Veesaunt Property Syndicate 1 Pty Ltd v Alliance Building and Construction Pty Ltd

Veesaunt Property Syndicate 1 Pty Ltd (the applicant) brought proceedings against Alliance Building and Construction Pty Ltd (the respondent) concerning the interpretation and effect of certain clauses in a contract for the construction of residential townhouses. The contract stipulated that the rights and obligations of the parties were contingent upon the satisfaction or waiver of certain conditions precedent by a specified date. The applicant argued that it had waived the requirement for satisfaction of any outstanding conditions precedent either through a notice given by the superintendent or at general law. The respondent contended that no such waiver occurred. The court was required to determine whether the superintendent’s notice effectively waived any outstanding conditions precedent under the contract or at general law. Additionally, the applicant contended that the superintendent gave the notice as its agent and at its direction, raising the question of whether the notice given by the superintendent constituted notice by the principal. The court also had to decide whether the failure to satisfy or waive the conditions precedent by the nominated date resulted in the automatic termination of the contract or made the contract voidable. Furthermore, the applicant argued that even if the contract provided for automatic termination, the respondent was in default and could not take advantage of its default. The court had to determine whether the contract could only be terminated at the applicant’s election and whether the respondent was in default such that it was prevented from relying on the non-satisfaction of the conditions precedent.

The court found that the notice given by the superintendent did not constitute a clear, unequivocal and deliberate waiver of the conditions in clause 6.2(a)(ii) and (iv) and did not waive those conditions in accordance with clause 6.1(b) of the contract. The court also held that only the applicant could waive the conditions in clause 6.2 of the contract, which were largely for its benefit, but any waiver had to be in accordance with clause 6.1(b) and not under general law. The court noted that clause 6.1(c) demonstrated a clear intention of the parties that if the conditions in clause 6.2 were not satisfied or waived by the applicant, the contract would terminate on the date nominated for such satisfaction or waiver to occur. However, the court applied the prevention principle, which states that a party who is relevantly in default cannot take advantage of that default. In this case, it was the respondent who had failed to comply with the conditions which it was obliged to meet under clause 6.2 and the relevant terms of the contract. Therefore, the respondent could not take advantage of its default and rely on conditions it had not satisfied to contend that absent waiver the contract had terminated under clause 6.1(c). The court concluded that the contract remained on foot and a declaration should be made in the applicant’s favour.

The court ordered that the contract between the applicant and the respondent remains on foot and is binding on the parties. The court also ordered that within seven days, the parties are to file and serve submissions of no more than two pages as to costs, which the court will determine on the papers unless otherwise ordered.