Lumbers v W Cook Builders Pty Ltd (in liquidation) 
HCA 27 (18 June 2008)
In Lumbers v W Cook Builders a land owner
(Lumbers) entered into an oral contract with a
building company, W Cook & Sons Pty Ltd
(Sons), to perform building works. In actual fact,
and unbeknownst to Lumbers, those building works were carried out
by another related building company, W Cook Builders Pty Ltd
(Builders) after a Sons company restructure.
Sons were not an active party in the trial proceedings or on
appeal as Builders could not provide security for Sons' costs.
The court was required to determine whether Builders could succeed
in a claim against Lumbers for restitution when Builders, after
going into liquidation, claimed that it had been short paid by
Lumbers for the work performed. This was despite the fact that
Lumbers didn't have a contract with Builders or knowledge that
Builders was conducting the works. The Court found that the
relationship between Builders and Sons was a
The High Court ultimately found that a claim in restitution
could not succeed because it would "redistribute not only the
risks but also the rights and obligations for which provision was
made by the contract Lumbers made with Sons." It was
a critical issue that Lumbers had not requested Builders to perform
the Works but rather, those works were carried out pursuant to a
contract between Sons and Builders to which Lumbers was not a party
to nor had knowledge of its existence.
Legally, the decision demonstrates that the Courts are unlikely
to provide equitable relief where there is a commercial arms length
contractual chain that could be applied, especially where to do so
would extend the scope of restitutionary claims beyond the bounds
set by legislation (such as the Security of Payment
Practically, the case reminds us of the importance for parties
to understand their contractual relationships, and particularly
where a claim for payment may lie. This is especially important in
circumstances where parties have complex corporate structures in
place that may change over the course of a project.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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