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OWNERS TERMINATING MAJOR DOMESTIC BUILDING CONTRACTS UNDER SECTION 41 OF THE DOMESTIC BUILDING CONTRACTS ACT 1995 ARE NOT THEREBY PRECLUDED FROM CLAIMING DAMAGES FOR IDENTIFIED DEFECTIVE WORK: Wenli Shao v AG Advanced Construction Pty Ltd [2019] VSCA 93 ||| MTECC News edition 19.8

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OWNERS TERMINATING MAJOR DOMESTIC BUILDING CONTRACTS UNDER SECTION 41 OF THE DOMESTIC BUILDING CONTRACTS ACT 1995 ARE NOT THEREBY PRECLUDED FROM CLAIMING DAMAGES FOR IDENTIFIED DEFECTIVE WORK: Wenli Shao v AG Advanced Construction Pty Ltd [2019] VSCA 93

An owner terminated a major domestic building contract under section 41(1)(a)(ii) of the Domestic Building Contracts Act 1995(Vic) (“the Act”) because works were not completed within one and half times the period allowed in the contract.

VCAT found that the owner had paid the builder approximately $1,040,000 and that there were defects which would cost approximately $93,000 to rectify. VCAT held that the builder was entitled under section 41(5) of the Act to a reasonable price for the work carried out to the date of termination, which VCAT assessed at approximately $917,000, being a sum assessed by an expert less the cost of defect rectification.

VCAT ordered the builder to pay the owner approximately $93,000 by way of damages for defective work. Even though the builder was paid more than the reasonable price of the work it had completed, the owner did not seek a refund and VCAT did not order one.

The builder appealed asserting that if an owner terminates under section 41 of the Act, the owner is precluded from claiming contractual damages for identified defective works.

The matter eventually came before the Court of Appeal which rejected the builder’s assertion. The Court of Appeal noted that the builder’s construction of section 41 involved the loss of accrued statutory and common law rights, and hence could only be supported by clear statutory language, which did not exist. This was especially so given that the Act is a consumer protection measure.

The Court of Appeal remitted the question of whether any refund was due to the owner back to VCAT.

Nicholas Gallina

Society of Construction Law Australia Conference in Perth 1 to 3 August 2019

MTECC is once again sponsoring the SoCLA national conference held in Perth at the Westin from 1-3 August 2019. The conference theme is “Doing it Overseas – the legal tips and tricks for taking Construction Smarts to foreign jurisdictions”. The details are here.

Society of Construction Law Australia presentation 28 May 2019

MTECC members Michael Whitten QC and Andrew Downie are presenting a seminar for SoCLA titled “Defects on large-scale construction projects – what you need to know following recent cases including Opal and Lacrosse”. The presentation is on 28 May 2019 from 5:45pm for a 6.00pm start at Corrs Chambers Westgarth Melbourne. The details are here.

 

 

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