Excess progress payments refundable by builder where statutory warning not signed by the building owners
Imerva Corporation Pty Ltd v Kuna (Building and Property)  VCAT 2058
VCAT has determined that $654,568.00 in progress payments received by a builder was repayable as the building owners did not sign the warning in the contract that the progress payments were in excess of the statutory limits set out in section 40 of the Domestic Building Contracts Act 1998 (DBC Act)
A building contract entered into between the Applicant (Imerva) and the Respondents (Owners) was terminated by the Owners by reason of the builder’s defective work. In the course of the hearing, VCAT considered whether three progress payments made by the Owners of $654,568.00 were made in accordance with the DBC Act. Under the DBC Act, if the parties wish to vary the progress payments set out in the schedule in section 40 of the DBC Act, they must do so in the manner set out in the Regulations. The Regulations required, inter alia, that there be a warning in the contract which must be signed by the building owner before executing the contract. The contract executed by the parties contained a schedule for progress payments which was much more favourable to the builder and which departed from the schedule in section 40 of the DBC Act. The parties signed the contract and initialled each page of the contract (including the page of the contract on which the required warning appeared), but the building owners did not separately sign in the space provided for on the page of the contract on which the warning appeared.
The Tribunal was not satisfied that the owners’ initials on the bottom of each page of the contract satisfied the requirement in the Regulations for the warning to be signed by the building owner. The Tribunal rejected the builder’s submission that the owners, by agreeing to the amended schedule and making the payments in accordance with that schedule, were estopped under the principles in Walton Stores (Interstate) Ltd v Maher  HCA 7. The Tribunal also rejected the builder’s claim for lengthy extensions of time on the ground that the builder had not demonstrated how the events complained of delayed the progress of the work.
The order that the builder repay excessive progress payments did not have any practical effect in this case, because the Tribunal, having found in favour of the owners on the issue of termination, simply adjusted the unpaid balance of the contract price accordingly when assessing the owners’ loss.