Builders Beware! Check that your selection schedule matches the plans and specifications

In the case of Watson v Gremmo Homes Pty Ltd (Home Building) [2013] NSWCTTT 44, Gremmo Homes Pty Ltd and the owner Watson entered into a standard HIA form building contract for the price of $681,000.00. The contract included plans and specifications which required the construction of hob-less showers, with the selection schedule specifying hob waterproofing. Although it was clear that the documents were inconsistent with one another, the showers were constructed with hobs in accordance with the selection schedule. The homeowner sued for breach of contract, claiming rectification costs for the showers plus the costs of alternative accommodation whilst rectification of the showers took place. The builder claimed that these apparent variations were carried out in accordance with instructions received by the owner’s husband.

It was found that despite the selection schedule being recognised as part of the contract documents, the contract required the party that become aware of any error, ambiguity or inconsistency to give written notice of same to the other party within 2 working days. Since the builder had not reported any inconsistency to the owner in writing, it was held that the builder was in breach, despite its reliance on the acceptance of the hobs by the owner’s husband. The builder was found to have made an assumption that the owner’s husband was acting as her agent, however he was not appointed as such in the contract.

Accordingly the owner was awarded rectification costs, but no costs for alternative accommodation as it was determined that the showers could be rectified one by one allowing the owner to remain in the house. Had the builder given notice to the owner, the builder may have been entitled to proceed according to the selection schedule.

Tips

• Do not make variations to the contract unless it is in writing;
• Do not take instructions from structural engineers, architects or any other person who has not signed the contract unless you have written authority from the homeowners; and
• Do not proceed to commence building works until you have sorted any inconsistencies in the documents with the homeowner in writing.

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