Essential Guides to Local Government Law
Our series of Local Government Guides are comprehensive yet simple to understand guides on how to deal with certain legislation and problems that Local Government and Councils often face.
Blockchain: what you need to know
Our series of Blockchain articles are comprehensive yet simple to understand and explain the legislation, benefits and issues around using the technology.
Can I Terminate an Employee Who is on Workers' Compensation?
In certain circumstances it may be possible to lawfully terminate an employee who is on long term workers compensation provided the employer adheres to several key obligations.
News & Events
-
Whistleblowing and Grievance Handling: July Business Breakfast Club Summary
This month at Business Breakfast Club, BAL Lawyers Senior Associate, Anca Costin spoke on the topic of Whistleblowing and Grievance Handling.
Widespread changes to Australia’s whistleblower protection regime have now come into force. On 19 February 2019, the Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill was passed by Parliament. This bill amended the Corporations Act, with these reforms operative from 1 July 2019.
These amendments are set to create a much more expansive and strengthened whistleblower protection framework.
Anca’s presentation focused on the key changes to the whistleblowing regime that all employers and HR managers need to be aware of, namely that:
- The categories of people who can qualify as a protected whistleblower have been expanded. It is no longer the case that active employees, officers and contractors are the only groups of people covered by whistleblower protections, with former employees, officers and contractors as well as associates of the company now being offered protection.
- The topics that a person may “blow the whistle” about have been broadened. Formerly, a whistleblower was only protected from disclosing conduct in contravention of the Corporations Act. However, whistleblowers will now receive protection for disclosing information relating to misconduct and general “improper” circumstances.
- Whistleblowers can now elect to remain anonymous.
A key emphasis of the presentation was that after these changes take effect, there is a real need for businesses to consider having a whistleblower policy in place.
The following video on Whistleblowing was also shown:
After 1 January 2020, all public and private companies will be required to implement a compliant whistleblower policy (with it being highly unlikely that any existing whistleblower policies will be compliant).
If you require any assistance with drafting a compliant policy, please contact BAL Lawyers Employment Law & Investigations Group, or purchase our Whistleblower Policy.
Our next Business Breakfast Club will be held on Friday 9 August 2019. Riley Berry of BAL Lawyers will be presenting on ‘Directors’ duties and the Director Identification Number’.
Read more -
GIPA Act and ‘out of scope’ information
In a decision handed down on 10 July 2019, the NSW Civil and Administrative Tribunal has ruled that decisions about whether documents are outside the scope of a GIPA application are not reviewable by the Tribunal: Miskelly v Roads and Maritime Services [2019] NSWCATAD 133.
This issue has not been squarely addressed in previous decisions of the Tribunal. By excluding review of a decision as to whether a document is within or outside the scope of a request altogether, the decision in Miskelly goes further than previous decisions, which have simply acknowledged that an agency has no obligation to provide material that has not been requested by an applicant[1].
Background
Mr Miskelly sought review of a decision by RMS to refuse him access to specified information concerning the costs and budget estimates for the Sydney Gateway Project. He argued that there was a ‘manifestly overwhelming public interest’ in the disclosure of the information so that members of the public could know the estimated cost of this major infrastructure project.
Many of the documents for which the RMS refused to allow access were Cabinet documents and much of the decision deals with whether RMS had reasonable grounds for not releasing those documents. (In dealing with a Cabinet information claim under the GIPA Act, the Tribunal is limited to reviewing whether ‘reasonable grounds’ for the claim exist rather than, as is usually the case, deciding for itself what is the correct and preferable decision in relation to the request for access.)
Out of scope documents
Of more interest to local government, the Tribunal also dealt with a request by Mr Miskelly to review the decision by RMS that a number of documents initially identified during its search for the information requested by the applicant were not within the scope of his request.
In coming to its decision, the Tribunal observed that every Government agency today has some form of computerised records management system (eg TRIM) that captures and manages both paper and electronic information held by the agency.
The GIPA Act requires an agency to undertake reasonable searches to find any Government information held by the agency when the application was received[2] and this obligation expressly extends to carrying out searches using any available electronic information management system[3]. The Tribunal noted that it is not unusual, when conducting an initial search for relevant documents using a computerised document management system, that the search will locate documents which, on closer examination, are found not to contain information relevant to the access request. These records are commonly described as being ‘out of scope’.
This is what happened when the RMS responded to the applicant’s GIPA request. A search was carried out using its computerised document management system and this identified a number of documents as being relevant which, on further review, were determined not to fall within the scope of the applicant’s request. The applicant asked the Tribunal to review that determination. The RMS argued that the Tribunal had no jurisdiction to do so.
The Tribunal’s decision
The Tribunal agreed with the contention made by the RMS that the Tribunal had no jurisdiction to review a decision that a document is ‘out of scope’. The Tribunal’s reasoning was as follows:
- Under the Administrative Decisions Review Act 1997, the Tribunal is given jurisdiction to review a decision when the enabling legislation (i.e. legislation other than that Act) provides for applications to be made to the Tribunal for review of decisions of that kind[4].
- The GIPA Act provides for the review by the Tribunal of a ‘reviewable decision’ by an agency.
- Section 80 of the GIPA Act lists the decisions that are ‘reviewable decisions’. Some thirteen different kinds of decision are the listed in that section including, for example, a decision to refuse to provide access to information, a decision that the information is not held by the agency and a decision that information is already available to the applicant.
- The list of reviewable decisions in s.80, which is quite specific and detailed, does not include a decision that the information requested is ‘out of scope’.
- Hence the Tribunal does not have jurisdiction to review a decision that information requested by an applicant is ‘out of scope’.
Implications for local councils
The effect of the Tribunal’s decision Miskelly is that decisions made by councils as to whether documents are outside the scope of a GIPA application are not reviewable by the Tribunal.
In drafting decisions under the GIPA Act, councils should therefore take care to distinguish any information which is determined to be out of scope from the information to which a council decides to refuse access under s.58(1) of the Act.
For more information about this decision or its implications please contact Alan Bradbury.
[1] See, for example, Ormonde v NSW National Parks and Wildlife Service (No.2) [2004] NSWADT 253 (at [58] to [66]
[2] GIPA Act, s.53(2)
[3] GIPA Act, s.53(3)
[4] Administrative Decisions Review Act 1997, s.9
Read more -
Essential Guide to Local Government Law: Lapsing of a Development Consent
A development consent can add significant value to land and can be costly to obtain. It is therefore important to understand when it will lapse. This guide will assist you in determining when this will occur.
The statutory lapsing period
The lapsing of a development consent is dealt with in the statutory provisions in s.4.53 (formerly s.95) of the Environmental Planning and Assessment Act 1979 (the Act). These provisions fix a period of time at the expiry of which the consent will lapse unless certain action has been undertaken.
The starting point is s.4.53(1) of the Act. That subsection provides that a development consent will lapse 5 years after the date from which it operates. However, the 5 year period can be reduced or extended under the subsequent subsections. You also need to consider whether there is a deferred commencement condition. Both of these situations are explained below
When can the 5 year lapsing period be reduced?
Any reduction in the ‘default’ 5-year lapsing period is imposed at the discretion of the consent authority when it determines a development application. However, there are 2 constraints on a consent authority’s ability to do so. These are:
- If a proposed development involves the erection or demolition of a building or the subdivision of land, the consent authority cannot reduce the lapsing period to less than 2 years from the date that the consent becomes operative;[1] and
- If the consent authority issues a development consent for a concept development application which requires the making of a subsequent development application and consent, the lapsing period cannot be reduced at all.[2]
When can the lapsing period be extended?
If the 5 year lapsing period is reduced by the consent authority, the consent authority may extend the lapsing period by 1 year if the applicant for the consent (or any person otherwise entitled to act on it) applies, under s.4.54 of the Act, to the consent authority for a 1 year extension. Such an application must be made prior to the consent lapsing.[3] The lapsing period cannot be extended by a modification application.[4]
The Act also provides that any reduction to the 5 year lapsing period imposed by the consent authority is to be disregarded if the consent falls into specific categories. [5] These categories were inserted into the Act in 2010 to due to difficulties in obtaining developer finance at that time, and also as a means of providing the Minister with the ability to the extend the lapsing period by regulation in the event of an economic downturn in the future.[6] The categories are:
- If the development consent operated before, and lapses after, 26 May 2010;[7]
- If the development consent lapsed between 22 April 2010 and 26 May 2010;
- If the development consent operated before, and lapses after, a date after 1 July 2011 which is prescribed by the regulations. At the time of writing no date has been prescribed by the regulations (but it may be future).
If a development consent falls within any of these categories, the lapsing period will default to the period which is 5 years from the date from which the consent operates.
What must be done to prevent a consent from lapsing?
The action that must occur to prevent a development consent from lapsing depends upon what type of development has been approved. It also depends on whether the consent has a deferred commencement condition.
A. Deferred Commencement Consent
A development consent may be granted subject to a condition that specifies that the consent does not operate until the applicant satisfies the consent authority as to any matter specified in the condition.[8] In such a situation the consent will lapse if the applicant fails to satisfy the consent authority as to the matter specified within 5 years from the grant of the consent or, if a shorter period is specified by the consent authority, within the period specified.[9] This can occur regardless of whether or not physical works have been undertaken in attempt to satisfy the consent authority of a particular matter.
B. Development involving the erection of a building, subdivision or the carrying out of a work
A development consent for the erection of a building, the subdivision of land or the carrying out of a work will lapse on the lapsing date unless the following three things occur:
- ‘building, engineering or construction work’ is undertaken on the land which is the subject of the consent;
- the work was ‘physically commenced’ before the date on which the consent would otherwise lapse; and
- the work ‘relates to’ the approved development.[10]
A significant body of case law has developed in relation to these three elements and will be summarised below.
1. ‘Building, engineering or construction work’
Under the Act, ‘building work’ is broadly defined as ‘any physical activity involved in the erection of a building’.[11] Neither ‘engineering’ nor ‘construction’ work is specifically defined in the Act but the meaning of these terms has been considered by the Courts.
In Hunter Development Brokerage v Cessnock City Council[12] the definition of ‘engineering work’ in the context of a subdivision consent was found to include all activities associated with and forming a necessary part of, the discipline of engineering, survey work and geotechnical investigation applicable to the subdivision. These principles have also been applied to ‘works’ generally (i.e. not just subdivision).[13]
Examples of works which have been held by the Court to constitute ’building, engineering or construction work’ include:
-
- extracting samples of water from the site for offsite quality testing;[14]
- obtaining an acoustical engineering report relating to the noise made by trucks entering and exiting the site;[15]
- the removal and testing of soil for the purposes of obtaining a remediation and validation report;[16]
- digging boreholes for testing soil conditions;[17]
- survey work.[18]
Care needs to be taken in relying on these examples, however, as the circumstances of each development will need to be considered to determine whether the work relied on in fact ‘relates to’ the development the subject of the development consent.
2. ‘Physically commenced’
The statutory requirement that work is ‘physically commenced’ necessitates that work is commenced upon the land in a physical sense, as opposed to off-site work such as design and planning work.
There does not need to be a material change to the physical nature of the land as a result of the physical work.
3. ‘Relating to’ the development
The use of the term ‘relating to’ means that there must be some real relationship or connection between the work and the development in respect of which the consent has been granted.[19] The requisite link between the work and the consent will be satisfied if the work is a necessary step in, or part of, the process required for the carrying out of the development. If the work serves more than one purpose, it is sufficient that one of those purposes bears a real relationship to the development.[20]
Importantly, for any work to constitute commencement so as to prevent the consent from lapsing, that work must be undertaken lawfully. Any work which is not lawful, for example, if it is not undertaken in accordance with the conditions of consent or is in breach of the Act, will not ‘relate to’ the development.[21]
C. Development other than development involving the erection of a building, subdivision or the carrying out of a work
A development consent for any other type of development will not lapse if the use of the land, building or work, the subject of the consent, actually commences before the date on which the consent would otherwise lapse.
For further information or assistance with orders, please contact Alan Bradbury and the Local Government & Planning team on (02) 6274 0999.
Further Essential Guides to Local Government Law can be found here.
The content contained in this guide is, of course, general commentary only. It is not legal advice. Readers should contact us and receive our specific advice on the particular situation that concerns them.
[1] Environmental Planning and Assessment Act 1979 (NSW), s.4.53(2).
[2] Ibid, s.4.53(2).
[3] Ibid, s.4.54.
[4] Kinder Investments Pty Ltd v Sydney City Council (2005) 143 LGERA 237; [2005] NSWLEC 737.
[5] Environmental Planning and Assessment Act 1979, s.4.53(3A).
[6] New South Wales, Parliamentary Debates, Legislative Assembly, 22 April 2010, 22150 (David Harris, Parliamentary Secretary) and New South Wales, Parliamentary Debates, Legislative Council, 18 May 2010.22828 (Penny Shape, Parliamentary Secretary) : second reading speeches of the Environmental Planning and Assessment Amendment (Development Consents) Bill 2010.
[7] Being the date that s.4.54 (formerly s.95(3A)) commenced.
[8] EPA Act, s.4.16(3).
[9] Ibid, s.4.53(6).
[10] Above n 1, s.4.53(4). These three questions are referred to in Hunter Development Brokerage v Cessnock City Council (2005) 140 LGERA 201.
[11] Above n 1, s.1.4 and s.6.1
[12] (2005) 140 LGERA 201.
[13] Benedict Industries Pty Ltd v Minister for Planning; Liverpool City Council v Moorebank Recyclers Pty Ltd [2016] NSWLEC 122 at 61.
[14] Norlex Holdings Pty Ltd v Wingecarribee Shire Council (2010) 177 LGERA 261.
[15] Ibid.
[16] Zaymill Pty Ltd v Ryde City Council [2009] NSWLEC 86.
[17] Rowlane Investments Pty Ltd v Leichhardt Council (2013) 195 LGERA 9.
[18] JMS Capital Pty Ltd v Tweed Shire Council [2006] NSWLEC 535.
[19] Hunter Development Brokerage v Cessnock City Council (2005) 140 LGERA 201; Tovedale Pty Ltd v Shoalhaven City Council (2005) 140 LGERA 201 at 104.
[20] Ibid.
[21] K & M Prodanovski Pty Ltd v Wollongong City Council (2013) 195 LGERA 23.
Read more -
WHEN FACEBOOK IS NO LONGER YOUR BUSINESS’ FRIEND
In June this year, the New South Wales Supreme Court handed down an important judgment of Voller v Nationwide News Pty Ltd; Voller v Fairfax Media Publications Pty Ltd; Voller v Australian New Channel Pty Ltd [2019] NSWSC 766. This case may have significant implications for organisations using public social media pages particularly around their liability for posts made by third parties.
Mr Voller brought proceedings against three media organisations for defamation, alleging that the media organisations were liable for the defamatory comments made by members of the public on news stories or links that were published about Mr Voller on the media organisations’ public Facebook pages. The Court was required to consider whether the defense of innocent dissemination would apply to protect the media organisations (the defendants) from liability. Innocent dissemination is intended to protect people such as newsagents, booksellers, and internet service providers who unwittingly publish defamatory material without any negligence on their part.
Ultimately, the Court found that organisations with public Facebook pages can be the “primary publishers” of the material and therefore liable for the defamatory posts made by the public.
In coming to his decision, Judge Rothman drew a significant distinction between a public Facebook page and the operation of a public website. His Honour reasoned that on a public Facebook page, the administrator has the ability to prevent and vet comments made by others. By way of contrast the administrator of a public website has no capacity to prevent the publication of negative comments by members of the public, but is only able to remove the comments once made. This comparison led His Honour to find that the media organisations were primary publishers of the third party comments on their public Facebook pages, and the defense of innocent dissemination did not apply.
Key Takeaways
This case serves as an important warning to organisations that have public Facebook pages. Owners and administrators of these pages should be warned of their potential liability for the comments posted by the public on these pages. In light of the above decision, public Facebook page users should note the following:
- Courts are more likely to hold owners of social media accounts liable for the posts made by third parties, particularly so if the owner/administrator has the ability to prevent the publication of defamatory material – such as by pre-approval, comment hiding or vetting processes;
- The Court in this case clarified that organisations who utilise public Facebook pages for commercial purposes, assume the risks that certain comments may render them liable;
- If you have a public Facebook page to promote your business, consider:
-
- hiding comments made by members of the public until you have pre-approved or checked them;
- utilising the Facebook list of banned words, which will hide or delete public comments which contain such words; and
- blocking users who may make unacceptable, threatening or defamatory comments.
If you have any questions or would like to discuss please feel free to get in touch with our Business team at BAL Lawyers.
Read more -
What a drag! – Intoxicated Passenger takes on Taxi Driver
In the recent ACT Supreme Court decision of Hargrave v Singh [2019] ACTSC 139, the court considered the culpability of an intoxicated passenger, who was struck by a taxi which had dropped him home at the end of an evening, after the passenger had chased down the taxi to dispute the fare.
Background
The plaintiff’s allegation was that, on 24 May 2014, he (a then 21 year old male) was struck by a taxi, causing him to suffer a myriad of bodily injuries, as well as associated psychological trauma, in the aftermath of the accident. In most accidents of this nature, the legal liability that flows is relatively straightforward; the driver of the vehicle owes a duty of care to the pedestrian to not drive the vehicle in a way that may cause injury to another.
In this case though, the facts leading up to the incident were pivotal. Specifically, the plaintiff and his friends had attended the Mooseheads Pub in Civic, where alcohol was consumed. At trial, the plaintiff gave evidence of having pre-drinks at a friend’s home prior to arriving at the Pub at around 11pm. He then consumed five to six schooners of beer between 11pm and 3am.
At around 3am, the plaintiff, his girlfriend and other friends, shared a maxi-taxi home. After the plaintiff’s friends were dropped off at various locations, an argument arose between the plaintiff and the driver in relation to the total of the ultimate fare. In the end, the plaintiff’s girlfriend paid the fare by using the plaintiff’s credit card, and was given a receipt. When the plaintiff and his girlfriend alighted from the taxi, the driver commenced to take off. However, when the plaintiff viewed the receipt given by the driver, he proceeded to flag down the departing taxi to further dispute the charge to his credit card. In the course of doing so, the plaintiff was struck by the taxi, ending up being dragged into in the gutter. The taxi driver did not stop, and kept going on into the night.
Having suffered personal injuries, the plaintiff sued the driver in negligence in the ACT Supreme Court, with the claim ultimately heard and decided by the Honourable Justice Burns.
The Findings
The driver denied his driving of the taxi was carried out negligently, arguing the collision was caused by the taxi being chased down by the plaintiff (not vice versa). The driver further defended the claim on the basis that the court ought to presume the plaintiff was contributorily negligent for his own injuries, due to his intoxication, pursuant to section 95(1) of the Civil Law (Wrongs) Act 2002 (ACT) (the Wrongs Act).
That section of the Wrongs Act provides that “contributory negligence must be presumed if an injured person was intoxicated at the time of an accident giving rise to a claim for damages for personal injury and the defendant alleges contributory negligence”. That is to say, the court’s starting point must be that the intoxicated party was negligent, and work backwards from there to determine whether that presumption should be rebutted. Subsection 95(2)(a) gives guidance on this, by clarifying that the injured person needs to establish, on the balance of probabilities, that the intoxication did not contribute to the accident; or the intoxication was not self-induced.
Here, after consideration of medical, expert and lay witness evidence from both sides, Justice Burns was not satisfied that the accident was caused by the plaintiff’s chasing down of the taxi, and that a reasonable person in the driver’s position could have avoided the accident. Judgment was thus entered in the plaintiff’s favour for just over $275,000.
However, in arriving at that judgment sum, His Honour did accept that the plaintiff’s intoxication had to be taken into account. In doing so, the effect of His Honour’s findings was that, but for the plaintiff’s intoxication and conduct, the damages awarded to him would have been 10% higher.
Key Lessons
The onus to rebut the effect of intoxication in a personal injury case falls on the intoxicated party. In the event an injured intoxicated person is unable to rebut the statutory presumption of contributory negligence, then the damages that injured person may be entitled to, apart from the contributory negligence, must be reduced to the degree that the court considers just and equitable.
In the present case, the plaintiff was lucky to have escaped without sustaining more serious injuries. Arguably though, he was also lucky to have his damages reduced by only 10 per cent, given the starting point under section 95(1) of the Wrongs Act is for the courts to presume contributory negligence exists in cases involving intoxicated plaintiffs, unless the plaintiff can satisfy the court of a good reason why that should not be the case. The legislative effect of section 95(1) may, of course, be a drag for plaintiffs to comply with, though it nevertheless is reflective of public policy that plaintiffs need be aware of when bringing such personal injury claims.
Injured in a motor vehicle accident? Call our team at BAL Lawyers.
Read more -
Whose right to payment? ACT Building Contract protects homeowners from claims for payment by a subcontractor
Is a homeowner legally required to pay a subcontractor a fair and reasonable sum for work performed and materials supplied when the building contract exists with the head contractor only? The ACT Court of Appeal recently considered this question in its decision of Liu v A&A Martins Pty Limited [2019] ACTCA 8.
The purchasers of an ACT block of land (“the Owners”) entered into a written contract with a head contractor, Maples Winterview Pty Ltd (“the Builder”) to build their family home. A dispute arose when the Owners alleged defects in the building works of the Builder. A separate dispute also arise where a sub-contractor to the Builder, A&A Martins Pty Limited (“the Subcontractor”), claimed monies from the Owners for work completed and materials supplied by the Subcontractor to the Owners’ benefit. The Subcontractor ultimately brought an action against the Owners in the ACT Supreme Court, seeking restitution for unjust enrichment enjoyed by the Owners in receiving the benefit of the Subcontractor’s works. Notably, the Subcontractor and Builder were related companies with common directors. In the primary proceedings, the Supreme Court found in favour of the Subcontractor, and ordered a six figure judgment in its favour against the Owners.
This decision was appealed on the basis that the Owner’s contract was with the Builder, such that the Subcontractor was not entitled to recover against the Owners in the absence of a request by them for the Subcontractor to have provided the services which it did (whether to the Builder, or otherwise).
Background
The building contract in question was a staged building contract whereby payment was due at the completion of each stage. The Owners paid the Builder for stage 1, but argued the Builder failed to install insulation, being a requirement under stage 2. The Owners withheld payment on the basis that the Builder had no entitlement to its progress payments for stage 2 until its requirements were met. The Builder, by its Subcontractor, nevertheless continued work on the house until around 6 March 2012 when building work was suspended – leaving the house unfinished.
The Maples Proceedings
On 10 October 2012, the Builder purported to terminate the contract and commenced proceedings in the ACT Supreme Court to recover the cost of the building works.
The Owners defended the claim on the basis that stage 2 was defective, such that the trigger for payment for subsequent stages never arose and the house was incomplete.
The Owners were self-represented in these proceedings, though their defence in this regard was entirely successful.
In obiter, the presiding judge (Mossop J) said that it would have been open to the Builder to complete the contract without insisting on the making of progress payments and then claim payment for the entire cost of the works at the conclusion of the project, at which point it could claim for practical completion once the certificate of occupancy could be obtained. However, the contract was never completed by the Builder, which left the Owners to complete the works themselves.
The A & A Martins Proceedings
Following the decision in Maples, the Subcontractor, who was not a party in the Maples proceedings, brought separate proceedings against the Owners seeking quantum meruit or restitution based on unjust enrichment.
Unjust enrichment is an equitable claim that arises where three circumstances are satisfied:
- A party is enriched or benefited;
- The enrichment has come at the expense of another party; and
- The enrichment, or its retention, is unjust.
‘Unjustness’ is determined with regard to, amongst other things, lack of consideration and unconscionability.
In these circumstances the Subcontractor argued the Owners had received a benefit at the Subcontractor’s expense which was unconscionable for them to accept without payment. The Owners, meanwhile, denied receiving a benefit at all; having been left, they said, with defective building work that they had to complete without the Builder.
McWilliam AJ recognised that there were intercompany arrangements between the Builder and Subcontractor which made them difficult, at times, to distinguish and further found that:
In the absence of a contract it is clear enough that the work was carried out by A & A Martins at the request of the plaintiff and that there would be an entitlement to reasonable remuneration. That remuneration would be assessed on the basis of the market value of the services provided.
On that basis, Her Honour entered judgment in favour of the Subcontractor in the sum of $198,484.20 plus interest. The Owners were again self-represented during these proceedings.
The Appeal
The Owners appealed the judgment against them, this time represented by Bradley Allen Love Lawyers. The judgment against the Owners was appealed on the basis that the Owners had entered into a written contract expressly with the Builder (that is, not the Subcontractor). Any work done by the Subcontractor thus was not done “at the request of [the Owners].” Rather, to the extent the Subcontractor did work, it must have done so as the request of the Builder – being the party who engaged the Subcontractor.
The Court of Appeal found that it was not open to the primary judge to resolve the proceeding on the basis that the Owners knew, or ought to have known, that the Subcontractor was undertaking the works in some capacity other than as a subcontractor. In the appeal, Justice Elkaim drew an analogy to a subcontracted painter asking a homeowner (whose arrangements are with their builder) what colour they wanted their walls painted. If a homeowner, in that example, were to answer ‘blue’, that would not constitute a direction to undertake the work by the homeowner. Rather, the painter would nevertheless still be on the site at the request of the builder.
It followed that the Court of Appeal found that an essential step in considering a claim in quantum meruit is to ask whether, and how, that claim fits within a particular contract the parties have made. Here, the Owners contracted with the Builder who then chose to undertake the works as a separate corporate entity. Where a company is afforded the advantage of arranging its business in a certain way, they will also bear the risk of the structure and the allocation of resources and risk under the arrangement. Where the Builder was then disentitled to any monies under its contract with the Owners, the Subcontractor was not entitled to claim the same monies, in a roundabout fashion, by arguing quantum meruit principles.
If you are involved in a building dispute, and if you are unsure of your legal rights and obligations under such agreements, this decision highlights the utility of seeking early legal advice. A failure to do so may be complicated and costly.
If you have any questions about a potential breach in your building contract or guidance on entitlements to payment under a contract generally, please get in touch with Laura McGee and Ian Meagher.
Read more