Repudiation is usually imagined as a clean break. A contractor walks off site, refuses to perform. A principal stops paying and engages another contractor to complete your scope. A subcontractor downs tools and refuses to come back. Those are the easy cases, and they are not the ones that fill our files.
The harder dispute, and the far more common one, is the relationship that fails slowly. A party never announces that it is finished with the bargain. It simply stops performing as the contract requires, a little at a time, until the other side has had enough. Establishing repudiation in that situation is a different exercise. There is no single act to point to. There is only a course of conduct, and a question of whether, taken as a whole, it deprived the innocent party of substantially the benefit it bargained for.
SHRL Ventures Pty Ltd v Pedro-X Pty Ltd [2026] QCA 119 is a clean illustration of how a court works through that second kind of case. It is not a construction matter. It concerns a joint venture to run a Pack & Send franchise that collapsed within six weeks. But the questions the Court of Appeal had to answer are the ones we argue about constantly in construction terminations. When does a series of breaches cross from default into repudiation. Whose conduct is attributed to the contracting entity. How do obligations of good faith and cooperation feed into the analysis. And how do duress and unconscionable conduct sit alongside, and sometimes substitute for, an ordinary repudiation case.
This article steps through the decision and draws out what it means for those advising on construction disputes.
The dispute in brief
Pedro-X, owned and controlled by Mr and Mrs Augustine, and SHRL, owned and controlled by Mr Grewal and Mr Singh, entered a Joint Venture Agreement in May 2022. They formed a jointly owned company, Tweed Heads Logistics, to acquire and run a Pack & Send franchise at Tweed Heads on a ten year term. Each party held half the shares. The company had three directors, Mr Augustine, Mr Grewal and Mr Singh.
The franchise was meant to be run for the parties’ mutual benefit by Mr Augustine and Mr Grewal as the two nominated managers. It operated from early July to 18 August 2022. In that short window two things went wrong. Mr Grewal bullied and belittled Mr Augustine, and Mr Grewal did not attend to the business with the diligence the venture required. Mr Augustine confronted him. Mr Grewal apologised, improved for a short time, then reverted.
On 18 August 2022, Mr Augustine met Mr Singh to raise his concerns. At that meeting an oral agreement was reached for Pedro-X to sell its share to SHRL, which the trial judge called the Buy Out Agreement. The trial judge found that agreement was procured by duress and was the product of unconscionable conduct. The Augustines later refused to sign the transfer documents, but SHRL proceeded to exclude Pedro-X from the business and told the franchisor it had assumed full control. Pedro-X commenced proceedings and terminated the Joint Venture Agreement in March 2023.
The trial judge found that SHRL had breached the agreement, repudiated it, engaged in unconscionable conduct, and acted oppressively as against Pedro-X as a shareholder. SHRL challenged and lost on every ground.
Whose conduct counts
SHRL’s threshold argument was a familiar one. Whatever Mr Grewal did, it said, were his personal acts, or at most the acts of an employee of the joint venture company, and not the acts of SHRL. This sometimes occurs in construction disputes when a corporate party tries to put distance between itself and the site conduct of its project manager, contracts administrator, site manager, foreman etc.
The Court rejected it (at [37] to [39]). SHRL’s promises under the agreement required it to take positive steps, to ensure the business was run to sound and ethical standards, to use its best endeavours to promote the venture’s interests, to apply its skills to management, and to act in good faith. The evidence showed that the way SHRL chose to perform those obligations was through Mr Grewal. Read with the secondment clause, that justified treating Mr Grewal as SHRL’s agent for these purposes. The Court added a second and independent answer. Even leaving agency aside, SHRL took no step other than through Mr Grewal to discharge its obligations. So whether or not the conduct was attributed to it, SHRL had failed to perform.
That second point is important to remember. Where a contract imposes a positive obligation to ensure an outcome, a party cannot escape by saying the failure was the act of the individual it deployed to achieve that outcome. The obligation was the party’s. It was not met. The identity of the person who fell short does not rescue it.
Was there a breach at all
Two construction points emerge from the breach analysis.
First, the Court upheld the trial judge’s reliance on standards drawn from the head franchise agreement, even though neither joint venture party was a party to that franchise agreement (at [27] to [28]). The mechanism was a deeming clause in the Joint Venture Agreement, which provided that a failure to adhere to the franchisor’s standards was deemed to be a default of the party’s obligations under the joint venture deed. That is a structure we see constantly. Upstream obligations are pulled into a subcontract or a joint venture deed by a flow down or back to back provision. The lesson is that you do not need privity with the upstream instrument for its standards to bind you, if your own contract deems non compliance with those standards to be a breach.
Second, on good faith, SHRL argued that the clause the trial judge relied on was only a statement of intention rather than a binding obligation (at [29] to [30]). The Court did not need to resolve that. The statement of claim had pleaded an implied term of good faith, and that pleading was admitted on the defence. So however the express clause was read, the obligation to act in good faith was established. The point for drafters and litigators is the same one that recurs in relational construction contracts. A good faith obligation can arrive by more than one route, and an admission on the pleadings can put the question beyond argument before the evidence is even reached.
The heart of it: when breach becomes repudiation
The Court restated the orthodox framework from Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (at [42]). A party may terminate for the other’s conduct where that conduct:
- amounts to a renunciation of the bargain, being conduct that evinces an unwillingness or inability to render substantial performance;
- is a breach of a term the parties agreed to be essential, that is, a condition; or
- is a sufficiently serious breach of a non-essential term.
The trial judge’s language pointed at the second and third of these. The Court of Appeal then did something that matters, in my experience, for the majority of construction terminations. It held that the obligations breached were not essential terms (at [44]). The reasons were that none of the clauses were described in the agreement as a condition; that the obligations they imposed were imprecise, being expressed as duties to act diligently, in a timely manner, or to actively participate, which do not readily support a conclusion that any departure entitles the other party to walk away; and that the agreement contained its own termination machinery requiring notice and an opportunity to remedy, which had not been used.
Most construction contracts do not label their terms as conditions. Obligations to proceed with due expedition, to comply with directions, or to use best endeavours are exactly the kind of imprecise standard the Court had in mind. The practical consequence is that a party seeking to terminate at common law usually cannot rely on the breach of an essential term. It is thrown back onto the third limb, the serious breach going to the root of the contract, which is the most fact heavy and least predictable of the three.
The Court then worked through that third limb and, in a helpful and instructive way, it set out the reasons for doubt (at [47]). The conduct lasted only six weeks. Mr Grewal had improved for part of that period. There was no proof the business suffered financially. A manager was to be employed within weeks in any event, reducing the managers’ day to day role. Pedro-X remained a half owner entitled to its share of profits. And it had not been shown that damages would be an inadequate remedy, which Koompahtoo identifies as a material factor.
On the face of it, those are five serious reasons to find the breaches fell short of repudiation. The fact that the Court went the other way piqued my interest.
It found repudiation made out (at [48]) because the venture was, in substance, a quasi partnership. The two managers had to work together cooperatively and diligently during the critical early period, and Mr Grewal’s belligerence showed that was not possible and was not likely to change. The franchise could be terminated by the franchisor for unremedied default, so the continued existence of the business depended on cooperative effort within short time frames. The agreement itself called for that cooperation and diligence. And, decisively, the trial judge had found that SHRL’s conduct showed it did not have an honest and genuine commitment to the bargain. The breaches were serious not because any one of them was catastrophic, but because together they were systemic rather than a passing phase, and they demonstrated an absence of commitment to the venture itself.
That is repudiation by a thousand cuts. No single act renounced the contract. The cumulative course of conduct, viewed against the cooperative and relational nature of the bargain, did. For construction practitioners advising on a contractor’s persistent failure to progress the works, or a party’s sustained refusal to cooperate in a relationship that depends on cooperation, this is the analysis that will be run. It is also a reminder that the inquiry cuts both ways. The same five doubts the Court acknowledged are the points a respondent will press to defeat a termination, and on slightly different facts they could have carried the day.
Duress, and where unconscionability fits
The Buy Out Agreement opened a second front. The trial judge had found it was procured by economic duress. SHRL argued the wrong test had been applied, contending that economic duress requires illegitimate pressure understood as unlawful conduct only.
The Court gave an extended and genuinely useful survey of an unsettled area (at [69] to [85]). The narrow view, from the New South Wales Court of Appeal in Karam, limits duress to threatened or actual unlawful conduct. The broader view, traced from McHugh JA in Crescendo Management v Westpac, treats pressure as illegitimate where it consists of unlawful threats or amounts to unconscionable conduct. Beach J in AHG WA v Mercedes-Benz described the Karam formulation as a curate’s egg, noting it does not actually rule out lawful act duress. The High Court in Thorne v Kennedy expressly left open whether lawful but illegitimate pressure can suffice. And the United Kingdom Supreme Court in Times Travel has since accepted that economic duress is not confined to unlawful acts.
Doyle JA’s contribution is the observation that it is difficult, conceptually, to stop short of treating as unlawful a threat that is itself unconscionable conduct contrary to section 20 of the Australian Consumer Law (at [78]). Parliament has proscribed unconscionable conduct in trade or commerce, so conduct that contravenes that proscription can fairly be characterised as unlawful for the purposes of duress. On that footing the Court would have upheld the duress finding (at [86]).
The reasoning has an obvious construction analogue. Section 42E of the Queensland Building and Construction Commission Act 1991 provides that a party to a building contract must not, without reasonable excuse, cause another party to suffer a significant financial loss because of the party’s deliberate non-compliance with the contract. It is an offence provision, so a deliberate and inexcusable default of that kind is not merely a breach of contract but a contravention of a statutory prohibition, and on the approach in SHRL there is a respectable argument that a threat to engage in such conduct is a threat to do something unlawful, capable of supplying the illegitimate pressure that economic duress requires. If anything the fit is cleaner than the section 20 route, because a threatened breach of a building contract already sits within the orthodox category of unlawful conduct the Court identified at [78], while section 42E forecloses the answer that the threat was no more than robust commercial pressure. The non-compliance must be deliberate and without reasonable excuse, which leaves a genuine dispute or a bona fide exercise of a contractual right outside the provision, just as the law of duress leaves legitimate hard bargaining outside its reach. The provision has been in force since 2017 but remains largely untested, so this is an argument to be advanced rather than a settled position.
A familiar construction scenario shows how the two doctrines run together. A head contractor owes a subcontractor a progress payment that is plainly due. The subcontractor has separately made a variation claim that the head contractor disputes. The head contractor tells the subcontractor that it will withhold the progress payment or final account unless the subcontractor signs a deed abandoning the variation claim. The subcontractor, needing the cash flow and not having the capacity or time to pursue other recovery avenues, signs, and later seeks to set the deed aside.
The threatened act is the deliberate withholding of a payment the head contractor knows is due, used to force the surrender of a separate claim. If there is no genuine basis for withholding, no bona fide back charge, no defective work, no valid payment schedule reducing the amount, there is no reasonable excuse, and carrying out the threat would contravene section 42E. That makes the pressure a threat of unlawful conduct rather than hard bargaining, and if it left the subcontractor with no practical alternative but to sign, the deed is exposed to being set aside for economic duress. The dividing line is the one the provision itself draws. Where the head contractor has an arguable basis to withhold, the pressure is legitimate and neither section 42E nor duress is engaged. Where the withholding is deliberate and unjustified, and is wielded to extract a release, both are. The point is reinforced by the security of payment regime, since a payment that is due under a payment claim or payment schedule is difficult to withhold with any reasonable excuse, and a deed exacted to give up an entitlement under that regime may separately offend the no contracting out prohibition in section 200 of the Building Industry Fairness (Security of Payment) Act 2017.
In the end it did not need to decide the precise limits, because the unconscionable conduct finding was sufficient on its own to set the Buy Out Agreement aside (at [87]). But the reasoning matters well beyond this case. Settlement deeds, deeds of release and exit arrangements in construction are routinely signed under pressure. If a threat that is itself unconscionable can ground economic duress, the basis for setting aside a deed extracted by that kind of conduct is wider than the strict Karam line would allow. That is a point worth keeping in mind whenever a client tells you they signed because they felt they had no choice.
Unconscionable conduct
The trial judge had found three episodes of unconscionable conduct: Mr Grewal’s bullying in the six weeks to 18 August, Mr Singh’s conduct at the 18 August meeting, and the exclusion of Pedro-X afterwards. The Court held that the first episode, viewed on its own, did not amount to unconscionable conduct, because in that period Mr Augustine was not under any special disability affecting his ability to make a rational judgment in his own interests (at [96] to [97]). He had confronted Mr Grewal, secured an apology, and gone to the 18 August meeting with an option of his own in mind. Equally, the conduct after 18 August was not independently unconscionable if the Buy Out Agreement stood; until Pedro-X disavowed it, SHRL was at worst jumping the gun (at [98]).
So the whole edifice rested on the 18 August meeting (at [99] to [100]). What tipped it over was not that Mr Augustine looked up to Mr Singh, nor that Mr Singh was the more experienced businessman. Those features are common to many joint ventures. It was the combination of the threats: to accuse Mr Augustine of dishonesty toward customers, to communicate that accusation to the franchisor, and to destroy his reputation, including by fabricating an allegation of cheating. That combination gave the conduct a predatory and unconscionable quality. The special disadvantage was assembled from a long list of circumstances, among them that Mr Augustine was outnumbered on the board, had been bullied for six weeks, could not assess the deadlock provision without advice, was told to agree on the spot or have his reputation destroyed, and faced consequences not only for the venture but for his separate Toowong franchise.
The Court then made the point that the episodes cannot be sliced apart (at [103]). The unconscionable conduct on 18 August is what allowed SHRL to present itself as sole owner and to exclude Pedro-X thereafter. The later conduct was the anticipated sequel to the earlier conduct, not a separate matter to be judged in isolation. The whole course of dealing is assessed together, with the earlier bullying forming part of the context that framed the vulnerability, even though that bullying was not by itself unconscionable.
The discipline of this analysis is the important takeaway. A finding of unconscionable conduct is not made by stacking up every unattractive thing a party did. It is anchored to a moment where a special disadvantage was unconscientiously exploited, and the surrounding conduct is read as context for, or consequence of, that moment.
What it means for construction disputes
A few points to take away for construction practitioners.
Repudiation is rarely a single act, and the cases that matter are usually built on a course of conduct. Where a contract does not designate its terms as conditions, termination at common law generally turns on the third Koompahtoo limb, the serious breach going to the root of the contract. That inquiry is fact intensive and can be finely balanced. Build the case on the cumulative effect and on whether the conduct shows an absence of honest and genuine commitment to the bargain, and expect the respondent to press the same factors the Court acknowledged here, short duration, partial improvement, no proven loss, and the adequacy of damages.
Cooperation and good faith can be critical in relational arrangements. Joint ventures, alliances and consortium structures are quasi partnerships that depend on the parties working together. Conduct that makes cooperation impossible can go to the root of the bargain even where no individual breach looks decisive.
A corporate party cannot hide behind the individual through whom it chose to perform. If the obligation was to ensure an outcome and the party performed only through one person, the failure is the party’s failure, whether or not agency is established.
Deeds signed under pressure are more vulnerable than the strict unlawful act theory of duress would suggest. A threat that is itself unconscionable can be treated as unlawful for the purposes of economic duress, and unconscionable conduct under section 20 provides an independent route to set an agreement aside. That is directly relevant to settlement deeds and exit arrangements extracted in the heat of a dispute.
