Key takeaways

The decision in this case emphasises that a written contract may be valid and enforceable despite being undated and unsigned.

This case serves as a critical reminder that:

1. Builders should not commence work under a residential building contract until it has been signed and dated by the homeowner
2. Residential building contracts (including any variations) should contain a sufficient description of the work and be signed and dated by the parties to avoid any ambiguity as to what the parties have agreed will be done and on what terms
3. Builders and homeowners should maintain clear and precise records of their agreements so that they can be easily construed, interpreted or given effect if they become contested.

Facts in this case

Ms Izabela Dyjecinska (Homeowner) negotiated and entered into an agreement with Step Up Renovations (NSW) Pty Ltd (Builder) to carry out several alterations and additions to a terrace house in Sydney, NSW.

The Builder provided the Homeowner with a copy of the final form of the agreed document representing the contract. Significantly, the parties did not sign or date the contract.

The Homeowner then terminated the contract with the Builder, alleging that the Builder failed to rectify defects identified by the Principal Certifying Authority after the Homeowner had disallowed the builder from entering the property to complete the works, and refused to pay the Builder’s invoices.

The Homeowner argued that the Builder could not enforce its entitlement to payment of the agreed contract amount because the contract was not signed as required by section 7 of the Home Building Act.

The formation of the contract and its terms were not in contention, as the Homeowner agreed that she entered into a written agreement for the provision of building goods and services and that the contract had been performed, notwithstanding the absence of her signature.

NCAT Decision

At first instance, the Appeal Panel found that the plain reading of section 10 of the Home Building Act only requires that the construction contract be in writing and that the described works be sufficiently set out to prevent builders from enforcing unwritten contracts that are not sufficiently described.

Principal Member Thode regarded the omission of a signature from an otherwise standard contract to not create uncertainty of the type requiring specific legislative intervention and that the contract would remain enforceable despite the lack of signature.

Furthermore, the Principal Member had difficulty reconciling the Homeowner’s “capricious” reliance on section 10 to prevent the Builder from enforcing the contract for the renovation works by reason of lack of a signature, even though the Homeowner insisted that the Builder perform and vary the work.

Supreme Court of NSW Decision

On appeal, Harrison AsJ was tasked to consider two mutually dependent issues:

1. Whether a written, but unsigned and undated document, that is accepted by the parties other than by written signature on the document, constitutes a “contract in writing” for the purposes of section 10(1)(b) of the Home Building Act, and
2. If so, whether a contract that is undated and unsigned, and a copy of that signed contract is not given to the Homeowner (as required by section 7B), is unenforceable by reason of section 10(1)(c) of the Home Building Act.

Harrison AsJ turned to the second reading speech to examine the legislative purpose and significance of section 10 of the Home Building Act. Her Honour considered that the amendment to section 10 was to ensure that minor violations of particular provisions of the Act do not have the unintended consequence of rendering the contract unenforceable. She added:

“if the drafters of the legislation had considered unsigned home building contracts to be sufficiently problematic that they should not be enforceable by builders, then s 10(1) would have included an express reference to signatures.”

On this basis, and given that a signed and dated copy of the contract between the Homeowner and the Builder did not exist, Harrison AsJ did not consider the second issue because section 7B of the Home Building Act requires the provision of a signed copy of the contract.

Essentially, this decision singles out two important aspects of a contract when it comes to enforceability under section 10: that it be in writing and that it sufficiently describes the work. Whether a contract is unsigned or undated (or both) does not necessarily render the contract unenforceable or disallow the builder from recovering damages.

Further information / assistance regarding the issues raised in this article is available from the author, Megan Palmer, Partner, Jackson Price, Lawyer or your usual contact at Moray & Agnew.