ENDING A CONTRACT

Terminating a contract is a serious business. Contracts have provisions for termination which should be followed otherwise it may result in paying damages to the builder. This fact sheet discusses how to manage disputes and what help is available to resolve conflicts.

Domestic Buildings Contracts Act 1995 ‘DBCA’

S.41 of the DBCA provides that a consumer may terminate a major domestic building contract if :

either the contract prices rises by 15% or more; or
the contract has not been completed within 1.5 times the period it was to have been completed; and
the increased time and cost was not reasonably foreseeable by the builder at the time the contract was entered into.

Disputes

Avoiding disputes - some tips

Be actively involved in your project.
Take independent advice where necessary and always seek a second opinion from a qualified professional.
Stay informed, ask questions and maintain good communications with your builder.
When things go wrong, do not escalate disputes and be prepared to compromise.

Resolving disputes

Attempt to resolve your dispute with the builder.
If option number 1 fails, refer your complaint to the Building Advice and Conciliation Service Victoria.
The Domestic Building List of the VCAT has jurisdiction to hear disputes arising from domestic building works.

The domestic building list of VCAT

Have unlimited monetary jurisdiction to hear and determine all domestic building disputes, including home warranty insurance claims.
Before a dispute can be heard by VCAT:
an application must be filed with the Registrar together with the appropriate fee; and
an applicant should provide three additional copies of the application to VCAT so that copies can be sent to all the other parties to the dispute.

Mediation

The VCAT Registrar may first refer a matter to mediation to help the parties resolve the dispute. A mediator who is qualified and independent conducts the mediation.

Outcomes

If mediation is successful, the mediator notifies VCAT.
If mediation is unsuccessful in matters no more than $10,000, the hearing may proceed immediately.
If mediation is unsuccessful in matters involving more than $10,000, a directions hearing is held immediately;
at a directions hearing, a VCAT member will set out steps that parties must take before a dispute is heard by VCAT.

Compulsory conferences

VCAT or the principal Registrar may also require the parties to attend one or more compulsory conferences before the proceeding is heard by VCAT.

Aim

Identify and clarify the issues in dispute.
Promote settlement.
Identify questions of fact and law.
Allow directions to be given concerning the conduct of the proceeding.

Powers of the tribunal:

VCAT can make any order it considers fair, including:

ordering the payment of money, including money owing, damages or restitution;
varying a term of a domestic building contract;
declaring a term of a domestic building contract is or is not void, or varying a contract to avoid injustice;
order the refund of money paid under a domestic building contract; and
order rectification of defective building work or completion of incomplete work.

VCAT also has power to:

award costs (s.109 Victorian Civil and Administrative Tribunal Act 1998 (Vic));
refer questions of law to the Trial Division of the Supreme Court or the Court of Appeal (s.148); and
grant leave to parties to be legally represented.

For more information on this subject refer to The Law Handbook chapter 14.2