Imerva Corporation Pty Ltd v Kuna - [2017] VSCA 168

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2016 0128

IMERVA CORPORATION PTY LTD (ACN 124 486 308)	Applicant
v
ANTON KUNA and JAGA KUNA	Respondents

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JUDGES:	TATE, KYROU and McLEISH JJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	9 May 2017
DATE OF JUDGMENT:	29 June 2017
MEDIUM NEUTRAL CITATION:	[2017] VSCA 168
JUDGMENT APPEALED FROM:	[2016] VSC 461 (McDonald J)

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BUILDING AND CONSTRUCTION – Major domestic building contract – Whether progress payments governed by schedule in contract or by schedule prescribed by the Domestic Building Contracts Act 1995 – Statute permits parties to depart from prescribed schedule where parties agree and ‘do so in the manner set out in the regulations’ –Regulations require warning of change to legal rights to be signed by building owner – Requirement has objective of consumer protection – Signature must demonstrate clearly that owners understand effect on legal rights – Initials at foot of page insufficient – Estoppel unavailable to preclude owners from relying on builders’ contravention – Tudor Developments Pty Ltd v Makeig (2008) 72 NSWLR 624 considered – R v Moore; ex parte Myers (1884) 10 VLR 322, Campbell v DPP (Cth) [1995] 2 VR 654, Waugh v Kippen (1986) 160 CLR 156, Nelson v Nelson (1995) 184 CLR 538 discussed – Re Brunswick NL; Blossomtree Pty Ltd v Brunswick NL (1990) 2 ACSR 625 distinguished – Domestic Building Contracts Act 1995 ss 40, 132, 133 – Domestic Building Contracts Regulations 2007 regs 12(a) and (b), Forms 1 and 2 – Leave to appeal granted – Appeal dismissed.

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APPEARANCES:	Counsel	Solicitors
For the Applicant	Mr M A Robins QC	Guymer Lawyers
For the Respondents	Mr R Andrew with Mr P Kelly	Noble Lawyers

TATE JA:

TABLE OF CONTENTS

Introduction and summary

Contract to construct two townhouses

The Domestic Building Contracts Act and reg 12(a)

The Tribunal’s reasons

The judge’s reasons

Grounds of appeal

Was there sufficient compliance with s 40(4) and reg 12(a)?

(1) Are the Kunas’ initials at the foot of Attachment 1 sufficient?

(2) Was the warning signed ‘before the execution of the contract?’

(3) What are the civil consequences of non-compliance?

Does s 40 preclude the availability of estoppel?

Conclusion on the application for leave to appeal

Conclusion on the appeal

Introduction and summary

The Domestic Building Contracts Act 1995 (‘the Act’) prescribes a schedule of progress payments applicable to a major domestic building contract. This prohibits a builder from charging more than a fixed percentage of the total contract price at the completion of each stage of building a home. The Act allows for the parties to a building contract, the builder and the owners, to agree that the schedule is not to apply to them and to specify instead what percentage of the contract price will be paid at each stage of construction. However, the Act directs that they must do so ‘in the manner set out in the regulations’.[1] The Regulations contain a form including a warning to the owners…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2017] VSCA 168
Decision Date: 29 June 2017

CaseChat Overview and Summary

Imerva Corporation Pty Ltd brought an action against Kuna in the Supreme Court of New South Wales, seeking a declaration and an injunction to enforce a contract for the construction of a building. The dispute centred on the interpretation of the contract's progress payment schedule and whether it was governed by the contract or by the Domestic Building Contracts Act 1995. The court was tasked with determining the legal framework governing progress payments and whether the parties could validly agree to a schedule that deviated from the statutory requirements.

The primary legal issue was whether the parties could effectively agree to a payment schedule that differed from the one prescribed by the Act, and if so, whether the agreement was properly executed. The court examined the statutory provisions and regulations that allowed parties to depart from the prescribed schedule, provided they did so in the manner outlined in the regulations. The regulations required a clear demonstration of the building owner's understanding of the change in legal rights, typically evidenced by a signed document. The court considered whether the signature on the document met this requirement and whether estoppel could prevent the owner from enforcing the statutory protection.

The court found that the signature on the document, which consisted only of initials, was insufficient to demonstrate the required understanding of the change in legal rights. The objective of the statutory requirement was to protect the consumer, and a mere initials were not a sufficient manifestation of this understanding. The court rejected the builder's argument that estoppel should preclude the owner from enforcing the statutory protection. The court held that the builder's contravention of the statutory requirements meant the owner could not be estopped from relying on the statutory provisions. The court granted leave to appeal, but ultimately dismissed the appeal.

The court's decision emphasised the importance of clear and unequivocal communication in altering statutory rights, particularly in consumer protection contexts. The court confirmed that the statutory requirement of a signed document was intended to ensure that the consumer fully understood the implications of any changes to their legal rights. The outcome underscored the need for builders to strictly adhere to the statutory requirements when negotiating changes to the prescribed payment schedule.

Orders