Construction business collapses after legal brawl with ALDI supermarket chain
The construction industry has claimed another scalp, with BBB Construction now placed in administration.
But while the company may have been affected by the general downturn in the construction industry, the collapse also comes after the business has been embroiled in several years of ongoing legal turmoil with supermarket giant ALDI.
The legal brawl has been cited by legal and property experts as a leading case in determining when commercial parties have the ability to walk away from negotiations without incurring legal liabilities.
Back in 2006, BBB had negotiated with ALDI about a possible commercial agreement over a piece of land on which the company could run a supermarket. Negotiations continued over a year, during which time BBB started constructing a second basement for the land, which ALDI requested.
In 2007, final documents had already been prepared when ALDI walked away from the agreement. BBB sued, suggesting it incurred costs on ALDI's representations and that it acted unconscionably and had misled the business.
But the Supreme Court ruled in favour of ALDI, saying BBB regarded itself as "uncommitted, and free to withdraw, before an agreement for lease was executed and exchanged".
"It can hardly have been unconscientious for ALDI to take the same approach."
BBB appealed, but the New South Wales Court of Appeal upheld the ruling in July of this year.
The case has been cited by legal experts as a key discussion in informing legal parties of when they can walk away from negotiations.
Barrister at law firm Greens List Barristers, William Stark, wrote about the case, warning parties that when engaging in negotiations, "it is important to recognise that you may become legally bound to the deal if you are not extremely careful in addressing the issue of when you have reached an agreement".
Allens partner Tony Davies has also written that businesses must "always consider at what point you want to be bound".
"Generally, in the interests of certainty, this should be addressed expressly in writing at the outset."
The company was placed in administration on Monday, November 19. SmartCompany has received no comment from BRI Ferrier administrator Andrew Cummins on the background behind the collapse. The company's website also appears to be offline.
SmartCompany also sought comment from ALDI but did not receive a reply before publication.