Home Building Act : Legal precedent set by Brander Smith McKnight

22 January 2025 in Building and Construction Law | 12 min read | skip to FAQs

The building and construction lawyers at Brander Smith McKnight Sydney Lawyers recently created a legal precedent with regard to the interpretation of contract requirements under section 7 of the Home Building Act 1989 (NSW) (HB Act) The relevant decision was reached in Step-Up Renovations (NSW) Pty Ltd v Dyjecinska [2022] (Step-Up). The original dispute between a licenced builder (Builder) (Step Up) and the owner (Owner) was heard in NCAT and found in favour of BSM Law’s client the Builder. This was appealed twice by the Owner and a final decision was handed down in 2024 by the Supreme Court in favour of our client, the Builder.

This article initially outlines the original tribunal proceedings in NCAT and the subsequent Supreme Court proceedings. We then discuss the Home Building Act in NSW with a focus on key contract requirements. Finally, we examine the importance and impact of the decision of the Supreme Court in Step Up on contractual aspects of the Home Building Act.

The Step-Up Decision Supreme Court 2024

This recent important decision of the Supreme Court should be noted by those in the residential building and construction industry. The building and construction lawyers at Brander Smith McKnight Sydney Lawyers were instrumental in the creation of this legal precedent and can provide advice on the repercussions.

The Dispute

The Step-Up matter concerned a dispute between a licensed builder (Builder) who entered into an agreement under which the Builder undertook and carry out residential building work to an existing dwelling situated on a property for the owner (Owner). The agreement was documented in a standard form Master Builders Association of NSW Residential Building BC4 Contract and incorporated a substantial number of the applicable form and content requirements for contracts (large jobs) as set out in section 7 of the HB Act.

The Contract document was not however signed or dated by the parties as required by section 7(1) of the HB Act.

The original Tribunal proceedings in NCAT 2022

In summary, the Builder originally commenced proceedings in the New South Wales Civil and Administrative Tribunal seeking orders that the Owner pay money outstanding under two (2) progress claims, totalling $120,212.75, issued for the work the Builder undertook and carried out at the Owner’s property.

During the original NCAT proceedings, the Owner lodged a cross-application seeking orders including that the Builder pay damages to the Owner for costs of rectification of alleged defects in the work carried out by the Builder. The Owner relied on a defence in the Builder’s application (and claim for the money outstanding under the progress payments) that the Builder had breached sections 7(1), 7A, 7B, 7E and Part 1 of Schedule 2 to the Home Building Act and, as a consequence, by operation of section 10(1) of the Home Building Act, the Builder was not entitled to damages or to enforce any other remedy (including recovery of debt) in respect of a breach of the Contract by the Owner, and the Contract was unenforceable by the Builder.

In the Builder’s application, NCAT found:

1. That section 10(1)(b) of the HB Act did not apply to all form and content requirements for contracts to do residential building work (large jobs) set out section 7;
2. That, in the circumstances, the consequences set out in section 10(1) applied only if a contract to do residential building work (large jobs) was not in writing or did not have sufficient description of the work to which it relates (as required by section 10(1)(b));
3. That the Contract was in writing and did have a sufficient description of the work by the references to ‘Extension of existing house’, prepared drawings, a specification prepared by the Builder, and the Tender letter, and therefore section 10(1)(b) of the HB Act did not apply to the Contract;
4. That the Builder was entitled to claim damages and otherwise enforce remedies in respect of a breach of the Contract by the Owner, including recovery of unpaid amounts under the two (2) progress claims as a debt;
5. That the Owner was liable to the Builder in the sum of $120,212.75 and, after deduction of $14,695.66 for defects determined in favour of the Owner in the cross-application, ordered the Owner to pay to the Builder the sum of $105,517.09.

The Appeal Panel proceedings NCAT 2023

The Owner subsequently lodged a notice of appeal in the Appeal Panel of the New South Wales Civil and Administrative Tribunal asserting that the Tribunal had erred in finding that the Contract was enforceable by the Builder because, among other things, it had not been signed and was undated by the parties contrary to the form and content requirements set out in sections 7 and 10(1) of the HB Act.

The Owner’s appeal proceeded to a hearing before Principal Member Thode and Senior Member Molony.

The Appeal Panel published its decision in which each Appeal Panel Member reached different conclusions in the Owner’s appeal. Therefore, the decision of the Principal Member prevailed in accordance with section 57(3) of the Civil and Administrative Tribunal Act 2013 (NSW). Reasons for the other Senior Member’s dissent were set out in the decision.

The prevailing decision of the Appeal Panel was that:

1. Section 10(1)(b) must be considered practically and that only two (2) requirements for contracts to do residential building work (large jobs) – that such contracts must be in writing and sufficiently describe the work – are “essential basics”, and had the legislature intended to include other factors in section 10(1) it would have done so;
2. A need for a signature, whilst required by section 7(1) of the HB Act for contracts to do residential building work (large jobs), is not critical when considering whether a licensed contractor should be deprived of a right of enforcement of an otherwise compliant contract to do residential building work (large jobs);
3. In the absence of a clear requirement for a signature in section 10 of the HB Act, it cannot be implied or inferred that unless a contract to do residential building work (large jobs) is signed, it is unenforceable;
4. A written contract to do residential building work (large jobs) that is not signed and dated may still be “in writing” for the purposes of s 10(1)(b). If that is not correct, section 10 (1)(b) would simply have said “in breach of Section 7”;
5. The original order for the Owner to pay to the Builder the sum of $105,517.09 be set aside and a new order that the Owner pay to the Builder the sum of $102,187.30 be made.

The Step-Up decision in the Supreme Court appeal 2024

The Owner subsequently filed an appeal in the Supreme Court in relation to the Appeal Panel decision primarily asserting that the Appeal Panel had erred in making an order that the Owner pay to the Builder the sum of $102,187.30, because the order was based on a finding that:

1. There was a contract to do residential building work in place between the parties that bound them, and was enforceable by the Builder, although the Contract was not signed by either party and was undated, in breach of section 7(1) of the HB Act;
2. No signed contract was given to the Owner in contravention of section 7B of the HB Act.

The Owner’s appeal proceeded to a hearing before Harrison AsJ.

The Step-Up decision in the Supreme Court appeal proceedings was that:

1. The central issue is whether a written, but unsigned and undated contract to do residential building work (large jobs), that is accepted other than by written signature on the contract, constitutes a “contract in writing” for the purposes of section 10(1)(b) of the HB Act, and whether a contract to do residential building work (small jobs or large jobs) which is undated, unsigned and not given to the other party (as required by section 7B) is unenforceable by reason of section 10(1)(c) of the HB Act;
2. An essential reason that the HB Act requires contracts to do residential building work, and variations, to be in writing, and signed and dated by parties is that a contract wholly in writing clearly and unambiguously sets out what the parties have agreed will be done and on what terms;
3. It ensures that the parties have a clear and precise record of their agreement, and that any court or tribunal required to interpret or give effect to their agreement, can do so by reference to the written text;
4. The current form of section 10 of the HB Act however does not have a blanket prohibition on licensed contractors enforcing non-compliant contracts to do residential building work (small jobs or large jobs);
5. The legislature amended the current form of section 10 of the HB Act to “ensure that [section 10] [does] not have the unintended effect of rendering a building contract wholly unenforceable at the suit of the builder merely because of the builder’s very minor contravention of certain provisions of the Act”;
6. If the drafters of the legislation had considered unsigned contracts to do residential building work (large jobs) to be sufficiently problematic that they should not be enforceable by licensed contractors, then section 10(1) would have included an express reference to signatures. The clear and unambiguous wording of the legislation cannot be supplanted by common law inferences.

Key Take aways of the Step Up Decision

In Dyjecinska v Step-Up Renovations (NSW) Pty Ltd [2024] NSWSC 159, the building and construction lawyers at Brander Smith McKnight Sydney Lawyers acted on behalf of a licensed contractor in successfully opposing an appeal brought by a contracting owner, and contributed to a legal decision which is now authority and precedent primarily  regarding  whether:

1. A written, but unsigned and undated contract to do residential building work (large jobs), that is accepted other than by written signature on the document, constitutes a “contract in writing” for the purposes of section 10(1)(b) of the HB Act;
2. Whether a contract to do residential building work or specialist work which is undated, unsigned and not given to the other party to the contract (as required by section 7B) is unenforceable by reason of section 10(1)(c) of the HB Act.

The Role of the Home Building Act in Residential Building Work

The Home Building Act 1989 (NSW) (HB Act) regulates residential building work and specialist work in New South Wales including contracts under which holders of contractor licences undertake to do such work

Residential building work includes “work involved in the construction of a dwelling, or the repairing, renovation, decoration or protective treatment of a dwelling”.

Specialist work includes, among others, plumbing and drainage work and electrical wiring work, whether or not done in connection with a dwelling.

There are significant consequences for a person who contracts:

1. To do residential building work or specialist work in contravention of section 4 of the HB Act (unlicensed contracting), being the absence of a contractor licence authorising that person to contract to do the work;
2. To do residential building work in circumstances where the contract price (or, if not known, the reasonable market cost of the labour and materials involved) exceeds $20,000.00, the contract is not in writing or does not have sufficient description of the work to which it relates;
3. To do residential building work or specialist work in contravention of any other provision of the HB Act or the regulations that is prescribed for the purposes of section 10(1)(c).

Those consequences as set out in section 10(1) of the HB Act include that the person who contracts is not entitled to damages or to enforce any other remedy in respect of a breach of the contract committed by any other party to the contract, and the contract is unenforceable by that person who contracts.

The person who contracts is however liable for damages and subject to any other remedy in respect of a breach of the contract committed by that person.

Key Contract Requirements under the Home Building Act.

The key requirements imposed on contracts for residential building work are found within sections 7 and 7AAA of the Home Building Act. These requirements vary depending on the price of the contracted work. At the crux of these provisions are the requirements that contracts for residential building work (small jobs, being less than $20,000) must:

1. be in writing, signed and dated by or on behalf of each of the parties;
2. include the names of all the parties, including the name of the holder of the contractor licence shown on the contractor licence
3. contain a description of the work which is the subject of the contract;
4. include plans and specifications of the work to be completed;
5. include the contractors licence number; and
6. state the contract price (if a price is known).

It is a regulatory offence under section 7A of the Home Building Act for a person to contract to do work under a contract to do residential building work (small jobs) unless these (and other) form and content requirements are complied with, with a maximum penalty of 80 penalty units in the case of a corporation and 40 penalty points in any other case (such as an individual).

Contracts entered into after the 1st of March 2015 which are over $20,000 (known as large jobs) are subject to additional requirements.

1. Contain any statutory warranties applicable to the work;
2. Contain the cost of cover under Part 6 or 6B (if insurance is required under Part 6);
3. In the case of a contract to do residential building work– contain a conspicuous statement setting out the cooling-off period that applies to the contract because of section 7BA of the HB Act;
4. In the case of a contract to do residential building work (other than a construction contract to which the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOPA) applies), contain details of any progress payments payable under the contract;
5. In the case of a contract to do residential building work, contain a statement that the contract may be terminated in the circumstances provided by the general law and that this does not prevent the parties agreeing to additional circumstances in which the contract may be terminated;
6. Contain any other matter prescribed by the regulations for inclusion in the contract including:
   1. A checklist in the approved form;
   2. Information, in the approved form, that explains the operation of the SOPA and the Building and Construction Industry Security of Payment Regulation 2020 (NSW). For further information on SOPA see our dedicated article.
7. Comply with any requirements of the regulations;
8. If the contract price is known, be stated in a prominent position on the first page of the contract;
9. If the contract price is not known or may be varied under the contract, contain a warning to that effect and an explanation of the effect of the provision allowing variation of the price. The warning and explanation must be placed next to the price if the price is known.

It is also a regulatory offence under section 7A of the HB Act for a person to contract to do work under a contract to do residential building work (large jobs) unless these (and other) form and content requirements are complied with, with a maximum penalty of 80 penalty units in the case of a corporation and 40 penalty units in any other case (such as an individual).

The Implications of Step Up

The Step-Up decision in the Supreme Court appeal proceedings resolves a rather nuanced and technical yet important aspect of the form, content and conduct requirements for contracts to do residential building work, and the potentially serious and disentitling consequences faced by licensed contractors who do not comply with those requirements.

Now there is opportunity for licensed contractors who do not comply with those form, content and conduct requirements to claim damages and enforce remedies (including recovery of debt) in respect of a breach of a contract to do residential building work (large jobs) provided it is in writing and has a sufficient description of the work to which it relates.

In the present case, BSM’s expert Sydney construction lawyers assisted a licensed contractor in successfully enforcing the terms of a contract to do residential building work (large jobs), and be awarded a money order as against a contracting owner, in circumstances in which the contract was unsigned and undated (in breach of section 7(1) of the HB Act), and a signed copy of the contract was not given to a contracting owner (in contravention of section 7B of the HB Act)

While the contract formed between the Owner and Builder may not have met the formal requirements of the Home Building Act, the 2022 Proceedings, 2023 NCAT Appeal, and subsequent 2024 Supreme Court Appeal all affirmed the Builder’s position and required the Owner to pay for works completed by the Builder.

The Value of Legal Advice for Building Contracts

Other amendments to the legal interpretation of the requirements for contracts to do residential building work under the HB Act may continue to be made by the Tribunal and courts in New South Wales. As such, parties to contracts to do residential building work must remain up to date with statutory and common law developments regarding the interpretation and effect of the HB Act. The developments can be complex and cover a broad area of law and it is important that you seek legal advice prior to entering into any such contract.

How can BSM Sydney Lawyers assist you?

This case and the subsequent appeals highlight’s the tenacity, expert legal knowledge and high level advocacy skills of BSM Sydney construction lawyers. Brander Smith McKnight’s building and construction team set a legal precedent in 2022 and successfully defended two appeals made by the Owner, firstly in 2023 in NCAT and then in 2024 in the Supreme Court. We are proud that we secured a favourable outcome for our client, the Builder, and upheld the legal precedent that we set, that eventually ended in the Supreme Court of Australia.

BSM building and construction lawyers have over 35 years of experience and expertise acting for developers, builders and home owners and are up to date with the latest development in legislation and case law. BSM Construction Lawyers Sydney has a dedicated team of expert construction lawyers who can assist with all aspects of your building and construction matter. Brander Smith McKnight law firm Sydney offer a free 20-minute consultation with senior construction lawyers to discuss your matter.

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