - Defendant

SOLICITORS: James A Moustacas & Co - Plaintiff
Henry Davis York - Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
TECHNOLOGY AND
CONSTRUCTION LIST

BARRETT J

WEDNESDAY, 7 APRIL 2004

55035/01 - EDDY LAU CONSTRUCTIONS PTY LTD v TRANSDEVELOPMENT ENTERPRISE PTY LTD & ORS
55009/02 - EDDY LAU CONSTRUCTIONS PTY LTD v TRANSDEVELOPMENT ENTERPRISES PTY LTD

JUDGMENT

The proceedings

1 The plaintiff, Eddy Lau Constructions Pty Ltd, is a builder. Transdevelopment Enterprise Pty Ltd (the first defendant in 55035/01 and the sole…

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: [2004] NSWSC 273
Decision Date: 7 April 2004

CaseChat Overview and Summary

Eddy Lau Constructions Pty Ltd (the builder) took action against Transdevelopment Enterprise Pty Ltd (the proprietor) for termination of their residential building contract and to recover costs under a statutory claim for quantum meruit. The builder alleged that the proprietor breached the contract by failing to obtain insurance under the Home Building Act, and that the proprietor's termination of the contract was a repudiation. The proprietor claimed that the contract was validly terminated due to the builder's failure to obtain insurance and sought the return of bank guarantees provided as security for the contract. The Federal Circuit and Family Court of Australia (the Court) was required to determine whether the builder's failure to obtain insurance constituted a breach of the contract, whether the proprietor's termination was valid, and whether the builder was entitled to recover bank guarantees and claim quantum meruit.

The Court held that the contract did not require the builder to obtain insurance, as the contract's language did not mandate such insurance and the Home Building Act only required the proprietor to obtain it. Therefore, the builder's failure to obtain insurance did not constitute a breach. The Court also found that the proprietor's termination of the contract was not a valid termination but rather a repudiation by the proprietor. The builder was entitled to recover bank guarantees provided as security for the contract's performance, as the guarantees were not affected by the contract's termination. However, the Court found that the quantum meruit claim was not "just and equitable" in the circumstances, as the contract's termination and the builder's failure to obtain insurance played a significant role in the termination. The Court considered the actual costs incurred by the builder, the defects and the cost to rectify them, and the overall fairness of the quantum meruit claim in relation to the terminated contract.

The Court ordered that the proprietor return the bank guarantees to the builder and dismissed the builder's quantum meruit claim. The builder was not entitled to recover any additional costs beyond those already received under the guarantees. The Court's decision highlighted the importance of clear contractual language and the consequences of a party's failure to fulfil statutory obligations, as well as the need for a fair assessment of quantum meruit claims in the context of terminated contracts.

Orders