The enforceability of Deficient HBA Contracts

The Home Building Act 1989 (“HBA”) provides the legislative framework for residential building works and the subsequent contracts that operate within the gambit of the HBA. Section 7 of the HBA sets out various requirements that a contract must adhere, relevantly, section 7(1) provides that: 

“A contract must be in writing and be dated and signed by or on behalf of the parties to it”.

Further, section 10 of the HBA provides that:

  1. “A person who contracts to do any residential building work, or any specialist work, and who so contracts—

    1. in contravention of section 4 (Unlicensed contracting), or

    1. under a contract to which the requirements of section 7 apply that is not in writing or that does not have sufficient description of the work to which it relates (not being a contract entered into in the circumstances described in section 6(2)), or

    1. in contravention of any other provision of this Act or the regulations that is prescribed for the purposes of this paragraph,

is not entitled to damages or to enforce any other remedy in respect of a breach of the contract committed by any other party to the contract, and the contract is unenforceable by the person who contracted to do the work. However, the person is liable for damages and subject to any other remedy in respect of a breach of the contract committed by the person”.

However, despite the above, the Supreme Court in Dyjecinska v Step-Up Renovations (NSW) Pty Ltd has held that, despite a failure by parties to meet the requirements under section 7 of the HBA, a builder’s rights to enforce a contract are not necessarily prevented. 

Irrespective of this, the Court held that Quantum Meruit is available where no contract is enforceable. 

Dyjecinska v Step-Up Renovations (NSW) Pty Ltd

Background

Dyjencinska (“the Owner”) was the registered owner of a 2-story property located in Forest Lodge, NSW. In or about late 2020, the Owner engaged Step-Up Renovations (NSW) Pty Ltd (“the Builder”) to complete residential building works in the amount of $145,120 plus GST (“the Contract”). 

The parties agreed, and it was undisputed that the Contract was in writing (albeit unsigned) and sufficiently described the works to be performed. A final form of the contract (unsigned and dated) was provided on 23 December 2020 – works commenced shortly thereafter. 

On 22 February 2021, the Owner suspended the works and denied the Builder access to the property, also refusing to pay the Builders invoices.

¹ [2024] NSWSC 159.
² [2024] NSWSC 159.

On 6 July 2021, the Owner wrote to the Builder, alleging that the Builder had refused to rectify defects with respect to the Works, which the Builder responded to on 12 August 2021, requesting access to the property to complete said defective works. 

On 16 August 2021, the Owners purported to terminate the Contract due to failure to rectify by the Builder, and the Builder, on 16 September 2021, accepted the Owners repudiation and terminated the contract. 

Prior Proceedings

Proceedings were commenced in the NCAT with respect to the parties’ competing claims, being the Owners claim for defective works and the Builders claim for payment/recovery of invoices for works performed pursuant to the Contract. The proceedings were originally determined, largely in the Builders favour. 

Subsequently, the Owner appealed the decision in first instance, stating that the Contract was not enforceable, and as such no payment was due. This was as the Contract did not comply with section 7 of the HBA and was unenforceable pursuant to section 10. The Appeal Panel found that the contract was in fact enforceable, finding that the intention of the HBA does not require strict compliance with all requirements as found in section 7. As such, the Appeal Pannel made orders that the Owner pay the Builder the sum of $105,517.09, being the total amount of the invoices claimed by the Builder. 

Again, the Owner appealed the Appeal Pannel’s decision to the NSW Supreme Court. 

Current Proceedings

The key issue advanced by the Owner in these proceedings was that the Contract did not comply with section 7 of the HBA as it was not ‘in writing’ due to being unsigned and dated by the parties and as such, was unenforceable pursuant to section 10 of the HBA. As a result, the Owner contends that the Builder is not entitled to claim damages under the Contract. 

However, the Owner did not dispute the works being sufficiently described, or the availability of the Builder to seek a Quantum Meruit. 

The Court found that, although the Contract was unsigned and dated, this breach of section 7 of the HBA does not prohibit the Builders right to enforce said Contract, as, upon reading the HBA, they found that it was not the invention of the HBA to require strict compliance with every section 7 requirements. The Court was largely in agreement with the prior Appeal Pannel. 

As such, it was found that, failure to comply “does not necessarily make the contract unenforceable or render the builder not entitled to damages” and “that it was not the intention of the legislation that a builder should be deprived of its rights under an otherwise conforming contract simply because it has not been signed”.

The Court also stated that, irrespective of these findings, the Builder would be entitled to a Quantum Meruit with regard to the sum claimed. 

Summary

³ [2024] NSWSC 159 [148].
⁴[2024] NSWSC 159 [149].

A written contract that is accepted, other than by written signature, may still constitute a “contract in writing” for the purposes of s 10(1)(b) of the HBA. Where a contract is undated, unsigned and not given to the homeowner (as required by section 7B of the HBA), this will not necessarily make the contract unenforceable by reason of section 10(1)(c) of the HBA. This is because legislative intention relating to s 10 clearly intended to allow builders to enforce unsigned contracts on the basis a contract being unsigned is a minor contravention of the HBA.

Article by Zac Thomas