Case Summary: Imerva Corp Pty Ltd v Kuna [2017] VSCA 168 (Imerva)
In building contracts, every signature matters – literally. In Imerva, a couple’s decision to initial rather than formally sign a crucial document clause unraveled a $2 million construction deal. The case is a sharp warning to builders and homeowners alike: skip a legal step, and the whole contract could come crashing down.
Facts
Mr and Mrs Kuna signed a contract with a building company, Imerva Corp Pty Ltd, to construct two attached townhouses above a basement car park. The total price was $1.98 million.
Instead of using the standard progress payment schedule set out in the Domestic Building Contracts Act 1995 (Vic) – which protects homeowners by spacing out payments at clear construction milestones – the parties used a custom payment method.
The Problem
The Act does let builders and clients agree to a different payment structure – but only if they follow strict rules. One of those rules is that the builder must include a clear written warning telling the owners they are giving up those protections, and the owners must sign that warning in a specific way (as required under Regulation 12(a) of the Domestic Building Contracts Regulations 2007).
In this case, there was a warning in an attachment to the contract. But instead of signing it fully, the Kunas had just initialled it. That didn’t meet the legal requirement.
What Happened Next?
The Kunas later sent a letter terminating the contract. Imerva claimed the Kunas were in breach and still had to pay under the custom payment schedule.
But the Victorian Civil and Administrative Tribunal (VCAT) disagreed and found:
- The Kunas had validly terminated the contract;
- The payment method was invalid because the required warning wasn’t properly signed;
- So, the standard payment schedule under section 40(2) of the Act applied.
Imerva Appealed
They argued:
- The Kunas’ initials on the attachment should count as a signature;
- The Kunas knew what they were agreeing to, so they should be estopped (legally stopped) from going back on it.
But the Court Said:
- The law requires strict compliance. Just initialling wasn’t good enough. Formal signature requirements matter, especially when legal rights are being waived.
- The purpose of the warning is to make sure homeowners clearly understand what they’re giving up. Cutting corners undermines that goal.
- Estoppel doesn’t apply here. Even if the Kunas knew what the attachment meant, allowing estoppel would let builders bypass important consumer protection laws, which the courts won’t allow.
So, the Court of Appeal dismissed the appeal and backed VCAT’s decision.
Why This Matters for You
This case is a big reminder for anyone building, renovating, or dealing with building contracts.
For Builders:
You must follow the rules to the letter, especially when changing standard payment terms. Even small mistakes like a missing signature can invalidate your payment rights. Legal formalities aren’t “just paperwork”—they’re enforceable requirements.
For Homeowners:
You’re protected under the law. If a builder wants to change how and when you pay, they must give you a clear, signed warning. Don’t sign or initial anything unless you understand exactly what it means.
Key Takeaway
Always check:
- Is the builder asking you to agree to something outside the standard rules?
- Have all warnings been properly signed, not just initialled?
- Have you reviewed the contract with a lawyer or building consultant?
Building contracts are legally binding and can be complex – get them right upfront to avoid costly disputes later.
Get in contact with Warlows Legal today using the contact information below for more assistance.
