On 16 June 2010, Federal Magistrate Cameron held Riteway Transport Pty Ltd liable for a repudiatory breach of contract in respect of three of its subcontractors after they would not purchase B Double trailers for line haul services they performed.

Riteway had asked its subcontractors to upgrade their fleet to B Double trailers. Three subcontractors only agreed to do so if they were compensated for the extra cost via increased cartage rates. Negotiations followed but broke down. Riteway then sought to terminate its contract with each of the offending subcontractors (the terms of which were negotiated by the Transport Workers Union (Agreement) if they did not comply by a certain date. The Court held that Riteway had wrongfully sought to terminate the contract and had repudiated the contract by refusing to give the subcontractors line haul work. It was held liable to pay the subcontractors damages and interest of approximately $125,000 for failure to give three months’ notice of termination pursuant to the Agreement. The $125,000 damages award was calculated based on the decline of net earnings for each subcontractor for the notice period of three months following the termination of the contract. Included in the damages award to each subcontractor was $20,000 representing the goodwill they had in their cartage runs.

For further information on anything in this article or related issues please contact the author:

Elizabeth Guerra-Stolfa
Principal
03 9611 0107
eguerra@harwoodandrews.com.au