Australia: You say toma­to, I say tom­ah­to: The bat­tle of forms and build­ing contracts

Last Updated: 25 May 2019
Article by Sean Greenwood


In the recent deci­sion of Stepanos­ki v Aslan [2018] NSWSC 1160, the New South Wales Court of Appeal had to grap­ple with whether:

  1. the par­ties involved were bound by the first build­ing con­tract that they signed; or
  2. whether the sub­se­quent con­tract, which was signed by the par­ties lat­er and back­dat­ed to the date of the ear­li­er con­tract, replaced the first contract.

The facts

On 14 Octo­ber 2014, the plain­tiffs entered into a cost-plus build­ing con­tract (Cost-Plus Con­tract) with the defen­dant builder in respect of the con­struc­tion of two res­i­dences on land that was owned by the plaintiffs.

In short, a costs-plus con­tract is a con­tract where the builder is paid the actu­al cost of work under­tak­en plus a per­cent­age over and above those costs on account of mar­gin and pre­lim­i­nar­ies. These con­tracts can be used when the total amount payable to the builder can­not be rea­son­ably deter­mined at the time of enter­ing into the con­tract, or the scope of the work is unknown, and the own­er takes the risk of that cost.

Sub­se­quent­ly, the plain­tiffs and the defen­dant signed anoth­er build­ing con­tract, being a home build­ing con­tract for work over $5,000 (Lump Sum Con­tract) and back­dat­ed to the date at which the Cost-Plus Con­tract was signed by the parties.

Under a Lump Sum Con­tract, a sin­gle 'lump sum' price for all the works is agreed before the works are com­menced by the builder.

The plain­tiffs alleged breach­es of the build­ing con­tract by the defen­dant and com­menced pro­ceed­ings claim­ing damages.

In the course of the pro­ceed­ings, the Court was required to deter­mine the terms of the build­ing con­tract and, in rela­tion to that par­tic­u­lar issue, was asked by the par­ties to decide whether the Lump Sum Con­tract was intend­ed to replace the Cost-Plus Contract.

The defen­dant builder ini­tial­ly argued that the Lump Sum Con­tract was not intend­ed to replace the Cost Plus Con­tract to any extent and that it was, in effect, no more than a sham. He assert­ed that the Lump Sum Con­tract was brought into exis­tence sole­ly to enable the plain­tiffs to rep­re­sent to their bank (who were financ­ing the project) that they had a con­tract with a builder for a fixed sum, a require­ment spec­i­fied in a loan approval giv­en to the plain­tiffs by their bank.

In the course of oral address­es after all of the lay evi­dence had been com­plet­ed, the defen­dant builder's posi­tion changed.

In that regard, the defen­dant was grant­ed leave to amend his Response and Cross Claim to assert, among oth­er things, that in Jan­u­ary 2015, the par­ties signed the Lump Sum Con­tract which they dat­ed 14 Octo­ber 2014 for the sole pur­pose of pro­vid­ing the doc­u­ment to the plain­tiffs' bank to assist the plain­tiffs to obtain finance for the project, but:

  1. the par­ties oral­ly agreed that they would con­tin­ue to be bound by and apply the Costs Plus Con­tract; and
  2. the defen­dant builder had informed the first plain­tiff a num­ber of times, and the first plain­tiff had agreed, that the cost of the project would be greater than the amount stat­ed in the Lump Sum Contract.


In deter­min­ing whether the par­ties were bound by the Cost-Plus Con­tract (which was signed by the par­ties first) or whether the Lump Sum Con­tract (which was signed lat­er but back­dat­ed to the date of the Cost-Plus Con­tract) pre­vailed, Emmett AJA found at [69] that despite minor incon­sis­ten­cies in the con­tem­po­ra­ne­ous mate­r­i­al, the major­i­ty of the doc­u­ments relat­ing to the project (which includ­ed the pro­posed build­ing doc­u­ments, such as archi­tec­tur­al draw­ings and a build­ing quote) point­ed to the par­ties' inten­tion as being bound by the Lump Sum Contract.

In reach­ing that con­clu­sion, his Hon­our found at [13] that it was not pos­si­ble to find any agree­ment that the Cost-Plus Con­tract was to remain bind­ing on any par­ty in any way and, despite the dis­sat­is­fac­tion of the defen­dant, the arrange­ments (as between the par­ties) were changed in a crit­i­cal respect by the sign­ing of the Lump Sum Contract.

Accord­ing­ly, his Hon­our decid­ed that the par­ties were bound by the Lump Sum Contract.


This case demon­strates how the Courts deal with the exis­tence of two con­struc­tion con­tracts and decide which one ought to bind the parties.

In that regard, the deci­sion of Emmett AJA high­lights how, in deter­min­ing the terms of a build­ing con­tract, the Court will attach sig­nif­i­cant weight to the con­tem­po­ra­ne­ous mate­r­i­al rather than the oral evi­dence pre­sent­ed by at tri­al the parties.

The case also serves as a time­ly reminder to con­trac­tors that a sec­ond con­tract, entered into sole­ly for finance pur­pos­es can be found to be bind­ing, pro­vid­ed the par­ties act in a way which sug­gest the con­tract applies to them, as occurred in Stepanos­ki as detailed above.

For further information please contact:

Sean Greenwood, Associate
Phone: +61 2 9777 8315

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions