New South Wales Court of Appeal - Decisions of Interest Search - Area of law: Contract


   

  1. 10/02/2017
    Contract: rectification; precise scope of intention of parties

    The respondents were licensed real estate agents. The appellants were property developers who entered into written sales authorities with each of the agents. The agents commenced proceedings for recovery of their claimed commission. The developers cross-claimed that the agents were not entitled to commission because the sales authorities contravened the Estate Agents Act 1980 (Vic). The agents sought to amend their statements of claim to seek relief by way of rectification of the sales authorities.

    The issue on appeal was whether the agent’s amended claim, seeking relief by way of rectification, should be struck out. This raised a question:

    • whether contravention of an Act precludes rectification in respect of that contravention; and
    • as to the proper test for whether amended pleadings should be struck out with no right to re-plead.

    Held:

    • The central consideration in whether the court will order rectification of an instrument is the precise scope of the intention of the parties. If the rectified document would not reflect the common intention of the parties, then the remedy will not be granted. In this case, rectification will not necessarily defeat or undermine the purpose of the Estate Agents Act, and the Court should take a proportionate response to the contravention.
    • The agent’s amended claim did not have no real prospects of success, in the sense of being fanciful. Accordingly, the amended claim should not be struck out.

    NSWCA cases considered include:

    Caringbah Investments Pty Ltd v Caringbah Business and Sports Club Ltd (in liq) [2016] NSWCA 165

    Mayo v W & K Holdings (NSW) Pty Ltd (in liq) [2015] NSWCA 119

    High Court cases considered include:

    Nelson v Nelson (1995) 184 CLR 538

    Simic v New South Wales Land and Housing Corporation [2016] HCA 47; 91 ALJR 108


    CA & CA Ballan Pty Ltd v Oliver Hume (Australia) Pty Ltd  [2017] VSCA 11
  2. 08/02/2017
    Contract: review of adjudicator’s decision; whether contract void or unenforceable

    Maxcon Constructions engaged Mr Vadasz to design and construct piling for an apartment building. At all material times, Mr Vadasz, who was carrying on the business under a firm name, was an undischarged bankrupt, and he had not disclosed this to Maxcon (in breach of s 269(1)(b) Bankruptcy Act 1966 (Cth)). Mr Vadasz served on Maxcon a payment claim, and Maxcon issued a payment schedule deducting a “retention sum”. An adjudicator found that the “retention sum” was rendered void by the applicable Security of Payment legislation.

    The issue on appeal was whether Maxcon was liable to pay Mr Vadasz the amount ordered by the adjudicator. This raised a question:

    • whether Mr Vadasz’s contravention of s 269(1)(b) of the Bankruptcy Act 1966 (Cth) rendered the design and construct contract void or unenforceable;
    • whether the adjudicator’s error in finding the retention sum void was a jurisdictional error; and
    • whether review is available for non-jurisdictional error of law on the face of the record.

    Held:

    • Mr Vadasz’s failure to disclose his bankruptcy was a contravention of s 269(1)(b). However, this section did not render the contract void or unenforceable by Mr Vadasz. Mr Vadasz’s failure to disclose also did not render the contract void or unenforceable at common law.
    • The adjudicator erred in finding the retention sum to be void under the Security of Payment Act. However, this error was not a jurisdictional error (Hinton J dissenting). 
    • The adjudicator’s error was an error of law on the face of the record, but the Security of Payment Act impliedly excludes certiorari on the ground of error of law on the face of the record (Shade Systems [2016] NSWCA 379 applied). 

    NSWCA cases considered include:

    Chase Oyster Bar v Hamo Industries [2010] NSWCA 190; [2010] 78 NSWLR 393

    Shade Systems Pty Ltd v Probuild Constructions (Aust) Pty Ltd (No 2) [2016] NSWCA 379

    High Court cases considered include:

    Craig v The State of South Australia [1995] HCA 58; (1995) 184 CLR 163

    Kirk v Industrial Court of New South Wales [2010] HCA 1; (2010) 239 CLR 531


    Maxcon Constructions Pty Ltd v Vadasz (No 2)  [2017] SASCFC 2
  3. 07/02/2017
    Contract: building case ultimately determined in District Court; s 69 Supreme Court Act 1970 (NSW); supervisory jurisdiction

    Torbey Investments entered into a building contract with Mr and Mrs Ferrara, pursuant to which it undertook building and construction work on the Ferraras’ residential property in Maroubra. Completion was delayed for several reasons, and the Ferraras pruported to terminate the contract.

    The issue on appeal was whether the contract had been validly terminated and what were the appropriate orders. This raised a question:

    • whether the contractual terms imposing procedural requirements and time limits for notices of breach and termination were mandatory; and
    • relating to the power of the Court of Appeal to substitute orders in the exercise of its supervisory jurisdiction.

    Held:

    • The contract had been validly terminated, and the owners were entitled to recover the cost of completion.
    • The order of the District Court with respect to interest, made in favour of the Ferraras despite their not being entitled to interest and not having sought it, should not have been made. Accordingly, the orders made in favour of the Ferraras should be altered.
    • The Court of Appeal, in the exercise of its supervisory jurisdication, has the power to make an order not merely quashing the determination of the court below, but making in its place the only order available in law, consistent with the reasoning of the court below. Therefore, the Court of Appeal ordered that Torbey Investments is liable to the Ferraras for damages for defective and incomplete building works in the amount that should have been ordered by the District Court.

    Torbey Investments Corporated Pty Ltd v Ferrara  [2017] NSWCA 9
  4. 22/12/2016
    Contract: contract of insurance; construction; complex and lengthy clause; regard to text, context and purpose; importance of grammatical structure; significance of punctuation; reading contract as a whole; regard to legislative context; whether proposed construction leaves other clauses with work to do

    Zhang v ROC Services (NSW) Pty Ltd; National Transport Insurance by its manager NTI Ltd v Zhang  [2016] NSWCA 370
  5. 21/12/2016
    Contract: contract between appellant and employer relating to change of work role; alleged that contract formed at meeting or clarified and confirmed by subsequent conduct entitling appellant to increased salary for fixed term and profit share; primary judge rejected claim as to alleged contract; appellant sought to argue for more limited contract on appeal; whether pleaded or claimed at first instance; whether appellant should be permitted to raise limited contract claim for first time on appeal

    Hopper v Campbell  [2016] NSWCA 371
  6. 21/12/2016
    Contract: concrete purportedly supplied by appellant resulted in damage to respondent; existence of contract between appellant and respondent; whether respondent’s contract was alternatively with different Boral company; importance of contemporaneous documentary evidence in determining contracting party identity; whether appellant could rely on defence where defence first raised at trial after close of evidence; defence did not admit but did not deny critical issues in proceedings

    Boral Limited v Foley & Bear Pty Ltd trading as J&R Industries  [2016] NSWCA 373
  7. 08/12/2016
    Contract: construction and interpretation; agricultural investment scheme; suite of related contracts between investors, representative and manager; loan agreements to facilitate investment; construction of limited recourse provision
     

    HP Mercantile Pty Ltd v Hartnett  [2016] NSWCA 342
  8. 28/11/2016
    Contract: general contractual principles; penalties; contract for commercial loan facility; whether default interest payable when monthly payments were not made within time constituted a penalty; question to be considered on a forward-looking basis at the date each contract was made; whether default interest is presumed to be a penalty; whether default interest was wholly extravagant or unconscionable compared to the greatest amount of loss that could possibly be foreseen to flow from a breach; whether purpose of default interest was to punish non-compliance
     

    Arab Bank Australia Ltd v Sayde Developments Pty Ltd  [2016] NSWCA 328
  9. 24/11/2016
    Contract: cross-appeal from decision that option for sale of a property had not been validly exercised; option for sale had been exercised without payment of a deposit as contractually required; whether contractual right to vary price extended to capacity to waive requirement for payment of a deposit
     

    Aquatic Air Pty Ltd v Siewert  [2016] NSWCA 318
  10. 24/11/2016
    Contract: appeal from decision refusing to set aside share sale agreements and make award for damages; shares in third and fourth respondents sold to fifth respondent; agreements allegedly vitiated by misleading and deceptive conduct in failing to disclose purported GST liability; whether representations were made as to GST liability of company; representation reliant upon warranties in agreement; whether such representations, as warranted, were made; whether the warranties could be severed from agreement; whether representations, if made, were false; effect of A New Tax System (Goods and Services Tax) Act 1999 (Cth), s 38-10(5); whether company not liable for GST; whether representations made as to liability of company to pay employee and redundancy entitlements
     

    Aquatic Air Pty Ltd v Siewert  [2016] NSWCA 318