What’s in a name? Using post-contractual conduct to correct errors

In BH Australia Constructions Pty Ltd v Kapeller [2019] NSWSC 1086, the Court was called upon to determine whether “Blissful Constructions Pty Ltd” (later renamed “BH Australia Constructions Pty Ltd”) (BC) or “Blissful Developments Pty Ltd” (BD) was the contracting party for a residential building contract. BD was identified as a contracting party, but was neither licensed nor insured and was in external administration. The NSW Civil and Administrative Tribunal's Appeal Panel, however, found that the contracting party was BC, based on what a reasonable observer would have concluded looking at the dealings between the parties.

The dispute allowed Justice Leeming to illuminate case law relating to the admissibility of post-contract conduct when construing a contract and identifying the contracting parties.

When using post-contract conduct as an aid for contractual construction, the traditional distinction lies between construing a contract (where evidence of post-contract conduct is inadmissible) and identifying the existence of a contract (where it is admissible).  It was noted that this distinction is “not necessarily as crisp as it might seem”.

While he noted that post-contract conduct might be used, for instance, to prove mutually known facts to identify the meaning of a descriptive term, he doubted that post-contract conduct could give legal meaning to the “label used in the contract to identify the contracting parties”.  Instead, this was a matter of chronology: the identity of the parties to a contract which came into existence in January could not be affected by conduct which subsequently occurred in March.

The dispute whether BC or BD was the contracting party was ultimately resolved by Justice Leeming finding that the reference to BD was “an obvious mistake on the face of the contract”.  This satisfied the legal test for judicial correction of a contract (this legal remedy differs from the equitable remedy of contractual rectification, which requires a mutual subjective intention). The key factor in this decision was the assumption that the parties objectively intended to enter into a lawful contract, which would not have been the case if the unregistered and uninsured BD was the contracting party.