My Builder is in delay completing my home build. I have requested my Builder compensate me for the financial loss I have suffered because of the Builder’s delay. My Builder says that “we have no delay damage clause in our Building Contract and will not pay any amount requested”.
Is the Builder right?
The Builder’s comment demonstrates a fundamental misconception on his part regarding the Builder’s liability to compensate the home owner for loss and damage arising from the Builder’s failure to achieve practical completion of the Works by the contracted date for practical completion.
Hypothetically, the Builder above suggests that where there is no liquidated damages clause contained in the Building Contract then the Builder is not obliged to pay any damages to the Owners.
There are published decisions of the State Administrative Tribunal in respect of claims by Owners against Builders for loss and damage suffered by the Owner as a result of the Builder's breach of the time for performance clauses of the Building Contract specifically the failure to cause the Works to reach practical completion by the date required under the Building Contract.
It has on various occasions been found by the SAT that damages for loss resulting from additional rent or loss of rental income flow naturally from a breach of contract, such as the failure to complete the Works within time, and fall within the first limb of the rule of assessment of damages in Hadley v Baxendale (1854) 9 Exch 341; 156 ER 145. Additionally, the Tribunal has found that “the absence of any liquidated damages clause in the contract, presents no bar to the applicant's claim”: see for example Byham v Afra Construction Pty Ltd [2014] WASAT 38. [Read here]
In the Byham case the SAT awarded loss and damage to the Owner in the sum of $29,568 for loss of rental income the contracted date of practical completion.
In a recent case I was involved in, I provided the above information to the Builder so as to clear-up any misconception on the Builder’s part that the Builder in that case is not liable to pay my clients’ loss and damage, comprising the additional rent paid by my client beyond the contracted date for Practical Completion, which in that case was 11 May 2022.
My Clients’ calculable loss incurred by reason of the Builder’s substantial breach was:
- $380 per week representing the costs incurred by my Clients for rental accommodation;
- Rates and Taxes on the Works property;
- water service charges on the Works property;
- electricity service charges on the Works property; and,
- loss of amenity (enjoyment of living in the Works Property).
After settlement negotiations were entered, the Builder agreed to pay my client a substantial portions of my client’s claim for delay damages.
Contact Vogt Legal - we can assist you in seeking compensation for your financial loss and damage resulting from your Builder’s delay in completing the Works under a building contract.
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