Written by In a detailed and instructive decision, the Supreme Court of New South Wales has provided authoritative guidance on how handwritten special conditions in building contracts, particularly those that impose cooperative duties, are to be interpreted. The ruling in Andrews & Andrews Construction Pty Ltd v Yao; Yao v Andrews & Andrews Construction Pty Ltd [2025] NSWSC 322 was ultimately found in favour of the builder, awarding judgment for over $840,000 in outstanding invoices, plus interest and costs.
The dispute concerned the construction of a luxury waterfront home in Northbridge. The plaintiffs, Andrews & Andrews Construction, had delivered a residential build over several years, with no issue raised by the owners as to the standard of work. The owners paid 17 invoices totalling around $4 million without protest, moved into the completed home, and raised no objections until months after practical completion. The disagreement then centred on a final invoice for $782,124.41, which was presented five months after the project finished, and a subsequent $60,500 invoice relating to post-construction labour. The owners resisted payment on the basis that the builder had allegedly breached a handwritten special clause in the contract which stated that:
“The Builder & Owners shall work together & cooperate to obtain the most competitive price for each element, trade or material & a minimum of two quotes shall be obtained for each item. All contracts are to be approved by the Builder & the Owners as to cost & quality.”
The owners argued that the clause imposed a strict obligation on the builder to source two quotes for every trade or material used. Where this was not done, they claimed, they had been overcharged, and sought to reduce the builder’s claim by $689,000 through a damages set-off. The Court rejected that construction. Justice Stevenson held that the clause in question created a joint obligation; one that was equally binding on both parties and not susceptible to unilateral enforcement. It reflected a shared commitment to cost transparency and cooperation, rather than a promissory condition that either party could sue upon. Indeed, the Court described the clause as “exhortatory”, consistent with the collaborative approach the parties had embraced during the build. The Court also found that even if the builder did not always obtain two formal quotes, this did not amount to a breach of contract. Both parties, including the owners’ son-in-law who frequently attended the site, were actively involved in decision-making throughout the build. The builder provided regular, detailed invoices supported by subcontractor documentation and kept the owners informed of budget updates. The process was fluid and transparent, which is a hallmark feature of cost-plus contracting.
The Court also scrutinised the owners’ reliance on the “facilitation principle”; a legal doctrine allowing courts to draw inferences about loss where a defendant’s breach makes precise quantification difficult. While this principle has been affirmed by the High Court in cases like Cessnock City Council v 123 259 932 Pty Ltd [2024] HCA 17, Justice Stevenson found it had no application here. The owners had waited years to raise the issue and could not show that any alleged non-compliance with the special condition had truly impaired their ability to assess loss. Even further, the evidence didn’t support the owners’ claim. Some items lacking two quotes were ultimately charged at less than what independent experts later deemed reasonable. Others involved work performed directly by the builder or urgent tasks where multiple quotes were impractical. There was no pattern of overcharging or concealment to be found, only a well-documented and evolving construction project which was carried out in close cooperation. The Court found no breach of the Special Condition and no basis for a set-off or damages. The builder was awarded the full amount of both disputed invoices.