The facts of this case will not strain the imagination of anyone with experience of domestic building work. Angela and Peter Mann engaged Paterson Constructions to build two townhouses in Blackburn, in suburban Melbourne. The parties fell into dispute when the builder claimed nearly $50,000 for additional work. The Manns claimed the builder refused to return to site until the bill for the additional work was paid, and that the work was defective. They argued that this amounted to a repudiation of their contract, and purported to accept the builder’s repudiation. The builder responded that the Manns did not have a lawful right to terminate and that, as a result, their actions amounted to a repudiation which the builder accepted. On any analysis, the contract was terminated. The Victorian Civil and Administrative Tribunal (VCAT) found that the Manns had repudiated the contract. The Manns appealed to the Supreme Court of Victoria, then to the Court of Appeal, and finally to the High Court.
The critical issue: can the builder elect between contract damages or a quantum merit? Continue reading
By Matthew Bell, Wayne Jocic and Rami Marginean
Brookfield Case Page
The central issue in Brookfield was one which is especially important given the proliferation of multi-use, multi-storey developments around Australia’s major population centres. This was whether the builder of an apartment complex owes a duty of care in negligence to protect the Owners’ Corporation (as agent for the owners of apartments in the building) from pure economic loss arising from latent defects in the common property of that building where those defects were structural, constituted a danger to persons or property in the vicinity or made the apartments uninhabitable. The High Court found that the builder owed no such duty, reversing the decision of the NSW Court of Appeal.
This result may be surprising to lay people or those not versed in construction law. For the reasons we set out below, we think that the Court’s approach is, to a certain extent, based on flawed assumptions as to the availability of legal protection for building owners by way of contractual negotiation or legislation. That said, the decision reflects the greater trend in Australian law in the past ten years to reverse the expansion of the duty of care in negligence, and to leave the question of liability to contract or legislative schemes. Moreover, the Court’s continued backing away from tortious liability is consistent with the view expounded by the Court’s most recent appointee, Justice Nettle, in a 2004 Continue reading
By Wayne Jocic and Matthew Bell
Verve Energy Case Page
Every transactional lawyer, and his or her clients, can imagine the situation. Contract negotiations have stalled because one party is unable to commit unconditionally to an obligation: aspects of its performance, it says, are beyond its control. That party might be a builder who is reluctant to provide a warranty that a third party assessor will accredit a building’s environmental sustainability to a particular standard, or an information technology contractor which needs to provide documents to independent consultants but cannot guarantee that they will keep them confidential.
The contract needs to be finalised and signed. Where do the parties turn?
Inevitably, the drafter or negotiator will call for help from an ‘endeavours’ clause. Whether the adjective in which it is clothed is ‘best’, ‘reasonable’ or otherwise, the concept often ends up being the foundation on which the conditioned obligation rests. Prudent drafters typically seek to add precision, perhaps by specifying criteria by which the endeavours are to be tested, or by setting out specific action that the counterparty must take.
In Electricity Generation Corporation v Woodside Energy Ltd  HCA 7 (Verve Energy), the High Court was called upon to decide whether a clause requiring gas sellers to use ‘reasonable endeavours’ to supply a ‘supplemental’ amount of gas was breached by the sellers. They had declined to make that gas available, largely because they could charge more than the contracted amount for it. Continue reading