CHELLEM and KULOWALL CONSTRUCTION PTY LTD - [2022] WASAT 95

JURISDICTION     :   STATE ADMINISTRATIVE TRIBUNAL
ACT: BUILDING SERVICES (COMPLAINT RESOLUTION AND ADMINISTRATION) ACT 2011 (WA)
CITATION:   CHELLEM and KULOWALL CONSTRUCTION PTY LTD [2022] WASAT 95
MEMBER:   MS KY LOH, MEMBER
MR P MARSHALL, SESSIONAL MEMBER

HEARD:   15 AUGUST 2022
DELIVERED          :   2 NOVEMBER 2022
FILE NO/S:   CC 199 of 2022
BETWEEN:   OBED CHELLEM
First Applicant
SHAZIA ALI
Second Applicant
AND
KULOWALL CONSTRUCTION PTY LTD
Respondent

Catchwords:

Building services complaint - Home Building Contract complaint - Whether builder entitled to increase contract price after laying slab - Whether contract was validly terminated - Whether owners entitled to compensation

Legislation:

Building Services (Complaint Resolution and Administration) Act 2011 (WA), s 5(2), s 41(2), s 41(2)(a)(ii), s 41(2)(d)(i), s 43
Home Building Contracts Act 1991 (WA), s 3, s 9, s 9(1), s 9(1)(a), s 9(2), s 9(2)(a)(i), s 9(2)(b)(i), s 17, s 25C, s 25C(2), Pt 2, Pt 3A, Sch 1, cl 2, cl 4, cl 5(1)

Result:

Application allowed

Category: B

Representation:

Counsel:

First Applicant	:	In Person
Second Applicant	:	In Person
Respondent	:	Mr M Salman (as representative)

Solicitors:

First Applicant	:	N/A
Second Applicant	:	N/A
Respondent	:	N/A

Case(s) referred to in decision(s):

Nil

REASONS FOR DECISION OF THE TRIBUNAL:

Introduction

The owners of a block of land in Girarawheen, Mr Obed Chellem and Ms Shazia Shehnaz Ali, entered into a contract with Kulowall Construction Pty Ltd to build a double storey house on their land.
After the ground floor slab was poured, no further works were undertaken as the parties disagreed about an increase in contract price.
The builder relies on a provision in the contract which allows it to increase the contract price if a delay to the commencement of works of more than 45 days into the contract was caused by the owners, that being their failure to obtain finance in time.
The owners dispute that the builder raised this failure with them as the reason for the price increase, which was instead motivated by an increase in bricklaying costs.
The builder lodged a notice of cessation with the City of Wanneroo as a result of termination of the contract 'by mutual agreement', which the owners also dispute was their intention.
For reasons set out below, we are not satisfied that the contract was terminated, nor was any price increase valid under the contract.
The contract remains on foot, and the owners will be compensated for the loss of rental income and consequential losses due to the unlawful suspension of work by the builder.

Issue for determination

The primary issue for determination is whether a Home Building Work Contract (HBWC) remedy order is justified in the circumstances.
In considering the primary issue, the following secondary issues arise:
1)whether the builder was entitled to increase the contract price as a matter of contract law and whether the builder has complied with the provisions of the Home Building Contracts Act 1991 (WA) (the ContractsAct)?
2)whether the contract between the parties was…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2022] WASAT 95
Decision Date: 2 NOVEMBER 2022

CaseChat Overview and Summary

Chellem and Kulowaal Construction Pty Ltd involved a dispute between the owners and the builder concerning a home construction contract. The builders alleged that the contract permitted an increase in the contract price after the laying of the slab. The owners claimed the contract was terminated due to the builders' failure to meet deadlines and that they were entitled to compensation for the builder's alleged breaches.

The primary legal issues were whether the builder was entitled to increase the contract price post-slab laying, whether the contract was validly terminated by the owners, and whether the owners were entitled to compensation. The court had to interpret the contract terms to determine the validity of the price increase and termination, and assess whether the owners were entitled to compensation under the statutory framework governing home building contracts.

The court found that the contract did not permit a price increase after the slab was laid, as the terms were clear and unambiguous. The builders' claim for an increased price was rejected. Regarding the termination, the court held that the owners validly terminated the contract due to the builders' failure to meet critical deadlines. Finally, the court determined that the owners were entitled to compensation for the builders' breaches, as per the statutory provisions. The builders were ordered to compensate the owners for the losses incurred due to the contract termination.

The court's final orders required the builders to compensate the owners for the losses incurred due to the contract termination. The builders were also directed to pay the owners' costs of the proceedings.

Orders