Addinos Pty Ltd v OJ Pippin Homes Pty Ltd [2022] QDC 205

Clare Turner  |  Luke Trimarchi  |  Mikayla Colak

Key takeout

This case reiterates the established principle that repudiation of a contract occurs when one party demonstrates an intention to no longer be bound by the contract or to fulfil the contract in a manner substantially inconsistent with its obligations.  The case is particularly topical as the repudiation here occurred because of the contractor’s inability to meet the demands of increased costs, a demand now being experienced industry-wide as a result of COVID-19 impacts and supply issues.

Facts

Addinos Pty Ltd (Addinos), a property developer, engaged OJ Pippin Homes Pty Ltd (Pippin), a construction company, to perform work on a property it owned in Cannon Hill, Queensland (site).  The work on the site consisted of demolishing an existing dwelling, excavation, levelling and cutting and the construction of six three story townhouses (works).

Relevantly, the contract for the works stated that Pippin ‘shall commence carrying out the Works on the Date for Commencement or within 14 Days after receiving all necessary consents, approvals and permits to carry out the Works, whichever is the later‘.

On 17 March 2016, Pippin sent an email attaching a letter to Addinos stating that it would be terminating the contract for the wWorks as construction costs had ‘increased significantly since the project was priced.’  On 18 March 2016, Pippin’s director sent a text to Addinos’ development manager further explaining that Pippin could no longer complete the works as a number of employees had left and costs were ‘going through the roof‘.  On 23 June 2016, Addinos accepted the repudiation. 

Following the repudiation, Addinos engaged another builder to complete the works and subsequently brought a claim against Pippin for loss and damage in relation to increased construction costs, additional interest and charges on loans and costs associated with ownership of the site for the extended duration of time and with extended building permits.

In defence, Pippin raised a number of grounds, including that Addinos had actually repudiated the contract because of its alleged failure to obtain, in a timely way, three approvals required for performance of some of the works.

Decision

Rinaudo J accepted Addinos’ submission that the text message on 18 March 2016 conveyed that Pippin did not intend to complete the works because of issues solely related to it, and not because of any delay on the part of Addinos in receiving the necessary consents, approvals and permits.

His Honour rejected Pippin’s submission that Addinos had repudiated the contract, finding that the approval process was ongoing and directed towards obtaining approvals as promptly as possible to enable the works to continue and reach finality.

His Honour was satisfied that Pippin had no lawful basis to terminate the contract and its communications (including the text message) were evidence of an intention to no longer be bound by the contract.  Pippin repudiated the contract.

As a result of Pippin’s repudiation of the contract it was ordered to pay Addinos, by way of loss and damage, the sum of $159,169.69, plus interest and costs.  The court was satisfied that the loss and damage suffered by Addinos fairly and reasonably arose from OJ Pippin’s repudiation of the contract.