Building disputes can arise in a number of different ways between a number of different parties.
A building dispute can be between a building owner and a building contractor; between 2 or more building contractors; or homeowner, contractor and a third party.
By using building and construction lawyers, a building dispute can be avoided or effectively managed.
Qld construction law can be complicated. This article provides general information on avoiding disputes, and effectively managing building disputes.
Building disputes can be managed effectively if they are dealt with quickly. Contact our building dispute lawyers in Brisbane and the Sunshine Coast
What is a Building Dispute?
A building dispute can arise in a number of different circumstances, these can include:
- Defective building work;
- Delayed building work or abandonment of work;
- Breaches of building contracts;
- Unclear or confusing ambiguous contractual language;
- Variations that have not been agreed, nor put in writing;
- Disagreements as to payment claims and schedules;
- Debt recovery and non-payment of money;
- Significant differences in contract price;
- Builder trying to charge more than the fixed price for materials and labour;
- Negligence claims for bad quality of workmanship against a builder; and
- Non-completion of building work.
We will briefly discuss these types of building disputes in more detail below
Defective Building Work
Defective building work is usually separated into two (2) groups:
- Structural defects; and
- Non-structural defects.
A structural defect can be identified to the QBCC within six (6) years and six (6) months from the date of completion of the work.
A non-structural defect can be identified to the QBCC within 12 months from the date of completion of the work.
Typical Types Defective Building Work
A list of typical defective building work in Queensland can include:
- Slab and footing failures and category 3 and 4 cracks in concrete;
- Incorrect dimensions of bedrooms, dining rooms, lounge and living rooms, family rooms, studies, halls, entries and stairways;
- Incorrect dimensions of garages, carports, verandas, decks, patios etc;
- Voids, holes, or category 2 level cracks in masonry walls;
- Any visible stains, mortar smears and damage caused by cleaning;
- Any visible staining, folds, splits, dents, open joints between panels, cracking and other distortions in wall cladding;
- Any visible staining, folds, splits, dents, open joints between panels, cracking and other distortions in roof cladding;
- Any visible irregularities or undulations in roof tiles;
- Cracks in external rendered surfaces;
- Visible cracks or open joints in external finishes applied to lightweight substrate or if they allow the ingress of water;
- Category 3 and 4 cracks in internal rendered surfaces on masonry substrate;
- Visible Cracks in mouldings and/or other architectural features and joints greater than 1mm;
- Defects and cracking in plasterboard sheeting, other sheeting and cornices;
- Visible gaps between mouldings or between mouldings and other fixtures over 1mm;
- Visible cracking, displacement, pitting or similar blemishes in natural stone, marble or similar materials;
- Visible blemishes such as paint runs, paint sags, wrinkling, dust, bare or starved painted areas, colour variations, surface cracks, irregular and coarse brush marks, sanding marks, blistering, uniformity of gloss level and other irregularities;
- Visible holes and any other unfilled depressions in painted or stained timber;
- Visible cracks in shower recess and components and cracks in shower bases, screens and glass;
- Splits in timber decking that extend to the end or side edge of the timber;
- Departures from the documented set out for concrete pools;
- Damages to appliances and fittings supplied as part of the building contract; and/or
- Visible scratches, fractures, chips or other blemishes on glazing and mirrors.
The above are only defects in certain circumstances, and small or minor defects may not be defects under contract or the QBCC.
There could be other types of defects in building work. For more defects, view the QCBB Standards and Tolerance Guide
Delayed Building Work
A builder has an obligation to bring the work to practical completion on the date for practical completion.
A building and construction contract will usually include a clause which says something along the lines of “the builder will not unreasonably fail to perform the work diligently, or unreasonably delay or fail to maintain reasonable progress of the Works” – or something like this.
Obviously, this does not include delay because of storms / heavy rains, floods, bush fires, etc. or things outside of the control of the builder.
The non-breaching party must issue a notice to remedy breach for the delay.
But, if the builder does not remedy the breach by bringing the building works to completion on the date of practical completion without a reasonable explanation, then they may be in breach of the building contract and may allow the non-breaching party to terminate and sue for damages.
A party may terminate for delay if the following criteria are met:
- The building works are seriously incomplete at the time the notice to remedy breach is served; and
- There did not exist any circumstances which would have prevented the builder from having completed the works on time.
Breaches of Building Contracts
A breach of contract occurs when a party to a contract does not perform their obligations under the contract.
Not all breaches of contract give rise to the right to terminate the contract and so care should be taken, and advice should be sought before attempting to terminate a contract.
However, all breaches allow for the innocent party to claim damages (if damages have been incurred).
There will usually be a clause in the building contract which will provide a framework for breaches and substantial breaches of the building contract.
There could be any number of breaches that could occur under a building contract, and it is vital to get qualified legal advice.
Unclear or Confusing Ambiguous Contractual Language
Entering into a building contract which has unclear or confusing ambiguous contractual language could lead to an expensive building dispute.
For example, if a party believes that something is included in the price, or not included in the price, a badly worded clause could lead to a building dispute which could cost both time and money.
If a definition, clause, phrase, specific term, or word is vague, ambiguous, or unclear then this could cause serious problems.
This includes residential or commercial building contracts between homeowners, builders, contractors, subcontractors, or third parties.
We would always recommend getting legal advice before entering into any building contract.
Variations that have not been Agreed, nor put in Writing
It is essential that all variation to building contracts be properly documents in writing.
Section 40 of Schedule 1B of the Queensland Building and Construction Commission Act says:
The building contractor must give the building owner a copy of the variation in writing
Further, Section 41 of Schedule 1B defines what needs to be included in the written variation notice.
The document evidencing the variation complies with the formal requirements if it—
(a) is readily legible; and
(b) describes the variation; and
(c) states the date of the request for the variation; and
(d) if the variation will result in a delay affecting the subject work—states the building contractor’s reasonable estimate for the period of delay; and
(e) states the change to the contract price because of the variation, or the method for calculating the change to the contract price because of the variation; and
(f) if the variation results in an increase in the contract price—states when the increase is to be paid; and
(g) if the variation results in a decrease in the contract price—states when the decrease is to be accounted for.
However, in some cases the Queensland Civil and Administrative Tribunal may allow a variation that was not in writing if
- There are exceptional circumstances; or
- The building contractor would suffer unreasonable hardship; and
- It would not be unfair to the building owner for the building contractor to recover an amount.
The contractor can also vary the contract without getting it in writing if the variation is required to be carried out urgently; and it is not reasonably practicable to produce a copy of the variation in writing.
Variations are a constant source of building disputes and it is vitally important that the variation process be carries out every time.
The above relate to domestic or residential building contracts only. The QBCC does not require commercial building contract variations to be in writing. However, it is just good practice to make sure that all variations to a building contract are documented in writing.
Disagreements as to Payment Claims and Schedules
A payment claim is a claim made under the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (“BIFA”).
Very strict time limits apply to the different stages of BIFA. Ensure that you do not miss out on a claim by contacting our building and construction lawyers today.
If the parties disagree about the amount of the payment claim, there is a relatively straightforward and structured process allowing a party to seek / dispute payment for the goods and/or services provided.
This will include issuing a payment claim, a payment schedule, the correct notice, and then proceeding to either Court or a seeking a determination from an adjudicator.
Read more here – Making a Payment Claim – BIFA (QLD)
Debt Recovery and Non-Payment of Money
Debt disputes are very common in the building and construction industry.
They can arise in any number of ways and for any number of reasons. Perhaps there is a dispute as to the quality of the work, or the inclusions / exclusions in the contract. Or, perhaps they arise because of an insolvent party.
Commonly, these debt disputes arise because of a difference in the contract price where the parties did not vary the price correctly (if at all), or the varying party trying to recoup unforeseen expenses.
Whatever the reason, building disputes in relation to debt can be resolved by:
- Issuing a BIFA payment claim;
- Issuing a BIFA subcontractor’s charge;
- Issuing a creditor’s statutory demand; or
- Commencing legal action for breach of contract.
As litigators, one of our main jobs is to avoid litigation and going to Court. If possible, we would almost always recommend informal or alternative dispute resolution before going to Court.
Negligence Claims for Bad Quality of Workmanship Against a Builder
A builder owes a duty of care to a homeowner / landowner / contractor to construct and/or supervise the building works to the standard of a reasonably competent builder.
A homeowner / landowner / contractor will rely on the skill and expertise of the builder as a licensed builder registered with the Queensland Building and Construction Commission.
A builder will breach their duty of care the homeowner / landowner / contractor if they fail to ensure that the building works at the property were carried out in a proper and workmanlike manner.
The other party can sue in negligence for damages sustained because of the breach.
How to Avoid a Building Dispute in Queensland
Building a house, or any kind of building and development project, is a big commitment and can incur significant costs.
It is vitally important that you spend some time and money at the beginning, to avoid any stressful building disputes along the way.
There a number of things that a party to a building contract can do to attempt to avoid a building dispute. These include things like:
- Seek legal advice before entering into the contract;
- Do some due diligence on the builder / other party;
- Keeping good lines of communication open;
- Ensure that the contracts (and all variations) are in writing;
- Take notes and photographs & keep a diary;
- Ensure the parties have realistic expectations;
- Seek help from a professional early before the disagreement escalates; and
- Properly review all of the facts of the disagreement.
We will explain these in more detail below.
Seek Legal Advice before Entering into the Building Contract
We would always advise that you seek written advice from a qualified lawyer before entering into a building contract.
The lawyer will ensure that the building contract is compliant and will identify any risks and liabilities.
If you know about the risks and liabilities beforehand, then you can choose to either not enter into the contract, or it will not be a surprise if the event happens.
The building and construction lawyer will also do some due diligence on the builder / other party.
Do some Due Diligence on the Builder / Other Party
It is very important that you do some due diligence on your builder / contractor. Don’t rely on what a bloke down the pubs says.
Do a QBCC license search for the builder and the building company.
Obtain an ASIC current extract to see all of the company information and who the directors are.
Do an ASIC directors search to see if the director has been a director of now insolvent companies or has been disqualified.
Check the ASIC Insolvency Notices website to see if there have been any insolvency forms filed on the company.
Read reviews online, do some serious searches online to find any relevant information.
Ask for references and actually take the time to follow up with those references.
It is not enough to simply do the above, you must be able to correctly interpret what the information gathered. It might not be relevant that the company has had 10 Court proceedings, for example. They could have been dismissed. It may not be relevant that a winding up application was once filed, it may have simply been a missed statutory demand, for example.
It is important that you get advice from a building disputes lawyer before engaging with a builder / contractor. A little due diligence at the beginning may stop a lot of problems down the line.
Keeping Good Lines of Communication Open
One of the key elements to avoiding building disputes is to have clear communication between the contracting parties.
Make sure that you have regular site meetings so that the parties are always on the same page.
Have a good relationship with the other party so that you can talk through any issues that may arise. This will help you work through most of the disagreements.
Also, be prepared to compromise. Things happen, nothing is ever 100% perfect. Be prepared for a little give and take between the parties.
Ensure that the Building Contracts (and all Variations) are in Writing
As above, the parties to a building contract or subcontract must ensure that firstly, the contract itself is in writing, and secondly, that any and all variations to the building contract are in writing.
It is common for parties to a building contract to informally agree to a variation on site. A conversation can occur on site about something that needs to be changed or varied.
This conversation must be followed up in writing and have all of the elements required for an enforceable variation.
Also, you should get legal advice from a building disputes lawyer for advice on:
- Any and all plans and drawings contained in the contract;
- Details of all payment claims and schedules, are whether they are compliant;
- The review process, any milestones, and the signing off process;
- The sum payable under the contract, the progress payments dates, times etc; and
- Any mechanism for dispute resolution prior to going to Court.
Take Notes and Photographs & Keep a Diary
Keep a diary and take detailed notes and photographs in relation to the progress, who was on site and for how long, and all conversation you have with the other party.
Follow everything that was discussed up by email to ensure that you have a paper trail.
Keeping proper records can help avoid costly building disputes.
If there is a potential dispute in the future about something that was or was not done or said, then the extrinsic documents that you can provide can help avoid a building dispute.
Ensure the Parties have Realistic Expectations
It is important that parties to the building contract do not have unrealistic expectations.
Builders, homeowners, contractors, and subcontractors should ensure that they understand about the building process, timeframes, and potential risks and liabilities, so that the expectations are managed.
Managing expectations will assist in avoiding building disputes.
Get a Building Disputes Lawyer Involved Early
It is important to seek help from a building disputes lawyer early before the disagreement escalates and becomes something that needs to be litigated.
It is important that the parties (but preferably their lawyers) properly review all of the facts of the disagreement to know exactly what the disagreement is.
As mentioned above, a litigation lawyer should attempt to advise their clients to avoid litigation where possible, and the costs and time involved with litigation.
A building disputes lawyer should attempt to get the parties to resolve this dispute informally where possible, rather than commencing legal action in the Courts.
But what is informal building dispute resolution?
Resolving Building Disputes Informally
Trying to resolve a dispute informally by negotiation, by informal agreement, by expert determination, or mediation is a good way to resolve building disputes.
Resolving building disputes informally takes the least amount of time and costs the least. It is usually in everyone’s best interest to attempt to informally resolve these building disputes.
Also, it is a good idea to try to resolve commercial disputes commercially, with the parties maintaining a commercial relationship.
Resolving Building Disputes by Negotiation
Lawyers will usually try to negotiate with the other party to seek a resolution to the building dispute.
This may involve several letters to the other party or the other party’s lawyers, seeking clarification to disputed facts, or seeking evidence to support the claims made.
A lawyer will then advise on the client’s prospects in litigation and advise on a reasonable compromise to resolve the dispute.
A lawyer will then send Calderbank letters of offer to get a without prejudice settlement negotiations started.
If the matter can not me resolved by negotiation, then the parties may want to consider settling the dispute by mediation.
Resolving Building Disputes by Mediation
A mediator is a third-party, usually a barrister, who will guide the parties to the building dispute through a structured process in an attempt to reach a resolution.
The end result of a mediation is for the parties to sign a legally enforceable contract or deed of settlement, which will outline the steps required by each party to finalise the building dispute.
Attending a mediation can save considerable time, legal fees and court costs.
If an agreement can be reached by negotiation or mediation, then this agreement should be documented in a deed or contract.
Seek an Expert Determination of the Dispute
Expert determination is a process in which the parties in dispute agree to have their dispute determined by an independent third-party, or expert.
In most cases the expert is a person with technical experience, such as an engineer, or a construction expert
Parties to disputed building contracts will sometimes include a clause requiring the parties in dispute to refer dispute to an expert for determination rather than going to Court.
Alternatively, the parties in dispute may agree to enter into a stand-alone expert determination agreement to save the expense and time of going to Court.
The determination is binding on the parties.
Making a Contract or Deed of Settlement
If the negotiated agreement includes consideration, then the agreement can be documented in a formal contract.
If there is no consideration, then the agreement must be documented in a formal deed of settlement.
If the building dispute cannot be resolved informally then the parties may need to resort to formal resolution of the building dispute.
Resolving Building Disputes Formally
If the parties need to formally resolve the building dispute, they can do a number of things, namely:
- Make a complaint to the QBCC;
- Seek an adjudication of the dispute;
- File proceedings in Court or QCAT.
We will explain these in more detail below.
Make a Complaint to the QBCC
The Queensland Building and Construction Commission (“the QBCC”) is the first place that a party to a building dispute should go.
The QBCC can resolve the following disputes:
- Complaints relating to building design;
- Complaints relating to pre-purchase and termite inspections;
- Complaints in relation to building certifiers;
- Complaints in relation to defective work;
- Complaints in relation to non-completed work; and
- Complaints in relation to unlicensed contractors.
If your building dispute relates to the above, then the QBCC can assist with the dispute.
Seek an Adjudication of Building Disputes
If the dispute relates to an unpaid progress payment, then the parties may opt to have the debt dispute adjudicated.
A BIFA adjudication is a fast and cost-effective way of resolving building and building disputes without resorting to the Court or QCAT.
Once a decision has been made, the adjudicator will issue an adjudication certificate which can be registered in the Court and enforced as if it were a decision of that Court.
Very strict time limits apply to BIFA claims, so it is vital that you act now to protect your rights.
Read more about making payment claims – How to Make a BIFA Payment Claim
Read more about making adjudication applications – How to Make an Adjudication Application
Commencing Proceedings in QCAT
The QCAT Building Disputes department has jurisdiction to hear building disputes.
The jurisdiction is conferred by section 77 of the QBCC Act says:
(1) A person involved in a building dispute may apply, as provided under the QCAT Act, to the tribunal to have the tribunal decide the dispute.
(2) However, the person may not apply to the tribunal unless the person has complied with a process established by the commission to attempt to resolve the dispute.
So, to enable QCAT to hear the dispute, the Applicant must have been referred by the QBCC after applying for their dispute resolution process.
Domestic Building Dispute is defined as a dispute arising:
1. Between a building owner and a building contractor;
2. Between 2 or more building contractors;
3. In negligence, nuisance or trespass; or
4. Between a building owner or a building contractor and any 1 or more of the following:
a. an architect;
b. an engineer;
c. a surveyor;
d. a quantity surveyor;
e. an electrician or an electrical contractor;
f. a supplier or manufacturer of materials used in the tribunal work.
Once QCAT makes a decision, and it is not appealed, then the QCAT decision can be registered in the Court and enforced as if it were a judgment of that Court.
Alternatively, the parties might just file proceedings in the Court.
Commencing Proceedings in Court
Alternatively, the parties can commence legal action in the Court with jurisdiction.
A proceeding is usually commenced by claim and statement of claim.
The objective of the Court process is to have the Court decide the building dispute and give a judgment.
Avoid and Manage Building Disputes in Queensland
This article provides information in relation to avoiding and managing building disputes in Queensland.
If you follow this information (if it related to your building dispute) then you would have done everything you can to avoid or manage the dispute.
However, some people are just unreasonable and will not act reasonably however reasonably you act.
However, there are a few tips and warning signs that you should be aware of.
Tips to Avoid Building Disputes
Below are a number of tips that any party to a building dispute can follow, to decrease the risk of a dispute arising. They are:
- Do not send angry or nasty emails and do not be angry or aggressive in person or on the telephone;
- Document all variations in writing;
- Ensure that builders reach their milestones when they are supposed to;
- Ensure that the building is completed at the practical completion stage;
- Ensure that you know all of the facts – do the math again, review the contract again;
- Ensure that you make prompt payments in accordance with the schedule;
- Get legal advice as soon as possible;
- Give serious consideration to compromise, it will likely cost less in the long run;
- Record everything – keep detailed notes of everything that happens on site;
- Review all of the work and only provide sign-off if you are 100% sure of the phase completion; and
- Stay focussed, calm, and remember that this is a commercial agreement, it’s not personal.
There are also a number of warning signs to look out for too.
Warning Signs of Potential Building Disputes
If you have doubts about the other party to a building dispute, then there are a few warning signs to consider. The warning signs include:
- A number of changes to major subcontractors;
- An excessive amount of quality issues;
- Badly worded scope of work / inclusions / exclusions;
- Constant key milestone dates are being missed;
- Constant requests to change the sequence of work;
- Disputes resolution clauses that do not read well and are badly thought out;
- Late delivery of building materials & building equipment;
- Payment claims not in accordance with progress;
- Subcontractors contacting the homeowner requesting payment not been paid;
- The builder or contractor going slow on site, or not attending the site;
- The builder requesting payment in advance before doing the work;
- The contract being substantially followed;
- The contract not being administered correctly;
- The contractor or homeowner constantly missing payment dates; and
- Unrealistic and undeliverable schedule of work.
Building disputes can be managed effectively if they are dealt with quickly. Contact our building dispute lawyers in Brisbane and the Sunshine Coast
Wayne Davis, LLB, GDLP – Commercial litigation solicitor and legal practice director at Stonegate Legal Pty Ltd. Stonegate Legal have a focus on commercial and civil disputes, debt recovery, the enforcement of money orders, bankruptcy and corporate insolvency. Wayne is also a committee member of the Sunshine Coast Law Association.