Eminent Forms Pty Ltd v Formosa

In the case of Eminent Forms Pty Ltd v Formosa, the appellant sought to challenge an interim arbitration award made in favour of the respondents. The dispute originated from a contract between the parties for the appellant to undertake alterations and additions to the respondents’ home. The appellant sought payment of the first progress payment, but the respondents denied the obligation to make such payment due to incomplete Stage 1 works. The appellant subsequently terminated the contract, and the respondents accepted the termination. The arbitrator found that the appellant had wrongfully repudiated the contract and awarded $22,164.00 to the respondents without accounting for the work done by the appellant.

The appeal centred on several legal issues. Firstly, whether the arbitrator erred in determining that certain work not completed by the appellant constituted part of the Stage 1 work. Secondly, whether the arbitrator erred in concluding that the respondents were not in breach of their contractual obligations not to take possession of the building area and not to disrupt the work. Thirdly, whether the appellant had substantially performed the Stage 1 work, entitling it to recover the first progress payment. Fourthly, if the appellant was not entitled to relief under the contract, whether it could claim restitutionary relief on a quantum meruit basis. Lastly, whether the appellant should be granted leave to challenge the award regarding compensation awarded to the respondents for the front verandah.

The court examined the doctrine of substantial performance, determining that if the appellant had substantially performed Stage 1, it would be entitled to the first progress payment. The court also considered the principles of quantum meruit in relation to work performed on land, evaluating whether the appellant could claim restitutionary relief if not entitled to relief on the contract. Ultimately, the court found that the arbitrator had erred in several respects, leading to the conclusion that the appeal should be allowed, and the award set aside. The court ordered that the appellant could claim the first progress payment minus the cost of specific work, while the respondents could recover costs for defective works, sundry items, and compensation for inconvenience and stress. The balance in favour of the appellant was set at $12,398.50, with further hearings to determine appropriate orders, interest, and costs.