Get the right advice!
A recent decision of NCAT Appeal Panel raises the importance of obtaining correct legal advice prior to termination of a Building Contract.
In the decision of D & R Construction (Aust) Pty Limited v Wesiak  NSW CATAP 38 the Appeal Panel found that a letter of termination of a Building Contract by Adams & Partners Lawyers on behalf of a Builder was a valid termination of the Contract.
The consequences of that decision means that the Owners were not entitled to claim compensation above the Contract price for incomplete work at the time the Contract was terminated.
In contrast, the letter from the Owners through their Solicitors was viewed as evidence of a wrongful repudiation of the Building Contract.
On 17 September 2013 the Owners through their Solicitors wrote a letter to the Builder’s Solicitors, Adams & Partners Lawyers which included the following quotation.
“For the reasons set out on our letter of 13 September 2013 our clients must mitigate their losses and intend to proceed to terminate the Contract….. Our clients are presently seeking quotations for the completion of the works. Upon receipt of an acceptable quotation, they will terminate the Contract and engage a new contractor to complete the works”
On 22 October 2013 Adams & Partners Lawyers acting on behalf of the Builder wrote to the Owners’ Solicitors. A copy of that letter is attached.
On 24 October 2013 the Owners’ Solicitors wrote to Adams & Partners Lawyers stating that the termination of the Building Contract by the Builder was unlawful. A copy of that letter is attached.
Decision by Tribunal
The Appeal Panel found inter alia that the letter from the Owners’ Solicitor dated 17 September 2013 showed an intention not to be bound by the Contract.
As a result the finding of the Tribunal at first instance awarding damages to the Owners was quashed and remitted back to the Tribunal for the determination of quantum.
Choose your Lawyer Wisely!