Termination of Contract and Repudiation
The judge found that the builder’s abandonment of the works amounted to a repudiation of the contract. Repudiation occurs when one party demonstrates through their actions or words that they no longer intend to be bound by the terms of the contract. In this case, the builder’s abandonment of the works was a clear indication that they no longer intended to fulfil their obligations under the contract.
The owner had the option to terminate the contract immediately, which they did on 24 April 2016. The termination was justified due to the serious breach of the obligation to carry out the building work with due diligence, which was an intermediate term of the contract.
The judge also found that the breach of clause 2.1 of the contract, which imposed a mandatory obligation on the builder to carry out the work with due diligence, was not in the nature of an essential condition of the contract. Therefore, any breach of clause 2.1, however slight, would not justify termination of the contract.
Delay and Unlawful Suspension of Works
Clause 19 of the HIA Contract provided for the builder to seek an extension of time in the event of a delay or circumstances beyond their control. The builder, however, did not request an extension of time for any of the delays in the project. Clause 25 of the contract dealt with the suspension of works, but the builder did not follow the proper procedure and unlawfully suspended the works.
The builder had an obligation to carry out the building work with due diligence, which was a serious breach of an intermediate term. Due to the builder’s abandonment of the works, the owners were justified in terminating the contract. The builder’s lack of due diligence was the reason for the delays and the unlawful suspension of works. Therefore, the builder was found to be in breach of the contract, and the owners were entitled to terminate the contract and seek damages for the incomplete and defective work. Homeowners should be aware of the builder’s obligation to carry out the work with due diligence and the proper procedures for seeking extensions of time or suspending works under the contract.
Related Content: Dealing with Delays: Homeowner’s Rights and Remedies
Remedies for Homeowners
The decision in Kapeller v BH Australia Pty Ltd [2020] NSWCATCD 20 shows that homeowners have various remedies available to them if their builder breaches the contract. In this case, the homeowners were entitled to:
- Terminate the contract due to the builder’s serious breach of the obligation to carry out the building work with due diligence.
- Claim for incomplete works and defective works, with a total value of $191,336.00, which was awarded to them by the court.
- Not pay the builder any further amount under the contract, and not allow the builder to claim for any amount through quantum meruit.
- Avoid rectification of defective work or completion of incomplete work by the builder, due to the builder’s lack of licence under the Home Building Act 1989.
It is important for homeowners to understand their rights and remedies in the event of a breach of contract by their builder. Seeking legal advice and guidance can help homeowners protect their interests and ensure that they receive the compensation they are entitled to.
Conclusion
The Kapeller v BH Australia Pty Ltd case highlights the importance of understanding your rights and obligations under a residential building contract. Homeowners should be aware of the potential breaches that can occur and the remedies available to them if their builder fails to meet their obligations.
If you are currently facing issues with a builder, it is crucial to seek legal advice to protect your rights and ensure a fair resolution. As a specialist construction lawyer, I offer a free 15-minute phone consultation to discuss your situation and advise on the best course of action. Don’t hesitate to reach out for assistance and protect your investment in your home.
