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Is a party to a contract who is in breach of that contract entitled to terminate the contract?

Construction Law News | February 2017

In December 2016 the NSW Court of Appeal made a determination to overturn the decision of the Appeal Panel of the NSW Civil and Administrative Tribunal (NCAT) in Wesiak v. D & R Constructions (Aust) Pty. Ltd [2016] NSWCA 353

The NCAT Appeal Panel had overturned a decision of Senior Member Thode of NCAT. The Senior Member had ruled that the builder in this case had not validly terminated the home building contract because that builder was in breach of the contract at the time because the builder had abandoned the site and omitted works and had performed defective works. The NCAT Appeal Panel overturned that decision and ruled in favour of the builder.

In reversing the NCAT Appeal Panel’s decision the Court of Appeal carefully considered the timing of events as they occurred and took into account the extent of the efforts of the home owners to address the builder’s failure to perform works under the contract, the builder performed works defectively and the fact that the builder abandoned the site, before the builder terminated the contract for alleged failure to pay the last progress claim. The owners had objected to the calculation of the payment claim and had made numerous attempts to resolve the dispute.

The court was required to examine the wording of a letter from the owners to the builder which stated in effect that the owners would terminate (in the future) if the builder did not co-operate with resolving the matter. The builder claimed this statement of an intention to terminate the contract amounted to a repudiation of the contract by the owners and therefore the builder was entitled to terminate the contract for repudiation, as well as, the builder claimed, non-payment of the last progress claim. The Court of Appeal dismissed the claim of a repudiaton by the owners in these circumstances.

The decision provides a valuable lesson on the owner’s rights where a builder fails to comply with their obligations under a home building contract.

Forum Law can advise and assist builders and subcontractors with all aspects of building and construction law including the NSW Home Building Act. We are on the legal panel of the Housing Industry Association of NSW. We provide an obligation-free 30-minute phone chat on (02) 9560 3388 or you can visit us in the Italian Forum in the inner west Sydney suburb of Leichhardt.

Forum Law is an active member of several reputable law and industry associations. We have recently obtained ISO9001 accreditation.