Melbourne Law School - Research Publications
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ItemContract Damages for Defective Construction Work: An Unsolvable Puzzle?(Society of Construction Law, 2022)The paper considers the assessment of damages for defective work and the puzzle posed by rectification damages. It outlines the high-level principles applicable to it in the UK and Australia, and goes on to focus on the 2017 Australian decision of Stone v Chappel. In that case the court distilled the factors relevant to whether it is reasonable to award damages based upon the rectification measure, and provided a ‘shopping list’ of principles, which has been recently borne out in Xtraordinary Constructions Pty Ltd v Luppino. The paper suggests that the approach taken in Luppino demonstrates that the list in Stone is sufficiently flexible and robust and is worthy of consideration in other jurisdictions. However, the author highlights a risk that the codification of factors as expounded in Stone could undermine considerations which should be overarching, such as the need for the building to be safe for all occupants. He warns that a potential disparity in bargaining positions could encourage builders to reflect these factors in their contracts in order to preclude arguments that residents should expect anything better than a baseline level of quality. For these reasons, the paper suggests that it should be an overriding factor within any adopted menu of elements that rectification be deemed reasonable to the extent that the defect threatens the health and safety of occupants of the building.