
Builder’s Defective Work Leads to Terminated Contract and Legal Dispute
In an eye-opening VCAT ruling, a dispute between Barbican Construction Group Pty Ltd and homeowners Ian McColl and Xun (Monica) Qing over defective building work and a terminated contract culminated in the tribunal siding with the homeowners. The case highlights key issues around contractual obligations, poor workmanship, and the rights of owners to terminate a building contract when faced with significant defects.
Background of the Dispute
The homeowners, Mr McColl and Ms Qing, planned an extension to their mid-century home in Melbourne’s southeast, hiring Barbican Construction Group Pty Ltd to complete the project in early 2021. The contract, signed on 22 January 2021, specified a 62-day construction period and a contract price of $105,050. However, after just a few weeks of work, concerns quickly arose regarding the quality of the builder’s workmanship.
The builder had completed several early stages of the work, including excavating the site and constructing timber frames, but 12 major defects were soon identified in the construction. These included critical issues like improper concrete footings, poorly installed stumps, and faulty wall framing, which raised serious concerns about the structural integrity of the extension. The defects were deemed serious enough to halt further progress on the project, leading to an escalating dispute between the builder and homeowners.
Major Defects and Structural Failures
A detailed defect assessment report issued in April 2021 confirmed that several components, including footings, timber lintels, and drainage, were either inadequately installed or entirely non-compliant with regulations. The report called for the demolition of the defective works and a complete rebuild of the foundation.
The report painted a grim picture of the extension project, with cracked stumps, improperly installed floor joists, and even ungalvanised nails that had corroded, causing further damage to the structure. The poor workmanship was evident early in the project, but despite multiple attempts to address the issues, the builder refused to accept responsibility for many of the defects.
Builder’s Denial and Owner’s Termination of Contract
The builder, led by Mr Homa Shahabadi, denied the validity of the Building Surveyor’s findings, claiming that the issues were either overstated or the result of interference from the homeowners. Mr Shahabadi argued that the homeowners had hindered the progress of the project, including stopping the builder’s work without reason. Despite these claims, the tribunal found that Mr Shahabadi’s explanations were largely unconvincing and amounted to excuses rather than legitimate defences.
The homeowners, frustrated by the builder’s refusal to rectify the identified defects, terminated the contract in February 2022, citing their right under the Master Builders Association Home Improvement Contract. They had already incurred significant costs due to the builder’s actions, including $18,841 to demolish and remediate the defective works, and further expenses for repairs to damaged drainage pipes, Council footpath slabs, and other affected areas of their property.
Tribunal’s Findings and Final Ruling
Ultimately, it was found that the builder had indeed rejected the contract by failing to perform the work in a proper and workmanlike manner, in accordance with the contract plans. The tribunal accepted the evidence of the homeowners as credible and dismissed the builder’s claims of interference or wrongful termination. Additionally, the tribunal rejected the builder’s argument that discrepancies in the architectural plans excused the defects.
The tribunal ruled in favour of the homeowners, awarding them $142,961.08 in damages, which included the cost of rectification and losses associated with the builder’s poor performance. The builder’s claim for additional unpaid invoices was dismissed outright.
Termination of a Major Domestic Building Contract
According to Section 41 of the Domestic Building Contracts Act 1995 (Vic):
“A building owner may end a major domestic building contract by written notice to the builder if the builder fails to carry out the work in a proper and workmanlike manner or in accordance with the plans and specifications set out in the contract and fails to remedy the breach within a reasonable time after being given a notice requiring the breach to be remedied.”
Key Takeaways for Homeowners and Builders
This case underscores the critical importance of quality control in building projects and the right of homeowners to demand rectification of defective work. Builders are expected to comply with architectural and engineering plans, and significant deviations or poor workmanship can lead to serious legal and financial consequences. For homeowners, the case highlights the need to document defects early, engage experts to assess the work, and be aware of their rights to terminate a contract under the Domestic Building Contracts Act when the builder fails to meet obligations.
In the end, the tribunal’s decision serves as a reminder to builders that substandard work and failure to rectify defects will not be tolerated, especially when serious safety and compliance issues arise.
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