A case summary, mistake in building contract and building defects

A relatively small case came before the Appeal Panel of Civil and Administrative Tribunal recently involving a homeowner (“Adams”) a contractor (“Parsons”) and a defective concrete slab.

The case is relatively small in the sense that the amount of the claim was $22,000. However, it deals with some fundamental legal principles, and some of the key requirements of the Home Building Act 1989 which, if not attended to carefully would have much larger consequences where the value of the work is higher.

It’s a case which homeowners, contractors and owners corporation’s alike should use a refresher on how important it is to double check the details before entering in to a building contract for residential building work.

Sarah Adams contracted with Dennis Parsons for Parsons to construct a concrete slab. About two months later parts of the slab had started to lift. Adams obtained advice from an engineer and was advised the slab needed to be demolished and replaced.

Adams succeeded at first instance in recovering $18,726. Parsons appealed this decision.

Parsons appealed on two bases:

1. He was not personally liable as the work was done by his company, D & J Parsons Pty Ltd.

2. As he relied on plans provided to him by the homeowner, and as the homeowners certifier inspected and approved the piers, he was not liable.

First issue

The first basis concerns what is referred to as “privity of contract”. This is a legal concept which means only a party to a contract may sue or be sued under the contract.

The “contract” however was in fact a quotation which was on the company letterhead but referred to the licence number belonging to Parsons personally.

The Appeal Panel applied the following legal authority:

Where the documents are silent or ambiguous, but there is undoubtedly a contract, the identity of the parties must be determined objectively from the surrounding circumstances: Air Tahiti Nui Pty Ltd v McKenzie (2009) 77 NSWLR 299; [2009] NSWCA 429 at [28]

The Appeal Panel noted that the only contractual document was the quotation, that Parsons issued receipts to Adams which did not reference the company name, and that before entering into the contract, Adams asked Parsons whether he had insurance and a licence.

The Appeal Panel applied the long standing case authority on contract interpretation, Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24, which provides that a court may look at the surrounding circumstances and the subject matter of the contract to resolve an ambiguity.

The Appeal Panel looked at the circumstances and in consideration of the fact that the Home Building Act 1989 makes it an offence to do work without a licence, concluded that the parties intended the contract was with whoever held the contractor licence.

Second Issue

The second basis of appeal concerns the defence under the Home Building Act 1989 known as the “Section 18F” Defence. This enables a contractor to defend a defect claim on the basis that:

a. instructions given by the person for whom the work was contracted to be done contrary to the advice of the defendant or person who did the work, being advice given in writing before the work was done, or


b. reasonable reliance by the defendant on instructions given by a person who is a relevant professional acting for the person for whom the work was contracted to be done and who is independent of the defendant, being instructions given in writing before the work was done or confirmed in writing after the work was done.


The Appeal Panel found that Parsons could not parsons could not succeed on this defence because there was no evidence that the certifier gave Parsons instructions in writing.

The Appeal Panel also commented that, Section 18F is the only provision in the Home Building Act 1989 which could be used as a defence to a claim for building defects.

Although this case involves only a relatively small claim, I have seen these issues arise in the context of much larger issues. When issues such as this arise there is a significant increase in the legal costs incurred as often many documents need to be reviewed and witness statements need to be taken to verify the parties intentions. Where the documents, and the surrounding circumstances remain unclear, more time is also spent at the hearing making submissions and cross-examining witnesses.


The information provided in this article is general information only and should not be relied upon as legal advice or be used as a substitute for obtaining legal advice. The specific circumstances relating to you impact upon your legal rights and obligations and personal legal advice based upon your circumstances should be obtained. This area of law changes frequently and the law may have changed after the time this article was prepared, up-to-date legal advice should be obtained. Please do not hesitate to contact Williamson Lawyers if we may be of assistance.