Westpoint Management Ltd v Chocolate Factory Apartments Ltd

Westpoint Management Ltd (the appellant) and Chocolate Factory Apartments Ltd (the respondent) were parties to a building contract. The dispute concerned defective or incomplete work under that contract, and the appellant's entitlement to the costs of rectification. The matter came before the Court of Appeal of New South Wales.

The primary legal issue before the Court of Appeal was whether the appellant was entitled to the costs of rectification for various defects, and in particular, whether rectification was a reasonable course to adopt. This required consideration of the principles established in *Bellgrove v Eldridge*, including the relevance of the intention to carry out rectification work or whether such work would actually be carried out. The court also considered the approach to be taken by a referee in considering and adopting reports.

The Court of Appeal dismissed the appeal in proceedings 40715/05. However, in proceedings 40789/05, the appeal was allowed in part. The court set aside certain orders made on 2 September 2005, specifically those adopting the referee's conclusions that damages should not be awarded for a range of defects including those relating to the car park shutter, internal doors, security system and access control, mechanical deficiencies, falls to showers, materials pipes, and defects identified by Tyrrells and purchasers. The judgment against the second defendant was also set aside. The proceedings were remitted to McDougall J for further consideration of the adoption of the interim reports, and the second respondent was ordered to pay eighty per cent of the appellant's costs of the appeal.