Builders bills

Hi. We engaged a builder on a 'do and pay' basis for some renovations. His work has been so-so.....
The project has seen a big blowout on budget so I have been going back through the invoices.

When we received the invoice from him we noticed that all the labour costs had GST added on top. Fair enough.

He gave us copies of invoices for building supplies (plaster, timber, etc) and these items, which were charged to his account at the suppliers, already had a GST component. He has then charged an additional '10% GST' on top of that. The additional 10% is actually listed as 'GST' on the invoice.

We had some skips delivered during the cleanup. They already had a GST component on the invoice, but again, he has added an additional 10% under 'GST' on his invoice.

He organised a plumber friend to do some work. The plumbers invoice also already had a GST component but again our builder has added an additional '10% GST' on the invoice. This was even done for work that was paid cash. The same occurred with the electrician.

A brickie closed up an unwanted window for us and was paid cash. '10% GST' was added onto his bill by the builder too, as well as for $1500 cash that was paid to a roof tiler to repoint some roof work.

Everything except for the labour component has had GST charged on the GST, meaning we have paid 21% GST. We never signed a contract with this builder as he was happy to take the job on a 'do and charge' basis, which was described to us as "We do the work and bill you, and you pay as you go". Most of the work was internal and we were not working to a set of plans. His estimate for the job was "$150k, even up to $200k depending on fittings". We bought all the fittings ourselves and he only provided labour and raw building materials and billed us for them. We are already over $250k and the job still isn't finished.

As a result of his GST accounting practice, we have been charged 10% GST plus an additional 11% 'GST on the GST'. That 11% extra constitutes over $26,500 of our costs so far. We were not advised of any builders margin when we started and have no contract.

I think I've been ripped off by his odd GST accounting practice. He has just presented me with a bill for a further $18k and I'm loathe to pay it as the way I see it he has already overcharged at least $26.5k.

Any suggestions?

Thanks in advance.

Also would like to know if I am on a 'do and charge agreement' am I responsible for paying for lunch breaks and smokos? Some days they are only here for 4 hours but still take a break of some sort and bill me for the full 4 hours....

I thought it was illegal for a builder to enter into a cost plus contract unless the works were over $500000.,
or else it was impossible to quote on.
Some more knowledgeable people will be along shortly.

What state are you in?

You need to speak to the office of fair trading or similar ( consumer.vic.gov.au if you are in Victoria.

If you are in Victoria then as oldchippy says cost-plus methods are generally illegal for building work worth less than $500,000. See Unfair Contract terms on the Consumer Affairs website:

Victoria has laws to prevent unfair terms in consumer contracts, including contracts to build a house, and renovate, extend or repair an existing house.

Make sure your contract does not include these illegal terms:
[ul][li]a clause requiring any dispute to go to arbitration (a compulsory arbitration clause)[/li]
[li]a caveat (a warning of some right or interest on the land title) on the building site land[/li]
[li]any statement that restricts or denies your rights to implied warranties (see building warranties and insurance)[/li]
[li]a cost escalation or ‘rise and fall’ clause, unless the contract price exceeds $500,000. The onus is on the builder to calculate into the contract price any likely rise in costs caused by inflation, wage increases and the like. If the builder wants to include a cost escalation clause, the Director of Consumer Affairs Victoria must approve it. The director has not yet approved any cost escalation clauses[/li]
[li]an agreement to pay the builder by a cost-plus method, if your contract is less than $500,000. An example of a cost-plus method is when a builder charges by the hour and you do not have a fixed price for your contract. You can use a cost-plus contract if you are renovating an existing house, but only in very limited circumstances. Get legal advice before you sign any cost-plus contract[/li]
[li]the expression ‘practical completion’. If you find it in your contract, delete it and insert ‘complete in accordance with the plans and specifications’. [/li][/ul]

https://www.consumer.vic.gov.au/housing ... /contracts

I'm sure Consumer Affairs could tell you what is meant by "very limited circumstances".

I'm no gst expert, but from what I understand if the builder has paid the timber invoice and then invoiced you with an amount plus gst then that is legit.
If the builder has organised the plaster material and you are paying the plaster supplier direct then the builder should not state on his invoice plaster supply, timber supply etc with a gst component.

Regarding paying for breaks, usually on an hourly rate basis you wouldn't pay for morning tea and lunch breaks.
But that is determined by your agreement with the builder.

Tell the builder that you are going to the ATO to ask their advice over why you're being charged GST when you have paid him and some of the tradies cash. Watch him backtrack real quick!

First mistake


Second mistake


Guessing all round by both you and him will end in tears...

When we were on site, a full 8 hr day started at 7 ( usually on site at 6:45 )
Sit down for a cuppa and a bite for half an hour at 10.
Lunch at 1 for another 1/2 an hour
Finish after 4
We certainly wouldn't expect to be paid for sitting on our ar$es on a do and charge job and I was always surprised by the number of trades who rocked up at 7:30 and tried to finish at 3:30 or earlier as well as having the same breaks as us who wanted to be paid for a full 8 hrs. Brickies were the worst.

Stewie

Hi again and thanks for all the replies. We're in Tassie...
Yes, in hindsight a contract should have been signed. Unfortunately the builder was a friend of a friend who "was very happy with his work". We saw the previous job he did and it was fine, finish was good and the price was reasonable. Our job seems to have been thrown together. The house is circa 1950 and we have remodelled a lot of the interior with new walls, new bathrooms, etc. The invoices have us being charged for "straightening" walls and ceilings but none of the new walls or ceilings are straight! This has caused havoc with the tilers and the builders excuse for everything being out of square is "well, it's an old house". I'm seriously disappointed with his attention to detail and his finish. I spoke to the Master Builders Association and they said we should not be paying for breaks either, but also said we shouldn't have started without a contract. I wrote to the builder outlining some of the issues mentioned above and he has not made contact for over a week. We want the job done properly and are giving him the chance to make things right but I have a feeling it will not end that way.

If it was me I wouldn't be giving him a cent more. I've worked on lots of old houses doing renos, add-ons, second storeys etc and you can nearly always come up with a good result even if the existing house isn't straight, plumb, square or a combo of all three. I'd also be looking at getting someone else in to repair what he has stuffed up and completing the work.
I don't know how big the town is where you live but I'd be letting it known locally that he has done a $hit job. In small towns reputation is everything and if he has any brains he'd be correcting things quickly lest all his work dry up.
I'd also let your mate know and say how disappointed you are with the guy he recommended and how much it is costing you.

Stewie

I agree with Stewie, I wouldn't be paying him anything else until he rectifies any issues, or at least makes an effort to and his future work is of a standard you're happy with.

The excuse for old house is rubbish, there's ways around things and solutions to problems and most of the time it can done correctly.
That could be packing studs and top plates with Masonite packers square with the room or planing the frame and chiseling sections that are hard to reach to get square, plumb, level and straight.

For someone who is on an hourly rate I am confused why you wouldn't take your time with it or get it right anyway, when if it's a fixed price and the builder has underestimated the works that's when cutting corners or slack work can occur more often.