In Darren Ryan Sacks v Bouwen Projects Pty Ltd (previously known as Indoor and Outdoor Constructions Pty Ltd) [2025] NSWDC 539, Habib SC DCJ upheld Sacks' claim for damages due to defects in the construction of his residential property, and in doing so rejected the builder's arguments that the parties had verbally agreed to change the design and specification, and that the owners had acted unreasonably in rectifying the defects and denying the builder entry to rectify itself.
In April 2017 Sacks engaged Bouwen to construct a three storey dwelling at his property in Dover Heights for $2.8m. The contract incorporated a set of drawings and specifications and a "job break down". Sacks took possession of the property in September 2018 but later commenced proceedings seeking damages for breach of contract due to alleged defects. Certain defects were conceded by Bouwen but it argued Sacks failed to mitigate his loss by refusing to allow Bouwen to rectify defects. There was also dispute about the rectification works required and costs.
One of the issues requiring determination was whether the contract required "Wolfin" waterproofing to be used. Bouwen argued there was an agreement to use an alternative product before the contract was entered into. This was rejected because the pre-contractual communications were not available to vary or contradict the language of the written contract - which clearly required Wolfin - and the "entire agreement" clause expressly provides that the contract was not affected by prior negotiations. Furthermore, Bouwen did not make a claim to rectify the contract to reflect the alleged agreement.
Another issue was if the defects constituted a breach and were within the limitation period. While certain defects were not "major defects" under the HBA and thus any statutory warranty claim was statute barred, it was ultimately accepted that Sacks' rights to enforce statutory warranties contained in the contract were separate to the statutory rights and therefore made within time. Furthermore, no "unreasonableness" in the scope of rectification was established which would have excluded alleged "Rolls Royce rectification" sought by Sacks.
Last, an issue concerned any failure by Sacks to mitigate his loss by unreasonably refusing to allow Bouwen access to the property to carry out rectification works. After referring to the recent NSWCA decision in Ceerose, and proceeding upon the basis that the common law principles relating to mitigation were unaffected by the HBA (including with respect to onus), it was ultimately held that no unreasonableness was established on the proper interpretation of Bouwen's contractual rights to access the property. Furthermore, it was held in any event that even if Bouwen had been unreasonable denied, it did not prove that any prejudice followed.