Ultra Modern Developments Pty Ltd v Cowan

In Ultra Modern Developments Pty Ltd v Cowan, the Full Court of the Federal Court of Australia was asked to determine the construction of a building contract between Ultra Modern Developments Pty Ltd, a builder, and Cowan, the owner of a property. The dispute centred on whether there was a binding contract between the parties and, if so, the extent of the builder's obligations under that contract. The primary judge found in favour of Cowan, ruling that there was a binding contract and that Ultra Modern Developments Pty Ltd had breached it by failing to complete the works to the agreed standard. Ultra Modern Developments Pty Ltd appealed the decision, arguing that the primary judge had erred in finding that a binding contract existed and in assessing the quantum of damages.

The key legal issue before the Full Court was the proper construction of the contract between the parties. Specifically, the Court had to determine whether the parties had reached an agreement on all essential terms, and if so, what those terms were. The Court also had to consider the extent of the builder's obligations under the contract, including whether the builder was required to complete the works to a specified standard. The Court noted that the primary judge had correctly found that a binding contract existed, but disagreed with the primary judge's assessment of the quantum of damages. The Court found that the primary judge had not properly considered the evidence of expert witnesses in assessing the cost of completing the works to the required standard.

The Full Court held that the primary judge had erred in assessing the quantum of damages, and that the correct approach was to consider the evidence of expert witnesses and to make a finding on the cost of completing the works to the required standard. The Court found that the primary judge had not properly considered the evidence of the expert witnesses, and had instead relied on his own estimation of the cost of completing the works. The Court held that the primary judge's approach was incorrect, and that the cost of completing the works should be assessed on the evidence of the expert witnesses. The Full Court remitted the matter to the primary judge for a re-assessment of the damages.

The Full Court allowed the appeal in part, setting aside the primary judge's assessment of the quantum of damages and remitting the matter to the primary judge for a re-assessment of the damages on the evidence of the expert witnesses. The Full Court upheld the primary judge's finding that a binding contract existed, and that Ultra Modern Developments Pty Ltd had breached the contract by failing to complete the works to the agreed standard. The Full Court did not make any orders as to costs.