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Residential Focus

27 August 2019

#Property & Real Estate

Published by:

Divya Chaddha

Residential Focus

A licence and insurance makes a builder  

The Supreme Court recently handed down the decision of BH Australia Constructions Pty Ltd v Kapeller [2019] NSWSC 1086, a dispute concerning the identity of the builder. It was concluded that irrespective of conflicting company details in the building contract, the contracting party was the building entity that had both a licence and insurance for the work.  

The facts

In or around September 2015, the owners entered into a written contract for the building of their home with either:

  • Blissful Developments Pty Ltd (Developments), a company to which voluntary liquidators were appointed in April 2018, and which was never licenced or insured, but which was named (by title and ACN) as the builder on the contract (which was signed for and on its behalf); or
  • Blissful Constructions Pty Ltd (Constructions), which was licenced, obtained homeowners warranty insurance for the work and whose licence number was used on the contract.

The contract confusingly referred to both companies, as well as “Blissful Properties”.

In early 2017, disputes arose as to completion of work and outstanding payment.

In late 2017, the owners commenced proceedings against Developments, asserting that it was the contracting party and that it was in breach of the contract for failing to hold a licence or home warranty insurance. The owners asserted, in reliance upon s 10 of the Home Building Act 1989, that Developments could not enforce the contract and the owners were thus relieved from the obligation to pay any monies owing. Constructions was joined to the application and brought a cross application against the owners, claiming that it was the correct contract counter party and that it was owed $123,634.50.

After liquidators were appointed to Developments the current or former administration manager of each company gave a statement contrary to this position.

The decisions of the Tribunal and Appeal Panel

During the hearing at first instance, Constructions sought to ‘undo’ an earlier order joining it as a respondent and to withdraw the cross application.

The Tribunal at first instance held that the contracting party was Developments for reasons including that it was named in the contract, each party treated it as such up until the initial stages of the dispute, that there was a proposed novation and that Developments had been receiving the payments under the contract. The Tribunal accordingly dismissed Constructions’ cross application.

The owners appealed.

The Appeal Panel considered whether it could have regard to post-contractual conduct, in determining who the counter party to the contract was. Among its reasoning that it could was the statement that “Except to the extent that subsequent conduct of the parties constitute admissions by one or other party they are largely equivocal”. This led the Appeal Panel to disregard much of the post-contractual conduct.

The Appeal Panel concluded that the contract itself suggested that the contracting party was Constructions, particularly given that Constructions was licensed and had obtained home warranty insurance for the works and the parties would have intended for the contract to be lawful.


Constructions sought leave to appeal the decision of the Appeal Panel, arguing that the Appeal Panel had made an error of law in determining that post-contractual conduct is largely equivocal on the question of the contracting parties, unless it constitutes an admission by a party.

The Supreme Court agreed that there was an error of law in elevating “a proposition descriptive of the particular evidence in the case to a general proposition of law”. Leave to appeal was allowed. 

The Court was against the proposition that the post-contractual conduct could be had regard to in order to identify the parties to a wholly written contract, noting there was no support for this in the authorities to which it had been directed. 

The Court concluded that the parties must have intended that Constructions was to be the builder given it held the licence and had obtained the insurance and had intended not to break the law.  There was an obvious mistake in the contract to the extent it named Developments.

Lessons for contracting parties

Due diligence is not just for large projects. Owners should ensure their contractors are licensed, insured and that the contracting entity is identical to the licensed and insured entity. Likewise, contractors with multiple entities within their corporate structure should take care to ensure that the contracting entity is correctly identified. 

Authors: Christine Jones & Divya Chaddah

In the media

HIA: Market to stabilise 20 per cent below peak
"The easing of wider economic and housing market conditions has given rise to a situation where monetary and fiscal stimulus is possible, without fear of overheating house prices,” stated HIA’s Chief Economist, Tim Reardon (23 August 2019).  More...

NFIA: Australia’s fire industry should face mandatory licensing
Based on historical data it can be said that fire safety systems in numbers of buildings in Australia are non-compliant and are at high risk of not protecting the occupants of a building in the event of fire (22 August 2019).  More...

MBA: Transport infrastructure wave to spur construction higher
The impending rollout of major government-led transport infrastructure will be good news for thousands of small construction businesses across Australia, according to newly-released forecasts from Master Builders Australia (21 August 2019).  More...

How the construction industry got itself into this mess
It’s a national scandal – worse, for now, in NSW – but the problems of the construction industry will likely just keep growing until we manage to find a pathway to systemic change (20 August 2019).  More...

Media investigation highlights need for reform
What a registration scheme implements is the right checks and balances to make sure that at all times the people working on jobs that involve public safety and public confidence - such as the building sector – are competent to do so,” said Mr McIntyre, CEO, Engineers Australia (20 August 2019).  More...

667,000 apartments in 18 years. What could go wrong?
Experts warn that many of Australia's apartment buildings are riddled with defects, following a decades-long building boom. A study by Deakin and Griffith universities also surveyed buildings in Australia’s east coast states and found more than 70 per cent had at least one defect. All were built after 2003 (16 August 2019).  More...

Significant building reform’ needed to restore insurers’ confidence
Insurers won’t consider offering unrestricted products in the building industry professional indemnity market until confidence in the sector is restored, Insurance Council of Australia (ICA) says (12 August 2019).  More...

Mascot Towers repair bill hits $20m as engineers close in on cause of cracking
Unit owners in Sydney's evacuated Mascot Towers building have learnt the repair bill could blow out to $20 million as construction engineers zero in on what caused the complex to crack (23 August 2019).   More...

Green light for $7m Mascot Towers repairs
Remediation work on Sydney's beleaguered Mascot Towers can now begin after unit owners agreed to pay a special $7 million levy. The sum will be raised by apartment owners and will pay for stages one and three of the complex’s remediation work (23 August 2019).  More...

Have your say on the NSW draft formwork code of practice
The NSW Government is seeking feedback on a draft formwork code of practice, which aims to provide practical guidance for workers and businesses when working with formwork and falsework (20 August 2019).  More...

Red tape and taxes account for half of a house and land package - NSW
HIA commissioned the Centre for International Economics to perform a bottom-up investigation of the magnitude of the taxes and red tape in housing costs. Stamp duty on the land and the house, GST, land tax, council rates, payroll, income and company taxes combine to raise almost $180,000 in taxes on a typical new house and land package (19 August 2019).  More...

Mascot builder 'didn't know how to read a construction drawing', commissioner says
The new NSW building commissioner, who has only been in the job three days, criticises the builders of Mascot Towers — evacuated in June because of structural faults — but says the industry does not need further regulation (16 August 2019).  More...

Communities Must Support Urban Infrastructure and Urban Density
The NSW Government needs to work within the IA strategy to ensure that infrastructure networks are supported by robust new development and support increased densities around public transport nodes, particularly metro rail stations (15 August 2019).  More...

Practice and courts

RICS draft guidance note - Measurement of land for development and planning purposes (1st edition)
Once adopted, the guidance will have far-reaching implications for development surveyors, planners, architects and government administrators around the world as the new standards become global best practice for the consistent calculation of land measurement and associated metrics. Consultations close on 17 September 2019 (06 August 2019).  More...

ABCB: Energy efficiency scoping study
The ABCB has released an energy efficiency scoping study for public comment. The study outlines an approach and scope for investigating possible changes to the NCC’s energy efficiency provisions, with a focus on NCC 2022. This work will consider the COAG Energy Council’s Trajectory for Low Energy Buildings. Consultation closes 8 September 2019.  More...

CER: Consultation for the national greenhouse and energy reporting regulations and auditor registration instrument
The Department of the Environment and Energy has released draft amendments to the National Greenhouse and Energy Reporting Regulations 2008 (the Regulations), and the CER has released draft amendments to the National Greenhouse and Energy Reporting (Auditor Registration) Instrument 2019 (the Instrument). The consultation period for the draft amendments to the Regulations and Instrument will close 28 August 2019 (15 August 2019).  More...

CER: Public consultation open for changes to solar postcode zones
The Clean Energy Regulator is proposing updates to postcode zones for small-scale technologies under the Small-scale Renewable Energy Scheme. The changes will affect the number of small-scale technology certificates (STCs) for eligible systems in certain postcodes. If agreed, the changes will come into effect from 1 October 2019).  More...

GBCA important deadlines - green star certification for your project
Many project teams have timelines set around major events. To support this, these guidelines below (based on typical time frames), which specify the deadlines you’ll need to meet in order to have your project certified in time for key milestones in 2019. Deadlines are from 08 April – 04 November 2019.  More...

Draft formwork code of practice
The updated Code, which is supported by industry, provides information on how to manage risks in this high-risk industry and provides a framework outlining best practice for businesses. The consultation period is open until 17 September 2019.  More...

NSW Fair Trading: security of payment laws start soon
The Building and Construction Industry Security of Payment Amendment Act 2018 (the Amendment Act) and the Building and Construction Industry Security of Payment Amendment Regulation 2019 (the amending Regulation) will commence on 21 October 2019.  More...

BPB releases summary of key audit findings for 2019
The Building Professionals Board has released a summary of key findings so far from its 2019 program of certifier audits. Read more about the audit program, including the objectives and summary of findings. As audits continue, more findings will be added (August 2019)

New dates for Environmental Planning & Assessment Act updates
Councils, certifiers and other industry practitioners have more time to implement some of the recent EP&A Act updates. Changes affect new provisions for building and subdivision certification, Local Strategic Planning Statements for councils in the Greater Sydney Region and Community Participation Plans. There will be a number of other changes that will involve further design and consultation from mid to late 2018 outlined here


Murrant v Building Professionals Board [2019] NSWCATOD 130
The decision of the Board to reprimand Mr Glenn Murrant and to impose a fine in the amount of $10,000.00 is affirmed. ADMINISTRATIVE REVIEW – accredited certifier – findings of unsatisfactory professional conduct – disciplinary orders. Administrative Decisions Review Act 1997; Building Professionals Act 2005; Environmental Planning and Assessment Act 1976; Environmental Planning and Assessment Regulation 2000

Hanson v Metricon Homes Pty Ltd (No 2) [2019] NSWCATAP 214
The appellants are to pay the respondent’s costs of the appeal as agreed or assessed.
COSTS – appeal dismissed – whether order for costs should be made
Civil and Administrative Tribunal Act 2013; Civil and Administrative Tribunal Rules 2014; Home Building Act 1989

Paraiso v CBS Build Pty Ltd [2019] NSWCATAP 211
APPEAL – Home Building – claim for variations on contractual basis – further claims for adjustment of provisional sum –alternative claims by builder on quantum meruit basis – no error of law – leave to appeal declined

BH Australia Constructions Pty Ltd v Kapeller [2019] NSWSC 1086
CONTRACT – wholly written contract – dispute as to identity of builder to perform residential building – whether regard may be had to post-contractual conduct – where contract identified one company as builder but gave another company’s licence and insurance details – parties taken to have agreed to a contract which was lawful and enforceable 

Harris for and on behalf of the estate of Harris and Harris v Rapisarda [2019] NSWSC 1088
ESTOPPEL – Anshun estoppel – where proprietors commenced earlier proceedings against builder alleging defective workmanship – where defendant architects prepared the building contract and supervised builder’s work but were not joined in earlier proceedings – where earlier proceedings referred out and referee’s report adopted – where proprietors do not in these proceedings seek findings inconsistent with those of referee in earlier proceedings – whether unreasonable for proprietors not to have joined architects in the earlier proceedings so that they are now estopped from bringing these proceedings 
CIVIL PROCEDURE – pleadings – striking out – abuse of process

Edwards v Commissioner for Fair Trading, Department of Finance, Services and Innovation [2019] NSWCATAP 208
Leave to appeal on a ground other than a question of law is granted.
APPEAL – licensing and regulation – leave to appeal on a ground other than a question of law – whether Tribunal’s decision unjust – whether significant new evidence had arisen since the hearing below
 ADMINISTRATIVE LAW – Practice and procedure – Agency's duty to produce documents under s 58 Administrative Decisions Review Act 1997; Civil and Administrative Tribunal Act 2013 (NSW); Home Building Act 1989 (NSW) 

Margaret Ritchie v Advanced Plumbing and Drains Pty Ltd [2019] NSWSC 1028
CIVIL PROCEDURE – Leave to proceed against insurer – defendant in liquidation – third party claims against insurers – arguable case that policy responds to liability – construction of insurance contracts – whether insurer has validly disclaimed liability – held arguable case against defendant – held arguable case that insurance policy responds to liability – held insurer has not discharged onus disclaiming liability – held leave to proceed against insurer granted.
CONTRACT LAW – Interpretation of insurance contracts – exclusion and limitation clauses – construing ambiguous words – whether general expression “spark producing equipment” should be read down – held general expressions to be read in context – held expression confined to include only specified equipment – held general expression to be read down.


Regulations and other miscellaneous instruments
Contaminated Land Management (Adjustable Amounts) Notice 2019 (2019-404) — published LW 23 August 2019
Dust Diseases Tribunal Regulation 2019 (2019-405) — published LW 23 August 2019
Protection of the Environment Operations (Underground Petroleum Storage Systems) Regulation 2019 (2019-411) — published LW 23 August 2019
Civil Liability Regulation 2019 (2019-384) — published LW 16 August 2019
Proportionate liability under the Environmental Planning and Assessment Act 1979
Environmental Planning and Assessment Amendment (Newcastle Gas Terminal Project) Order 2019 (2019-387) — published LW 16 August 2019

Environmental Planning Instruments
State Environmental Planning Policy (Housing for Seniors or People with a Disability) Amendment (Heritage Conservation Areas Exemption) 2019 (2019-394) — published LW 16 August 2019

The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this newsletter is accurate at the date it is received or that it will continue to be accurate in the future.

Published by:

Divya Chaddha

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