A recent decision of the NCAT Appeal Panel highlights that the operation of s.10 or s.94 of the Home Building Act 1989 (the Act) is not always to the owner's advantage.
The Act provides that non compliant building contracts (relevantly where a contract is not in writing or where there is no contract of insurance in force) are unenforceable, although quantum merit remains available.
InThompson v Chapman [2015] NSWCATAP 233 it was common ground that the contract was unenforceable - variations were not in written form and there was no contract of insurance required by s.92 of the Act.
Accepting the evidence of an expert, the Tribunal below allowed a profit margin of 20% in its assessment of quantum merit, whereas under the contract the builder would have been limited to an hourly labour rate plus GST for additional work. The decision variously refers to this producing a result that the builder was entitled under quantum meruit to close to or more than he had invoiced.
The Appeal Panel noted that the inclusion of a profit element in a quantum merit assessment was an approach supported by Court of Appeal authority.
The controversy was around whether the contract price acted as a ceiling upon the assessment of quantum merit in circumstances where one of the parties to the contract was entitled to rely on the contract and enforce the contract price.
The Appeal Panel noted that there were no special set of rules that distinguish assessment of quantum meruit in residential building cases. The Appeal Panel noted that contract and quantum meruit were two different remedies which may produce different results. The Appeal Panel explained, in dismissing the appeal (quoting from Sopov v Kane [No 2] [2009] VSCA 141) that contract price is relevant to quantum meruit not because of continuing influence of the contract, but merely as a piece of evidence, showing what value the parties attributed – at a particular time- to the work which the builder was agreeing to perform.
In the media
Apartment building to drive turnaround for construction
industry in next financial year: outlook report
Apartment building and a larger pipeline of infrastructure
activity are expected to drive a turnaround in construction work in
Australia in the next financial year according to the latest
Construction Outlook survey by the Australian Industry Group (Ai
Group) and the Australian Constructors Association (ACA) (30
October 2015)
More...
Published – articles, papers, reports
ABS: Building Approvals, Australia September 2015 (cat
no. 8731.0)
Building approvals are coming off record highs on a month by month
basis, according to the latest ABS data out on Monday, suggesting
governments need to keep a close eye on the supply pipeline for new
housing (02 November 2015)
Building Approvals, Australia (Media Release), Sep 2015 (cat
no. 8731.0). See also Master Builders Australia
Resilience In September Building Approvals and
Building approvals up 20 per cent (04 November 2015)
Practice and courts
ABCB Fixture Unit Ratings and Warm Water Systems The ABCB is currently undertaking a number of plumbing code development and research projects two of which being Fixture Unit Ratings and Warm Water Systems. These consultations are now available for comment on the ABCB website. Submissions close: Fixture Unit Ratings discussion paper: 27 November 2015;Warm Water Systems Report: 11 December 2015
BPB October 2015 e-news
Our e-news is a monthly digest of work by the Board, legislative
updates, events, training and consultation opportunities (30
October 2015) Read
our October 2015 e-news
BPB: Sydney Water Tap in: information for
certifiers
From November 2015, Sydney Water Tap in will replace the Quick
Check service and give certifiers online access to connections,
building plan approvals and diagrams (29 October 2015)
Sydney Water Tap in: information for certifiers
BPB: Codes SEPP amendments: comment by 16
November
Minor amendments to the State Environmental Planning Policy
(Exempt and Complying Development) 2008 are on exhibit until 16
November 2015 (29 October 2015).
Codes SEPP amendments: comment by 16 November
Cases
Coroneos v Trade Compliance Group Pty Ltd [2015]
NSWCATAP 236
Appeal – home building – defective and incomplete work
- premature application for damages while contract on foot –
construction and application of cl 12(a) of the contract that
enabled the homeowner to withhold payment of a progress payment
claim by the builder – adequacy of reasons.
More...
Thompson v Chapman [2015] NSWCATAP 233
APPEAL — assessment of quantum meruit.
More...
Steele & Associates Pty Ltd v Heath [2015] NSWCATAP
239
CONTRACT- whether repudiation or non-performance of contractual
obligations precludes claim under warranties implied by Home
Building Act. PROCEDURE- procedural fairness- right to
cross-examine – whether party denied procedural fairness.
HOME BUILDING ACT – implied warranties.
More...
This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.
