The case of Jones v Daon Projects Pty Ltd [2023] QCAT 329 provides an interesting synopsis of the common means by which builders may breach Residential Building Contracts and the rights of the owners who are a party to these Contracts in response to such breaches.

Synopsis

The parties entered into a QBCC New Home Construction Contract (Contract) dated 18 July 2020. Following commencement on 3 August 2020, the Builder failed to comply with its obligations under the Contract. The Owners issued a notice of breach and ultimately sought to terminate the Contract.  The Builder disputed the Owners’ right to do so.

Issues

The Owners’ complaints were numerous and included matters such as:

1. Daon Projects Pty Limited (Builder) claimed payment for works when the Contract did not permit the Builder to request payment. A claim was rendered by the Builder (and paid by the Owners) for the fixing stage when previous stages of works had not yet been completed, and more importantly, work had not even started on the fixing stage.
2. The Builder refused to attend the site or continue the works required under the Contract
3. The Builder installed incorrect material to that required under the Contract
4. The Builder did not comply with the requirements under Schedule 1B of the Queensland Building and Construction Commission Act 1991 (QBCC Act) by failing to issue a commencement notice and failing to comply with the requirements for variations to be agreed to by the parties.

The above issues led to the Owners issuing:

1. Notice to Remedy Breach dated 28 September 2021 and
2. Notice of Termination dated 12 October 2021.

The Builder asserted that the Notice of Termination amounted to repudiation of the Contract.

The defence

The Builder argued:

1. The Owners did not adequately identify the Contract breaches or the factual matrix by which the breaches might be discerned in the Notice to Remedy
2. The Owners were the source of the delay, as the Owners had been verbally abusive, expanding the scope of works and interfering with the scope of works.

The Builder argued that the Owners were therefore in substantial breach themselves and thus not entitled to terminate.

Tribunal’s decision

The Tribunal agreed that each of the following acts of the Builder was a breach of the Contract and, when taken together, entitled the Owners to seek to terminate the Contract:

1. Claiming money in advance of a contractual entitlement
2. Failing to carry out the works and maintain reasonable progress
3. Failing to carry out the works in accordance with the Contract
4. Not documenting commencement of the works or variations.

These matters are also likely to be a breach of the QBCC Act.

The Court determined that the Builder’s defences entirely failed as there was sufficient clarity in the Notice to Remedy Breach to identify the complaints of the Owners. The Court also found that the allegations by the Builder concerning the Owners’ conduct were not substantiated by the Builder during the hearing.

Key Takeaways for Developers and Builders

It is important to ensure that builders and developers comply with contractual requirements permitting them to seek payment for their services, and that any pro forma documentation is consistent with statutory obligations, including the QBCC Act. The team at Moray & Agnew Lawyers can assist in document preparation as well as navigating the consumer protection aspects of the QBCC Act.

Key Takeaways for Homeowners

Any termination of a Building Contract carries with it considerable risk and ensuring a lawful termination is necessary to make a completion claim under the Home Warranty Insurance Scheme. The team at Moray & Agnew Lawyers can assist in an evolving dispute to protect your rights.

Please contact Moray & Agnew Lawyers if you have a building contract in dispute or require advice prior to entering into a building contract.

Specific Legislation

Queensland Building and Construction Commission Act 1991 (Qld)