Forlyle Pty Ltd v Tiver & Tiver

Forlyle Pty Ltd v Tiver & Tiver involved a dispute regarding the enforceability of a settlement agreement between the plaintiff, Forlyle Pty Ltd, and the defendants, Mr and Mrs Tiver. The defendants argued that the settlement agreement was illegal and void under the Building and Construction Industry Security of Payment Act 2002 (SA), while the plaintiff contended that the agreement was valid and enforceable. The case was heard in the Supreme Court of South Australia.

The primary legal issue before the court was whether the settlement agreement, which included a release of all claims known and unknown, was contrary to the Act and therefore illegal and void. The defendants argued that the agreement was wholly invalid because it purported to release claims unknown to them, which they claimed was illegal under the Act. The plaintiff, on the other hand, argued that the settlement agreement was a valid compromise of all claims and that the offending parts could be severed to make the agreement enforceable.

The court found that while the settlement agreement contained terms that were void under the Act, this did not render the entire agreement invalid. Drawing an analogy to covenants in unreasonable restraint of trade, the court determined that the void terms did not affect the enforceability of the valid parts of the agreement. The court concluded that the settlement agreement was not wholly invalid and that the offending parts could be severed, allowing the remaining parts of the agreement to stand. The court exercised its discretion to grant a declaration that the settlement agreement did not operate to exclude statutory warranties effected by s32 of the Act with respect to potential breaches of those warranties by Forlyle Pty Ltd that were not known by Mr and Mrs Tiver on or after 4 April 2005.

The court made orders for judgment in favour of the plaintiff in the sum of $42,500, directed the payment of the sum held in the Suitor’s Fund to the plaintiff, dismissed the plaintiff’s claim for damages, and proposed to declare the settlement agreement in specified terms. The parties were to be heard on the issues of time to pay, the final terms of the proposed declaration, interest, and costs, and were at liberty to apply on short notice.