In Spry Civil Construction Pty Ltd v Aussie-Drain Pty Ltd; Aussie-Drain Pty Ltd v Spry Civil Construction Pty Ltd [2025] SASC 99, Doyle J of the Supreme Court of South Australia was called upon to interpret a line of a commercial quotation in the context of alleged repudiation.

Aussie-Drain Pty Ltd entered into a lump sum agreement with Spry Civil Construction Pty Ltd to carry out sub-surface drainage works at the Murray Bridge Racecourse. The contract was formed by a commercial quote, accepted by email. The quotation included a line providing that “prices need to be reviewed” if “rock is encountered” (the price review clause).

On 7 October 2021, after completing approximately 37% of the work, Aussie-Drain encountered rock, resulting in equipment failure and requiring a revised work method. At a site meeting on 8 October 2021, Aussie-Drain’s principal stated it was “not [his] job anymore” and left the site with most of the crew and machinery. Spry completed the remaining works using its own labour and machinery, assisted by one remaining Aussie-Drain worker and a sanding machine.

At first instance, Magistrate Jackson in the Magistrates’ Court of South Australia found that Aussie-Drain had repudiated the contract on 8 October 2021.

A central question for the Supreme Court of South Australia on appeal was whether the price review clause required the parties in good faith to seek to negotiate a new price, in the event Aussie-Drain encountered rock, or whether the agreement would be discharged immediately if rock were found. It was only in the case where the contract remained on foot pending negotiations, that Aussie-Drain could be taken to have repudiated it by refusing to negotiate and leaving the site.

Justice Doyle acknowledged that the price review clause was not drafted or negotiated by commercial lawyers but by practical business-people, who did not take steps to express their agreement about what should occur if Aussie-Drain encountered rock. Nevertheless, acknowledging that the commercial law should “foster and support commercial practice, not fight it”, Doyle J applied the standard principles for the construction of commercial agreements in Electricity Generation Corporation v Woodside, considered the potential implication of terms in accordance with the well-settled requirements in BP Refinery and the content of parties’ duty of good faith, and ultimately found that the parties were under an obligation to participate in good faith in a review of the price necessitated by the rock encountered.

Aussie-Drain had failed to do so and therefore repudiated or renounced the contract. Justice Doyle concluded with a detailed consideration of Aussie-Drain’s entitlement to payment for part-performance in the circumstances.

The decision can be found here.