HBA Contracts – to sign or not to sign?
In the decision of the Supreme Court, Dyjecinska v Step-Up Renovations (NSW) Pty Ltd [2024] NSWSC 159 (Dyjencinska), the Court considered the impact of an absence of signatures within a contract related to the performance of renovation works (the Works).
Facts
Dyjencinska (the Owner) requested Step-Up Renovations (NSW) Pty Ltd (the Builder) to perform the Works on the Owner’s property. Both parties negotiated a written residential building contract valued at $145,120 (the Contract), however neither party signed nor dated the Contract, which meant it could not be considered to have been ‘in writing’. After initial completion, the Owner suspended the Works and refused to pay the Builder $107,662.50 in invoices.
Decision
The Court determined that the absence of signatures within the Contract can be considered a breach under section 7 of the Home Building Act 1989 (NSW) (HBA) which requires a contract to be in writing, dated and signed by the parties. However, considering that the purpose of the HBA is to promote transparency and outline licensing and workmanship standards, section 7 does not need to be strictly complied with when considered simultaneously with section 10 of the HBA.
As such, the Court had found the Builder was able to enforce the Contract if it was written down and contained a ‘sufficient description’ of the Works to be completed.
Take home tips
Dykecinska highlights the importance of a clear contract exchange and that any contract must specifically outline exactly what is required for performance. Moreover, the case indicates that section 10 of the HBA requires strict compliance with section 7 to ensure a contract is in writing and contains sufficient descriptions of the work but does not require strict compliance with the latter half of section 7 which specifies the need for a signature.
This means that in the event of any action being brought against a builder for non-compliance with section 7, section 10 cannot restrict a builder from making a quantum meruit claim to uphold their right to payment of invoices for completed works.
A quantum meruit claim allows a builder or contractor to be paid for work completed or materials supplied that goes beyond the requirements listed in the original contract. For builders, this claim may arise where there is a variation to the contract or when property owners request performance of activities that are not covered by the contract.
Although, these claims cannot be made involuntarily, and a builder must prove that:
- The request was outside the scope of performance specified under the contract.
- The owner was aware that the variations were being completed by the builder and were outside the scope of specified contractual performance.
- The owner knew the builder was expecting payment for the variations.
- The builder had provided evidence that the amount claimed was fair and comparable to the variations performed.
The builder must also prove that the owner accepted the benefit that arose from the completion of the variations.[1]
Clearly, Dykecinska remains a good example of how builders must give thought to the contracts they enter into and be aware of how they are drafted to reduce liability and ensure performance of written obligations.
Comparatively, the Court expressed that even if the relationship between sections 7 and 10 of the HBA has been misconstrued, homeowners must comply with the determined payment schedules listed within a written contract.
We recommend that all builders:
- regularly review your contractual obligations;
- ensure your contracts are written down and contain reasonable and sufficient descriptions of the work required for completion of the contract; and
- not commence work until the contract has been signed
If you or anyone you know requires assistance with preparing contracts or determining enforceability of a contract, please contact Bradbury Legal on (02) 9030 7400, or at info@bradburylegal.com.au to see how we can assist you.
[1] Goodacre v Trinder Alpine Constructions Pty Ltd [2013] NSWCCT 124.