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Judgment handed down in Imerva Corporation Pty Ltd v Kuna

29 June 2017

The Court of Appeal today dismissed an appeal against a decision of a judge of the Trial Division of the Supreme Court with respect to the operation of the Domestic Building Contracts Act 1995 (‘the Act’).

The Act prescribes a schedule of progress payments applicable to major domestic building contracts.  It permits parties to depart from that schedule providing that they agree ‘in the manner set out in the regulations’. The regulations require building owners to sign a warning acknowledging the change to their legal rights before signing the contract.

A builder, Imerva Corporation Pty Ltd (‘Imerva’), entered into a contract with Mr and Mrs Kuna (‘the Kunas’) to construct two attached townhouses. The schedule of progress payments departed from the prescribed schedule. The Kunas placed their initials at the foot of each page of the contract, including on the page containing the warning. The trial judge found that this did not comply with the regulations. He held that the initials merely signified that each page was included within the contract and, to comply with the regulations, it was necessary for a signature, or mark, to appear on the dotted line of the warning.

The Court of Appeal found that the judge was correct in holding that the Kunas’ initials placed at the foot of the page of the warning, in an identical manner to their placement on all the other pages of the contract, was insufficient to comply with the regulations. The Court held that it is necessary for the warning to be signed in a manner that demonstrates clearly that owners understand that the legal protection afforded by the Act, with respect to progress payments, will not apply to their building contract. This does not require a signature on the dotted line but the place of signing must enable the necessary inference to be confidently drawn.

The Court further held that the judge was correct in concluding that estoppel is not available to preclude owners from relying upon a builder’s contravention of the Act.

Read the Court's full judgment on Austlii (External link)

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