Builder wins house renovation dispute

A builder recently won a Disputes Tribunal case brought by a disgruntled former client and was awarded $24,890

The Tribunal heard that ES Ltd was contracted by TG in October 2021 to work on a renovation of TG’s home. The contract price was estimated at $304,211.91, including a 10% contingency.

According to the Tribunal, by June 2022 the client had paid around $305,000 for the renovation but cancelled the contract after becoming concerned about increasing costs. As a result of the cancellation, not all the contracted work was completed.

At the time of cancellation, the Client claimed ES owed $29,933 in remediation costs under the building contract for work which required remediation or completion. The client also sought a declaration saying she wasn’t liable to pay the builder’s most recent invoice for work completed – for $32,046.71 – because “there have been unacceptable cost overruns and she has been overcharged for labour and minor variations, among other complaints”.

In response, ES Ltd filed a counterclaim of $24,890.65 for payment of building work completed before the contract was terminated.

The client told the Tribunal they had been overcharged in the following ways:

• The amount charged is more than 15% of the contract price.
• Little evidence of how cost overruns were incurred.
• No credit for savings made.
• Discrepancies in variation costs.
• Inflated labour charges.
• Being charged to remedy builders’ mistakes.
• Lack of communication.
• The contingency spending had not been itemised.

The builder, ES Ltd, rejected the claims and told the Tribunal that it provided extensive documentation, including evidence of costs charged and details of the variation costs.

While ES Ltd acknowledged that there were cost overruns, it highlighted that the terms of its contract specifically stated there: “It should be noted that there [is] no allowance for further price escalations or changing market conditions and, while all care has been taken to achieve the calculated project value, there is no responsibility taken for cost overruns.”

In its judgement, the Tribunal stated that the evidence did not support the client’s cost overcharge claim.

“The respondent’s documentation is excellent,” said the judgement. “It has provided a carefully worded and comprehensive written contract, evidence of variations agreed including planning requests, clear invoices and, when asked, supported these invoices with further records.”

As for the labour overcharge claim, the Tribunal was not satisfied with the client’s evidence.

“I have also considered her claim that she (the client) caught a worker leaving the site early one day and this is evidence of labour overcharging. Even if this is true… this is not evidence of overcharging of labour. It is simply one instance. Neither am I persuaded of overcharged labour based on the applicant’s belief of how long each job should take.”

The Tribunal also found that none of the client’s other claims, which include poor management of costs, overspending, non-refund of credits and inflated hours, were supported by evidence. It was also not a fixed price contract. The Tribunal threw out the client’s application for $29,933 – which she estimates is the cost of the work outstanding.

“Having viewed the applicant’s list of works requiring completion, I can find no remediation as such, the itemised work is for completion of the contract, work the applicant prevented the respondent from completing,” said the Tribunal referee Hannan DTR.

Hannan DTR also found that the respondent, ES Ltd, was not liable for any remediation costs.

In final judgment, the client was ordered to pay $24,890 for work completed, but not paid for, before the contract was cancelled.