Owners Successfully Terminate Contract Due to Defects and Incomplete Work

Contract Dispute Between Anna Maria and Luciano Troise and Blue Key Properties

Anna Maria and Luciano Troise secured a significant financial outcome against Blue Key Properties Pty Ltd after a prolonged dispute involving defects, incomplete work, and delays in their Werribee townhouse development. The dispute began after the couple entered into a major domestic building contract in August 2018 valued at $812,000 for three two-storey units. An occupancy permit was issued in September 2020, but the homeowners identified defects, missing installations, and uncompleted work, leading them to refuse the builder’s final claim. The contract was formally terminated by the homeowners on 30 April 2021.

Significant Defects and Damage Identified Across the Three Units

Throughout the proceeding, multiple defects were identified in expert reports and during inspections. Major issues included stormwater and plumbing defects, incomplete downpipes, balcony waterproofing failures, brickwork and structural concerns, and unfinished items such as appliances, flyscreens, water meters, and plumbing fixtures across all units. Unit 3 also suffered extensive vandalism damage while the contract was still active, and Blue Key Properties was found responsible for that damage because it remained in control of the site prior to termination.

Findings on Termination, Final Claim, and Contract Obligations

The Tribunal found that the homeowners lawfully terminated the contract after the builder failed to complete the works in accordance with contractual requirements. It was also determined that the occupancy permit issued in September 2020 was conditional and therefore did not constitute a valid completion notice. Special Condition 6, which required payment of the final claim within 14 days of issuing the occupancy permit, was ruled unenforceable because it conflicted with Section 40 of the Domestic Building Contracts Act 1995, which prevents builders from claiming progress payments unrelated to actual completion of works. As a result, the builder’s claim for the $81,200 final payment was rejected.

Damages Awarded to the Homeowners

The Tribunal initially awarded the homeowners $196,800 in damages. This sum was calculated after offsetting the builder’s unpaid final claim against the total rectification, completion, liquidated damages, vandalism repairs, and agreed credits. The major awarded amounts included:

• $40,200 for rectification of vandal damage

• $57,536 in agreed liquidated damages

• $111,837 for defective work

• $56,928 for completion costs
  The total damages of $278,001 were reduced by the builder’s unpaid claim, resulting in the initial award of $196,800 in January 2025.

Additional Interest Awarded, Bringing Total to $238,220

In October 2025, the Tribunal awarded the homeowners a further $41,420 in damages in the nature of interest. Interest was calculated on $103,551 being the amount the homeowners were deprived of the use of, covering vandal rectification costs, amounts actually spent on defect rectification, and a portion of agreed and credit-related damages. Interest was calculated at 10% per annum over four years, resulting in a total payable amount of $238,220.

Costs Order Made in Favour of the Homeowners

The builder was also ordered to pay one third of the homeowners’ costs on the standard basis, with specific exclusions. No costs were allowed for the drafting of the third witness statement, the discovery of documents attached to it, or any work relating to one of the expert reports that was not ultimately relied upon. The Tribunal also ordered the builder to reimburse the homeowners for the filing fee, three hearing day fees, and the filing fee for the costs application, totalling $2,116.35.

Tribunal’s Considerations on Costs and Conduct

The Tribunal found that the proceeding was complex and involved extensive documentation, expert evidence, and a seven-day hearing. While the homeowners succeeded in major claims, the Tribunal noted that parts of their case were expanded beyond what was ultimately justified, which contributed to the hearing running its full length. Taking all circumstances into account, partial cost recovery rather than full indemnity was considered appropriate.

Final Total Outcome for Homeowners

With the addition of interest and the partial costs order, Anna Maria and Luciano Troise’s overall recovery increased beyond the original damages amount. The final total damages payable by Blue Key Properties amount to $238,220, in addition to the reimbursement of specific fees and one third of the homeowners’ legal costs on the standard basis.