Preston Erection Pty Ltd v Sandman Holdings Pty Ltd (formerly known as SGB Brooker Pty Ltd)

Preston Erection Pty Ltd (the appellant) appealed to the New South Wales Court of Appeal against a decision of the Supreme Court of New South Wales. The dispute concerned the interpretation of a building contract and the appellant's entitlement to payment for work performed.

The primary legal issue before the Court of Appeal was whether the appellant had validly terminated the contract and was therefore entitled to recover the value of work done and materials supplied up to the date of termination, or whether the respondent was entitled to claim damages for breach of contract. This involved determining whether the respondent had committed a repudiatory breach of the contract by failing to make progress payments as required.

The Court of Appeal, in considering the terms of the building contract, found that the respondent's failure to make progress payments constituted a fundamental breach of its obligations, thereby entitling the appellant to treat the contract as repudiated. The court applied the principle that a persistent failure to make payments due under a contract can amount to a repudiation, giving the innocent party the right to terminate. The court also considered the appellant's conduct in response to the breach, concluding that its actions were consistent with an acceptance of the repudiation.

Consequently, the Court of Appeal allowed the appeal, setting aside the Supreme Court's judgment and ordering that the appellant was entitled to recover the value of the work done and materials supplied. The matter was remitted to the Supreme Court for assessment of the amount due.