Howell v Talevski [2021] NSWSC 1133

Andrew Hales, Laura-Rose Lynch, Tom Dearden 

Key takeouts

Correspondence between a builder and home owner had the effect of varying the building contract between the parties and extending the completion date of the work.  If the work had been completed by the original completion date specified in the building contract, the action would have been outside the 7 year limitation period for breach of statutory warranty.  However, due to the correspondence between the parties, the completion date had been extended so that the proceedings were in fact brought within the limitation period.

Builders should be mindful that promises they make to continue working on a project after the date for completion specified in the building contract has passed could have the effect of varying the building contract and extending the date for completion.  This could in turn extend the time period in which a claim can be brought against them.

Facts

In 2007, Mr & Mrs Howell (owner) decided to demolish their existing home and construct a duplex, with plans of living in one half and renting out the other.  They entered into a home building contract with Mr Talevski (builder) on 26 May 2007.  The building contract comprised a series of documents including general conditions ‘FT241’ entitled ‘Home building contract’ issued by the NSW Office of Fair Trading.

The building contract specified that the ‘date for completion of the work’ was ’32 calendar weeks from the date the work is due to commence’.  It also specified that the parties could vary the contract by written agreement.

The builder commenced work in August 2007 and, due to numerous delays (the causes of which were disputed between the parties, with each party blaming the other), continued working on the project until August 2012.  During this time, there were numerous communications between the owner and the builder and requests for extensions of time, with the builder promising that he would complete the project.  Eventually, on 9 November 2012, the owner terminated the building contract with the works remaining incomplete.

In July 2018, the owner commenced proceedings against the builder for breach of the statutory warranties implied into the building contract under section 18B of the Home Building Act 1989 (NSW) (HBA) and expressly incorporated into the general conditions.  While the HBA has since been amended, at the time of the building contract (26 May 2007) section 18E of the HBA required such claims be commenced within 7 years after:

‘(a)  the completion of the work to which it relates, or

(b)   if the work is not completed:

(i)    the date for completion of the work specified or determined in accordance with the contract, or

(ii)   if there is no such date, the date of the contract.’

Decision

The Supreme Court of NSW decided in favour of the owner by holding that the proceedings had been commenced within the limitation period.

At the time the contract was terminated the work was not complete, based on the requirements for completion under the building contract.  Therefore, paragraph (b)(i) of section 18E of the HBA applied.  The court needed to determine the relevant ‘date for completion of the work specified or determined in accordance with the contract’.

The building contract had originally specified that the completion date would be 32 calendar weeks after the work was due to commence.  The court ultimately held that the communications between the parties, where the builder promised to complete the works, had the effect of varying the contract and extending the completion date well beyond the date originally agreed between the parties.

Although the court could not determine a precise completion date, by looking at these communications, it held that the parties had effectively agreed to extend the completion date until sometime in mid-2012.  Since the proceedings had been commenced within seven years of this general period, the court held that they had been brought within time.