Owner and Builder Dispute Resolved in QCAT

  05-Sep-2018


Are you a builder who has agreed to allow a homeowner some control over the construction process? Or a homeowner who has insisted on offering some assistance during the building phase? 

A recently published decision, in which our construction litigation team represented the successful builder, identifies the risks that can be associated with such an agreement as well as the consequences that arise when one party exceeds the boundaries of that arrangement.

When it comes to new home construction contracts, it’s not unusual for a builder to allow a homeowner some degree of control over the construction of the property. These agreements can range from the builder providing the homeowner the flexibility of selecting a specific kitchen unit, to the homeowner carrying out labour on the work site. While these arrangements usually occur without controversy, in this case the parties ended up in QCAT when one party exceeded the scope of the agreement.

Following an unfortunate breakdown in the relationship between the homeowner and builder, both parties sought to terminate the contract, each alleging breaches by the other. Prior to the breakdown, there had been an agreement between the parties that the homeowner would choose the preferred tiling and painting contractors. The evidence before the Tribunal indicated that the breakdown in relationship arose in part due to the builder’s concern that the homeowner was acting beyond the scope of their agreement. 

The builder was particularly concerned that the homeowner:

  • Ignored instructions provided by the builder;

  • Engaged and instructed subcontractors directly, without the authority of the builder; and

  • Arranged the installation of various items in circumstances where the homeowner was either not licensed to do so and had not been correctly supervised, would not be able to provide certification, or without prior engineering approval.
The Tribunal found that the homeowner had exceeded the bounds of the agreement by directly engaging and instructing tradespeople without the authority or knowledge of the builder, undertaking deficient work, performing unlicensed works personally, and failing to comply with instructions provided by the builder.  

In doing so, the homeowner had shown that he no longer had an intention to be bound by the contract, had acted inappropriately, and had engaged in conduct making it impossible for the builder to fulfil his contractual obligations. 

These obligations included the builder’s obligation to ensure that all building work carried out on site was carried out in compliance with the Building Code of Australia and all relevant standards. Accordingly, the Tribunal found that the homeowner was in substantial breach of the contract.  
 
The consequence of the Tribunal’s decision was that the homeowner’s purported termination was invalid and had no effect at law, as a party cannot rely upon their own breach of the contract to force a termination.  Further, the Tribunal held that a non-completion claim made by the homeowner under the QBCC statutory insurance scheme was disallowed.


The full reasons of decision can be read here