case in brief - Double edition DCT Projects Pty Ltd v Champion Homes Sales Pty Ltd [2016] & Vinergy International (PVT) Ltd v Richmond Mercantile Ltd FZC [2016]
by Sarah Redding
In two recent decisions of the Australian and UK Courts, the respective jurisdictions each took a different approach to the relationship between parties’ contractual termination obligations and the common law right to terminate for repudiatory breach. Regardless of the jurisdiction, parties are encouraged to use clear and unequivocal language in drafting termination provisions to ensure their intentions as to the common law right to termination based on repudiatory breach are clear. Failure to do so, could enable parties to circumvent any contractual notice or remedy requirements, as was the case in Vinergy. DCT Projects Pty Ltd v Champion Homes Sales Pty Ltd [2016] NSWCA 117
Background
In May 2006, DCT Projects Pty Limited (DCT) and Champion Homes Sales Pty Limited (Champion) entered a construction contract for the construction of several townhouses, as principal and contractor respectively. Work commenced in August 2006, but construction was delayed following a number of disputed variations claimed by Champion. The Parties signed a modification agreement following suspension of works by Champion due to the unpaid variation claims. However, the modification agreement had little effect, as further disputes arose and Champion suspended work on three further occasions during early 2008. The parties’ deteriorating relationship culminated in DCT purporting to terminate the contract on 2 July 2008. DCT asserted Champion’s conduct amounted to repudiation of the contract. Notably, DCT did not terminate for breach of contract. Had DCT done so, they would have been required by the contract to serve a notice of default, and allow Champion a 10 working day remedial period. On 7 July 2008, following DCT’s action, Champion considered DCT’s purported termination as repudiation of the contract, and sought to terminate the contract itself. Despite a barrage of cross-claims from DCT against Champion, the trial judge ruled in favour of Champion, holding that DCT had wrongfully terminated the contract, which conduct amounted to repudiation. Champion was therefore entitled to terminate the contract in the circumstances. DCT appealed the decision.