The underdog won against unfair terms in their contract
Updated: Mar 27
Latest update 27/03/2024 | Last update 22/10/2023 | First published 09/08/2023 on TradeBox's website, 02/08/2023 on Aitchison Reid's client newsletter
This guidance article was provided to TradeBox Australia by Aitchison Reid Building and Construction Lawyers, and written by its director, Fionna.
I don't know about you...
I don’t know about you, but I love a good underdog story. Where despite all the difficulties, the little guy wins.
Sometimes these stories unfold in the courtroom. On those occasions, it makes me realise that sometimes, just sometimes, our legal system, can be a justice system.
Those kinds of decisions usually don’t just change the circumstances for the parties, they frequently change the circumstances for everyone.
On 12 June 2023
On 12 June 2023, the Queensland District Court handed down a decision that will have ramifications in the construction industry for some time to come.
It all started with an HIA domestic building contract between a homeowner (Perera) and Bold Properties (QLD) Pty Limited trading as Bold Living (Bold).
Now, before all of you subbies turn off and say this does not relate to you, please stay tuned, this decision relates to us all.
The reason I love this decision is that it provides the industry not only with clarity, but also possibility - especially for subbies.
What did the builder do?
Okay, so what happened. Bold had added some special conditions to the contract including:
Special condition 7, which was a price escalation clause, which stated:
“In the event that commencement has not taken place by the anticipated start date (as noted in item 14) the builder reserves the right, at the builders sole discretion, to increase the contract price to the current base price of the house type, which is the subject of this contract and identified in the Contract Tender, to the builder’s current base price for that house type.”
Special condition 11, which stated:
“The paragraph under the word “Warning” in Item 2 of Schedule 1 is amended to read “The contract price is subject to change. The clauses that allow for changes to the contract price are clauses 9, 10, 11, 13, 15, 16, 19, 20, 21, 23 the Special Conditions and the Tender Conditions attached to this contract.”
In summary, special condition 7 allowed Bold to increase the contract price if the works did not start by the anticipated start date and the increase was based on Bold’s current base price for that house type. The works were delayed by Bold by 120 days past the anticipated start date. Bold then tried to increase the contract price by $51,342 relying on special condition 7.
What did the homeowners do?
The homeowners made an application to the District Court to have special condition 7 made void and severed from the contract. The grounds argued by the homeowners was that special condition 7 should be void because:
It was uncertain;
It did not comply with the requirements of a warning on the front page of the schedule in accordance with section 14, Schedule 1 B of the QBCC Act; and
It was an unfair term.
So, what did the Court decide?
The Court declared that special condition 7 was void. The homeowners not only won the case, but they won on each of the major arguments raised.
Over the next few [guidance updates], I will expand on each of the issues that I think this case raises for the industry, both in domestic building and in commercial construction.
Please note
This article was written by Fionna C A Reid, director of law practice Aitchison Reid Building and Construction Lawyers (Aitchison Reid) for TradeBox Australia (TradeBox), so that TradeBox can share the article as guidance with tradies and subbies. Use of this article is subject to TradeBox’s terms and conditions of use stated here: https://www.tradebox.com.au/terms-and-conditions-our-ar-content
Aitchison Reid, like TradeBox, is based in Queensland.
This article has been drafted in reference to building and construction trade businesses in Queensland only.
TradeBox is not a law practice. This article is not legal advice and is for guidance purposes only. Seek advice on matters of interest arising from the commentary, information and guidance in this article.
Aitchison Reid’s content for this article was released to TradeBox in August 2023. Individual liability limited by a scheme approved under professional standards legislation.
