Growthbuilt Pty Ltd v Modern Touch Marble and Granite Pty Ltd

Growthbuilt Pty Ltd sued Modern Touch Marble and Granite Pty Ltd over a subcontract for marble works in a residential building. The dispute centred on whether the contractor was required to act in good faith when exercising discretion to extend time for completion. Additionally, the case questioned whether the liquidated damages clause for delay was valid and enforceable. The matter was heard in the Supreme Court of Queensland.

The primary legal issue was whether the contractor was bound by the principle of good faith when deciding whether to extend the time for completion under the subcontract. The subcontract explicitly stated that the contractor had absolute discretion to extend time with no obligation to consider whether it should do so. The court had to determine if these provisions negated any duty of good faith. A secondary issue was whether the stipulated delay damages were a valid liquidated damages clause or amounted to a penalty.

The court held that the express terms of the subcontract precluded any implication of a duty to act in good faith. The language used, which allowed the contractor absolute discretion without any obligation to consider extending time, effectively excluded good faith as a requirement. Additionally, the court found that the delay damages clause was not penal in character. The stipulated amount was a genuine pre-estimate of loss and therefore enforceable.

The court ordered that Modern Touch Marble and Granite Pty Ltd was not required to act in good faith when exercising its discretion to extend time. The delay damages clause was valid and enforceable as stipulated.