The plaintiff is the Owners Corporation in respect of a mixed residential and commercial strata development in Camperdown (the development). The development involved the conversion of a warehouse complex owned by Mr and Mrs King (the Kings). The Kings had entered into a Development Agreement with Meridian Estates Pty Ltd (Meridian) under which Meridian was appointed the Kings’ attorney. The Kings were both directors of Meridian. A third party builder built the development.
The Owners Corporation made claims for defects within the development. An issue arose as to whether the Kings were ‘developers’ within the meaning of s 3A of the Home Building Act 1989 (NSW) (theHBA) and therefore liable for the defects. That is, were the Kings persons ‘on whose behalf’ the building work was done for the purpose of s 3A of the HBA? The answer to that question turned on whether the Kings were a party to the building contract.
The Owners Corporation contended that the Court should conclude from various site minutes that the Kings signed the building contract and were personally bound by it, or that in the alternative, Meridian was a party to the building contract as the Kings’ agent.
Minutes of a site meeting stated that the contract had been executed by the Kings. Minutes of a further site meeting referred to the need for receipt of the signed contract for funding to commence.
The Owners Corporation submitted that the minutes of the site meetings were business records and admissible as evidence of the facts asserted in them under the Evidence Act 1995 (NSW) s 69.
Under s 69, the hearsay rule does not apply to representations in the document if the representation was made by a person who had or might reasonably be supposed to have had personal knowledge of the asserted fact or based on information supplied by such a person.
It was inferred that both sets of representations were made by representatives of the architect who attended the meetings. The Court held that it was not clear that any of the architect’s representatives had or could reasonably be supposed to have personal knowledge of any of the facts asserted in the minutes, saw the Kings execute the contract, saw a copy of the executed contract, or have personal knowledge of the circumstances under which the bank was or was not willing to advance money.
The Court acknowledged that even if those conclusions were wrong, the minutes were not sufficient evidence to prove that the Kings signed the contract in their own capacities. Whist the minutes infer that the Kings did sign the contracts, the strength of that evidence was undermined by the uncertainty surrounding who made the statements and on what basis they did.
The Court also considered the parties’ subsequent conduct and found it was consistent with Meridian being the contracting party. Reasons for this include that the Builder issued invoices addressed to Meridian, Bonus issued certificates of payments naming Meridian as ‘The Proprietor’, invoices were paid by Meridian from an account in its name and an occupation certificate was issued in the name of Meridian.
The Court found that the Owners Corporation had not discharged its onus of establishing that the Kings signed a contract.
The argument that Meridian entered into the contract on the Kings’ behalf also failed.
Whilst the Kings appointed Meridian as their attorney for the purposes of entering into transactions as may be necessary to perform the ‘Contracted Services’, this did not mean that everything Meridian did in relation to the project was done as attorney for the Kings. The Development Application did not provide that Meridian entered into the contract with the Builder as the Kings’ agent. The Court reasonably expected that the contract would have specifically stated this if it was intended. Similarly, the tender documents would have specified if Meridian was to engage a builder as agent for the Kings.