Summary Table
| Issue | Principle | Paragraph Reference |
| Experts’ conference | Legal practitioners should seek a direction from the Court for experts to confer, if not for the appointment of a single expert. This is consistent with their obligation under s 56(3) of the Civil Procedure Act 2005 (NSW) given the general tendency for joint expert reports to narrow issues to be determined in a hearing. | 53 |
| Retention release | Where there are no defects, the contractor must repay the amount of retention as it is a form of security provided by a subcontractor to a head contractor for the subcontractor to rectify defects. | 205 |
| Accepting repudiation | The onus falls upon a promise who claims to have terminated the contract for repudiation to establish an effective election by proof of unequivocal words or conduct evincing such election. Any words or conduct are sufficient if the election is manifest to the other party. What needs to be clear is an indication that the innocent party treats the contract as being at an end. | 206 |
Importance of Proactive Case Management: Failure to Direct Experts to Confer Results in Delayed Proceedings and Unnecessary Costs
One of the key issues in the case was the failure of the legal practitioners to seek a direction from the Court for experts to confer and produce a joint report before the hearing. This led to a delay in the proceedings and unnecessary costs for both parties.
The judge commented that:
“Legal practitioners who act for parties to building disputes about defective works should seek a direction from the Court for experts to confer, if not for the appointment of a single expert” (paragraph 53).
Abadee DCJ expressed that this is consistent with the obligation under s 56(3) of the Civil Procedure Act 2005 (NSW) and the general tendency for joint expert reports to narrow issues to be determined in a hearing.
The case highlights the importance of proactive case management and the need for legal practitioners to consider the benefits of joint expert reports well in advance of the hearing.
Retention Payment and Defect Rectification in Building Contracts
Another important issue in the case was the retention payment made by Invictus to Versatile Fitout. The judge held that Versatile had no right to withhold repayment of the retention sum as there were no defects (paragraph 205).
Although the parties agreed on the percentage reduction to a progress claim, they did not agree that Versatile was permanently entitled to withhold repayment of the sum. It was a matter of common knowledge that retention was a form of security provided by a subcontractor to a head contractor for the subcontractor to rectify defects. Where there are no defects, the contractor must repay the amount.
Importance of Clarity in Termination and Repudiation Communication
The case also involved issues related to the acceptance of repudiation. The judge held that if a promisee claims to have terminated a contract for repudiation, the onus falls upon the promisee to establish an effective election by proof of unequivocal words or conduct evincing such election (paragraph 206).
An election to terminate need not be expressed as such, and any words or conduct are sufficient if the election is manifest to the other party.
What needs to be clear is an indication that the innocent party treats the contract as being at an end. The case highlights the importance of clarity in the communication of termination and repudiation.
| Finding | Summary |
| Compliance with contract | Invictus did not comply with a valid direction made under the contract. |
| Termination of subcontract | Versatile was not entitled to terminate the subcontract in accordance with the terms of the subcontract, nor was it entitled to terminate the subcontract for repudiation by Invictus. |
| Unlawful termination | Versatile’s termination was unlawful and amounted to a repudiation of the subcontract. |
| Substantial damages | Invictus did elect to terminate the subcontract, but did not establish that substantial loss or damage was caused to it following Versatile’s repudiation, so therefore does not succeed on its claim for substantial damages. |
| Claim in debt | Invictus succeeds on its claim in debt, arising under the contract, for the unpaid invoice, for the sum of $17,116.. |
| Rectification costs | Versatile’s rectification costs for Invictus’ non-compliance with the direction concerning the bowing may offset its liability on the unpaid invoice. |
| Restitution and Security for Payment | It is unnecessary to determine Invictus’ claims in restitution or under the Security for Payment legislation, as such claims, as quantified, do not confer upon Invictus’ rights to any additional monetary claims beyond its entitlement under the invoice giving rise to Invictus’ successful action on the debt sourced in contract. |
Key Takeaways
The case of Invictus Development Group Pty Ltd v Versatile Fitout Pty Ltd [2022] NSWDC 477 raises important issues related to expert evidence, retention payments, and acceptance of repudiation. Legal practitioners need to be proactive in seeking a direction from the Court for experts to confer and produce a joint report well in advance of the hearing. The case also emphasizes the need for clarity in the communication of termination and repudiation and the importance of the prompt release of retention payments where there are no defects.
If you require assistance with a building dispute, our boutique construction law firm is available for a 15 minute free consultation. Book an appointment with our principal solicitor, John Dela Cruz.
