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Who do I sue? Post contractual conduct and identification of contracting parties in BH Australia Constructions Pty Ltd v Kapeller [2019] NSWSC 1086 ||| MTECC News 19.21

by admin admin


The issue for determination in this case was whether evidence of subsequent conduct is admissible in establishing the identity of a contracting party.  

Leeming JA held that such evidence was not admissible and cannot be so used in relation to a contract which is wholly written.  Where the contract is partly written and partly oral and/or partly to be implied by conduct, such evidence is admissible and can be so used. 

This case involved a married couple (“the Owners”), who entered into a standard form building contract for the construction of their home.  The issue in dispute was whether they entered into a contract with Blissful Constructions Pty Ltd (“Constructions”) or with Blissful Developments Pty Ltd (“Developments”). 

Confusion as to the identity of the builder was brought about by the following inconsistencies and errors in the contract document – the “Builder” was stated to be “Developments” and its Builder’s Licence Number and HIA Insurance details were stated.  However Developments had never been licensed or insured and the number and insurance details were in fact those of “Constructions”, not “Developments”. 

The execution clause in the contract was incomplete.  It was signed by “D. Alathi” who was the sole director and secretary of Constructions.  Beneath that signature there was very small typeface stating “signed for and on behalf of Blissful Developments Pty Ltd”. 

The post-contractual documents included three invoices in the name of Developments sent to the Owners; a statement of insurance cover which identified Constructions as the builder; a certificate concerning a framework inspection which was expressed to have been requested by Constructions; a letter by the Owners’ solicitors after the parties fell into dispute addressed to Developments and referring to Developments as the builder, and noting that it was not licensed or insured; and finally, the response letter by the director of Constructions offering to assign and novate the contract over to Developments which was licensed and insured. 

Leeming JA provided a detailed summary of the relevant authorities (refer to paragraphs [51] – [86]). He referred to a number of decisions in which the Court had ruled that evidence of subsequent conduct was admissible and could be used to identify the contracting parties (refer in particular to the Victorian Court of Appeal decision in Lederberger v Mediterranean Olives Financial Pty Ltd (2012) 38 VR 509; [2012] VSCA 262; Nurisvan Investment Limited v Anyoption Holdings Limited [2017] VSCA 141;  and Damien v JKAM Investments [2015] NSWCA 368).  With respect to these decisions he either distinguished them on the basis that they did not involve contracts which were wholly written, or chose not to follow them on the basis that the statements made therein were mere dicta. 

Leeming JA concluded that post-contractual evidence may not be used directly to determine the identity of a contracting party (refer in particular to paragraphs [90] and [101]). 

But he hastened to point out that there are situations in which, either as a matter of pure construction, or by the admission of evidence extraneous to the written contract, Courts were not limited to construing written contracts solely on the basis of the words in the contract.  These include: 

  • evidence adduced of mutually known facts to identify the meaning of a descriptive term in a written contract (refer paragraphs [94] and [95]); and
  • evidence adduced to demonstrate “misnomer”, enabling the Court to correct an obvious error by supplying, omitting or correcting words in the contract (refer paragraphs [96] and [105]-[108]).

Leeming JA decided (paragraphs [104]-[118]), in the present case that the parties must have intended that Constructions was the builder contracting party.  He said that there was unquestionably “an obvious mistake” on the face of the contract.  Whereas Blissful Developments Pty Ltd was stated to be the builder, the parties must have intended that Blissful Contractors Pty Ltd was the builder party to the contract.  The builder licence number and homeowners warranty insurance number stated on the face of the contract, belonged to Constructions.  Developments was neither licensed nor insured.  The Court held that neither party could reasonably have intended to enter into a contract under which the builder was both unlicensed and uninsured. 


Francis Tiernan QC

Liability Limited by a scheme approved under Professional Standards Legislation.


MTECC welcomes Alexandra Golding

We are pleased to announce that Alexandra Golding has joined MTECC.  Alex has a broad commercial practice, with a particular interest in professional negligence, liability, environmental and building claims. 


MTECC’s End of Year Function – this week

As a reminder, MTECC’s end of year function – featuring an address from Justice Riordan, Principal Judge of the Supreme Court’s Commercial List, and the launch of the sixth edition of Brooking on Building Contracts –  is on this week. 

Date: Wednesday 13 November 2019
Location: Melbourne Bowls Club, Flagstaff Gardens, West Melbourne
Time: 6:00PM-8:30PM

We hope you can join us to celebrate the end of another fantastic year for MTECC. 


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