The Case of DCR Constructions (NSW) Pty Ltd t/as True Built v Matthews
In this case, the homeowner contracted a builder to construct an extension to his home, and the parties agreed on a progress payment schedule. The builder issued several invoices during the construction process, but they did not comply with the contract’s terms. The homeowner paid some of these invoices, but he repeatedly informed the builder that he wanted a progress payment schedule and for invoices to be issued only when work was completed at the end of each progress stage.
Eventually, the builder issued an invoice for work that he claimed was complete, but the homeowner disputed the claim. The builder then suspended work and purported to terminate the contract under Clause 33 for non-payment of invoices 163 and 174.
The homeowner disputed the builder’s termination of the contract and took the matter to a tribunal. The tribunal examined the terms of the contract and relevant case law and concluded that:
- The builder had breached the contract by failing to issue invoices in accordance with the progress payment schedule.
- The homeowner had not waived his rights to insist on compliance with the contract’s terms regarding invoices.
- The builder’s termination of the contract was not lawful.
Clause 15 of the Contract
Whilst the case does not expressly refer to the Master BUilders Association BC4 contract, the terms referred to in the case coincide with the terms from the MBA BC4 contract.
In the DCR Constructions v Matthews case, the decision analysed clause 15 of the contract.
Clause 15 deals with payment of monies by the homeowner under the contract in regard to progress payments. This clause sets out the procedure for progress payments, which are payments made by the homeowner to the builder at certain stages of the construction project.
Under clause 15.2, the homeowner must pay the builder “the contract price progressively as claimed by the builder”. This means that the builder can claim payment from the homeowner for work that has been completed up to a certain point in the project.
Under clause 15.3, the builder must give the homeowner a written claim for a progress payment for the substantial completion of each stage. This means that the builder must provide the homeowner with an invoice for the work that has been completed up to a certain point in the project.
Under clause 15.4, a progress claim is to state:
- The amount claimed and not paid for the stages substantially completed;
- The amount claimed and not paid for the contract price adjustments;
- The amount claimed and not paid for variations; and
- The sum of the above amounts.
The Case: DCR Constructions v Matthews
In the DCR Constructions Case, the builder failed to issue an invoice that complied with the terms of the contract. The homeowner had agreed to an amended progress payment schedule on or about 3 January 2017. However, the builder issued invoices that did not correspond to the progress payment schedule, and did not provide sufficient information about the work that had been completed.
The homeowner made it clear to the builder that he wanted a progress payment schedule in respect of the work to construct the extension, and wanted the builder to issue invoices only when work was complete at the end of each progress stage. However, the builder insisted on payment of the invoices when they were rendered, rather than at the end of each progress stage of the work.
The builder argued that the homeowner had waived his right to rely upon clause 15 of the written contract regarding the issue of progress payments, because the homeowner paid invoices during the course of the build without insisting the builder comply with Cl. 15. However, the Tribunal was not satisfied that the homeowner had waived his rights to rely upon the issue of invoices in accordance with the amended progress payment schedule that he had agreed to on or about 3 January 2017.
The Decision
The Tribunal found that the builder did not lawfully terminate the contract under the provisions of the written contract. The Tribunal was satisfied that the homeowner had not elected to waive contractual rights under clause 15 of the written contract. The Tribunal also found that the homeowner’s conduct in paying some invoices rendered by the builder during the course of the works that were served before completion of a progress stage for works did not constitute estoppel.
Implications for Homeowners
The case highlights the importance of ensuring that your builder complies with the terms of your contract, particularly in relation to progress payments. If your builder fails to issue invoices in accordance with the contract, this can have a significant impact on the progress of your construction project, and may result in legal disputes.
As a homeowner, it is important to:
- Ensure that the progress payment schedule is agreed upon and included in the contract; and
- Insist that the builder complies with the written contract.
Case Law Relied On
The case decision relied on the following cases to make its decision:
- Corbett Court Pty Ltd v Quasar Constructions (NSW) Pty Ltd [2008] NSWSC 1163: This case sets out the principle that a party may waive his contractual rights by acting in a manner inconsistent with those rights.
- Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Marketing Pty Ltd (2013) 250 CLR 303: This case defines waiver as an intentional act done with knowledge, whereby a person abandons a right by acting in a manner inconsistent with that right.
- Craine v Colonial Mutual Fire Insurance Company Ltd (1920) 28 CLR 305: This case provides an explanation of waiver as a doctrine that prevents a person from taking up two inconsistent positions.
- Walton Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387: This case sets out the principles of estoppel
