Importance of Agreements for Residential Works are in Writing, Even Amongst Family

The recent decision of the New South Wales Supreme Court (Court) in Anjoul v Anjoul [2021] NSWSC 592 (Anjoul) has re-emphasised the importance of ensuring agreements for the completion of residential works are in writing, even amongst family members. Although the Court found that this can be remediated in a later agreement subject it to it being entered into without evidence of duress or unconscionable conduct, the agreement between the parties will ultimately be subject to the statutory requirements of the Home Building Act 1989 (NSW) (HBA).

In April 2009, Ashley Anjoul (the defendant) was issued an owner-builder permit by the NSW Department of Fair Trading for the property at Winston Hills (property). After receiving the permit, the defendant then engaged her former brother-in-law, contractor Jerry Anjoul (the plaintiff) to organise subcontractors to complete the renovation works. No written contract was entered into between the defendant and the plaintiff.

In early 2010, the works were completed. In mid-2013, the plaintiff became concerned that the defendant would not reimburse him for payments made to the subcontractors. Between 31 October 2013 and 14 November 2013, a deed was executed by the defendant and the plaintiff. In the deed the defendant acknowledged she was indebted to the plaintiff in the amount of $700,000.00. Due to the increase in the consumer price index, when the plaintiff filed his amended statement of claim, this amount increased to $743,353.45.

Around the time of executing the deed, the defendant’s husband was arrested and incarcerated for indictable criminal offences. As a result, the defendant suffered significant psychological and physical medical conditions.

The plaintiff maintained that he paid all the subcontractors and was entitled to the reimbursement from the defendant. The plaintiff did not tender any evidence of contracts, invoices or payments made to the subcontractors. The plaintiff claimed that the defendant was in good health at the time of executing the deed and that there was significant negotiation with the defendant as to the terms of the deed.

The defendant maintained that the plaintiff was barred from accessing reimbursement because of the statutory requirements under the HBA for a a written building contract agreement (s7), for the contractor to be licenced (s19) and insured (s92).

The defendant claimed that although she signed the deed, the deed was unenforceable because her signature was the product of duress and undue influence. The defendant held that the deed was only signed by her based on the reliance of the plaintiff that this would protect the property from being seized by the NSW Crime Commission in the active indictable criminal proceedings against her husband.

Additionally, the defendant claimed that the value of the works was less than the amount claimed by the plaintiff and that the amounts claimed were irrecoverable under the statutory requirements of the HBA.

The defendant also filed a cross-claim seeking an order that the deed was void and unenforceable under the Contracts Review Act 1980 (NSW) (CRA) because of the plaintiff’s unconscionable conduct.

The Court dismissed the defendant’s claim that there was no debt due under the deed. His Honour found that the plaintiff was not barred under the HBA from his claim of a reimbursement because even if the plaintiff entered into contracts with the subcontractors in his own name, he did so as an agent for the defendant who was the owner-builder, and not as a contractor which required a building license.

Although His Honour dismissed the defendant’s claims that under the deed there was no debt due, His Honour found that the deed was an unjust contract under the CRA. As a result, the deed was unenforceable under applicable equitable principals of duress and unconscionable conduct.

However, His Honour found it would not be conscionable for the defendant to enjoy the whole benefit of the residential renovation works without compensating the plaintiff for his efforts as agent for the owner-builder defendant.

Due to the inadequacy of the evidence for payments made and invoices available to the Court, His Honour gave the parties an opportunity to determine the appropriate amount of compensation that the defendant should pay the plaintiff.