Homeowners vs Metricon: A VCAT Ruling on Misleading Conduct and Compensation

A recent VCAT ruling sheds light on a significant dispute between homeowners Yocheved and Chaim Levin and builder Metricon Homes Pty Ltd. The case revolved around alleged misleading conduct, specifically concerning changes made to the design of a home that went unnoticed by the homeowners until well into construction.

The Dispute Over Customisation

In April 2021, the Levins signed a contract with Metricon to build a customised double-storey home in Caulfield North, Victoria. One of the key changes was to enlarge the study space to meet their needs for a functional work-from-home setup. The Levins claim that Metricon agreed to the change during pre-contract negotiations and even reflected the modification in preliminary plans. However, when the final contract was signed in April, the study had been reverted to the builder’s standard dimensions without the Levins being informed.

Midway through construction, the Levins discovered that the study was being built to the smaller, standard size, not the enlarged version they had agreed upon. After a five-week back-and-forth with Metricon, they were told they could only have the larger study if they paid an additional $8,852 for the variation, including removing work already completed. Although the Levins paid this amount under protest to keep the construction on track, they sought a refund through the tribunal, arguing that they had been misled.

Misleading Conduct and Builder’s Defence

The Levins’ claim was based on section 18 of the Australian Consumer Law (ACL), which prohibits businesses from engaging in conduct that is misleading or deceptive. They argued that Metricon misrepresented the final size of the study and failed to disclose the change before the contract was signed. Metricon defended itself, stating that the Levins, as highly involved clients, had several opportunities to spot the discrepancy in the plans before signing. They further argued that responsibility for ensuring non-standard requests were correctly actioned lay with the Levins.

Despite Metricon’s claims, VCAT found that the builder did not properly disclose the changes to the Levins and had indeed misled them. The court ruled that ordinary homebuyers would have expected the builder to disclose such changes and determined that the Levins had suffered loss as a result.

The Outcome

VCAT ruled in favour of the Levins, finding that Metricon had engaged in misleading or deceptive conduct under section 18 of the ACL. The tribunal ordered Metricon to refund the $8,852 paid for the variation, along with $1,267.68 in interest. Additionally, the Levins were reimbursed for their VCAT application fee of $66.30.

This case underscores the importance of clear communication and transparency in building contracts, particularly when it comes to customised requests. It serves as a reminder for both homeowners and builders to meticulously review and confirm all contract details before signing to avoid costly disputes down the line.