Form or content?
In the recent decision of Builtex Constructions Pty Ltd He  NSWCATAP 95, NSW Civil and Administrative Tribunal Appeal Panel dismissed the appellant Builder's submissions that the respondent Owner repudiated the contract because the Owner failed to provide notice of dispute, hold a dispute resolution meeting, and give a proper notice of default to terminate the contract.
In the Tribunal below, orders had been made awarding the Owner more than $100,000 for breach of statutory warranty and dismissing the builder's quantum meruit claim. The relevant contract was a Master Builders Association residential building contract.
The contract before the Appeal Panel was a Master Builders Association residential building contract. The relevant terms are summarised below:
- clause 26 provided that the party saying that there is a dispute must issue a dispute notice to the other party. Within 10 business days after giving such notice, the parties must confer at least once to attempt to resolve the dispute. In the absence of a meeting, the contract cannot be terminated unless the other party refused to attend the meeting
- clause 27 provided that the notice must accurately set out the matters giving rise to the issuing of the notice and attach supporting documents
- clause 28 provided, among other things, that the Owner may only terminate the contract if, in the case of a default capable of remedy, the default continues for 25 days after serving a notice of default.
Grounds of appeal and findings
The Builder relied on, inter alia, 3 grounds of appeal which each challenged that the contract was lawfully terminated, concerning:
- clause 27 and the role of the architect – the Tribunal below had found that the architect undertook a supervisory role on behalf of the Owner, and communicated with the builder as the Owner's agent. The contract did not contemplate this, only naming the architect as the nominating officer for the purpose of the mediation clause. The Appeal Panel found that whilst the contract did not give the architect an official role beyond that, it did not preclude him acting as the Owner's agent. The Appeal Panel also dismissed an argument that all allegations of default in the clause 27 notice must be established or capable of being established, noting that this would be inconsistent with common law principles
- validity of notices and meetings – the Tribunal below had accepted communications from and meetings with the architect as valid for the purpose of clause 26 and 27, even where they were not expressed to be pursuant to or in furtherance of the relevant clauses of the contract. The Appeal Panel agreed that at least one of the notices and meetings met the requirements and in particular found that the meeting which took place with the NSW Fair Trading inspector was not precluded (by its genesis being a complaint to NSW Fair Trading) from being a meeting for the purpose of clause 26 of the contract. An issue that a meeting had taken place more than 10 days after the notice was issued was also given short shrift, the Tribunal noting this could give rise to avoidance/delay so as to manufacture non-compliance and that there was no statement in the contract that a meeting held after the 10 day period would be invalid
- validity of notice of default – this was similar to an aspect of ground 1 and failed on similar grounds, that is, unjustified allegations in the default notice did not of themselves invalidate the notice when it was valid in an number of other respects.
The approach taken by the Tribunal was to look at the substance and effect of the communications, rather than merely how they were badged (or not badged). The cumulative effect is of course easier to see in hindsight. Parties in doubt can seek clarification from their counterparty as to whether communications are intended to be notices for the purpose of the contract, to seek to manage that risk.
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