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COURT AND TRIBUNAL

Sharai Projects v Gupta: builder's claim dismissed for our clients

19 August 2026

A builder sued our clients for $28,200, said to be the final progress payment due under a Housing Industry Association fixed price contract for the construction of their house. Work had stopped before completion after the relationship with the builder’s director broke down, and our clients finished the project themselves.

Our case was that the fixed price contract was never intended to bind anyone. The only agreement with legal effect was an earlier services agreement, under which the builder was engaged to project manage the build and to provide its licence and insurances for $40,000, and it had already received more than that sum.

The Court agreed and dismissed the claim: Sharai Projects Pty Ltd v Gupta [2026] ACTMC 20. Both construction contracts were machinery documents executed in order to obtain bank finance, were not intended to create legal relations between the parties, and were a sham with no legal effect, so nothing was recoverable under them. In any event the builder had not met the contract’s own requirements for the final progress payment, and the house had not reached practical completion and could not be lived in.

A further $56,400 raised in closing submissions was refused, because it was not pleaded, was not run at the hearing and no amendment was sought. The second defendant, who had no contract with the builder at all, should not have been a party.

We had earlier obtained a freezing order in the Supreme Court over the builder’s assets, licences and receivables, since varied. Costs and the application of those orders remain to be dealt with.

Read the judgment: AustLII

WHERE THIS SITS

Building and construction Commercial litigation

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