Client Update

Cole Sopov & Norma Walker v Kane Constructions P/L [2007] VSCA 257

A recent case in the Victorian Supreme Court of Appeal, Cole Sopov and Norma Walker v Kane Constructions Pty Ltd [2007] VSCA 257, dealt with issues of breach of contract, interpretation and repudiation.

The main issue was whether certain conduct of the Principal was repuditatory and therefore justification for the Contractor’s termination of the Contract. The relevant conduct in this case involved the Principal calling on bank guarantees, setting-off liquidated damages against a certified progress payment and insisting on an incorrect and untenable interpretation of the Contract having been informed of the correct approach. These actions by the Principal were held to be repudiatory and gave the Contractor the right to accept repudiation and terminate the contract.

This case is a good illustration of a principal’s need to understand its rights under the terms of a contract and how these terms interrelate.

Case Note

Authors
Barry Casey, Partner
Marie Hennessy, Solicitor

Fox v Leighton Contractors Pty Ltd & Ors [2008] NSWCA 23

Recently, the Court of Appeal of the Supreme Court of NSW in Fox v Leighton Contractors Pty Ltd & Ors [2008] NSWCA 23 upheld an appeal by an injured contractor (Mr Fox) against both the principal contractor and another subcontractor on the site, holding that both had breached their general law duty of care. Mr Fox was awarded $472,562 in damages.

Case Note

Authors
Geoff Wood, Partner
Benjamin Urry, Solicitor

Lime Telecom Pty Ltd v Powertel Ltd [No.1][2008] NSWSC 324 (unreported) BC200802748

Summary

Recently, McDougall J of the New South Wales Supreme Court considered whether an exclusion clause was sufficient to exclude liability for a claim of damages arising from the repudiation of a contract.

In the case, his Honour held that:

• exclusion clauses in contracts should be construed according to the principles laid down by the High Court in Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500.
• an exclusion clause “could not apply to defeat the main object of the contract unless it were clearly and unambiguously expressed to do so”: Kamil Export (Aust) Pty Ltd v NPL (Australia) Pty Ltd [1996] 1 VR 538.
• exclusion clauses, to the extent specified, may only exclude liability that arises “in connection” with the performance of the contract. They cannot exclude liability for losses arising from “activities outside the scope of performance (or nonperformance or malperformance) of the contract” (at [34]; See also Sydney Corporation v West (1965) 114 CLR 481), and
• exclusion clauses cannot exclude or limit liability for losses suffered by a party as a result of the other party repudiating the contract, because repudiation is an abandonment of a party’s performance obligations and is outside the scope of performance.

For his Honour’s separate but related decision on the related limitation clause 14.5, see our separate case note on Lime Telecom Pty Ltd v PowerTel Ltd [No.2][2008] NSWSC 362 (unreported) BC200802752.

Case Note

Authors
Geoff Wood, Partner
Brandon Yap, Law Graduate

Lime Telecom Pty Ltd v Powertel Ltd [No.2][2008] NSWSC 362 (unreported) BC200802752

Summary

This case follows from Lime Telecom Pty Ltd v PowerTel Ltd [No.1] [2008] NSWSC 324. Here, McDougall J in an ex tempore decision considered clause 14.5 and the extent to which it limited the liability of PowerTel Ltd (PowerTel).

In the case, his Honour held that:

• the principles applicable to the proper construction of exclusion clauses are equally applicable to limitation of liability clauses,
• like exclusion clauses, limitation of liability clauses cannot operate to defeat the main objects of the contract, and
• parties cannot use a limitation of liability clause as a “back door approach” to defeat claims for damages for repudiation not excluded by exclusion clauses.

Case Note

Authors
Geoff Wood, Partner
Brandon Yap, Law Graduate