Builder suspended works, demanding variations, cost increase

Hi All,

I am currently in dispute with my builder, and need some advice on my position, legalities, and where I stand and what to do to protect myself.

I will keep this post brief and as technical as possible, all information below is accurate and true.


1. Fixed priced contract just under $1m for construction, which includes allowances for some areas.


2. It's been ~18 months since construction started and we are still only at starting internal fitout stage.

3. Builder has received all progress payments except for final 10%.

4. Builder has had several issues with delays on is end due to his trades (issues, availability, etc).

5. There are several variations outstanding totalling ~$30k which we were told could paid whenever we had the funds available.

6. A few weeks ago builder abruptly stopped communicating with us, stopped work, and wrote a letter with demands that;

- All construction has been immediately suspended (no forewarning or prior discussion about this).


- We must sign and pay all outstanding variations within 10 days, and work will not resume until everything is paid in full.


- Builder sent replacement variations and advised us to disregard previously agreed (but not signed) variations, increasing them from ~30k to ~80k with many items we never discussed/agreed on and added margins we never agreed on.

- Passed all blame to us for the construction delays advising we took to long to make internal selections, and as a result has advised we are now liable to pay for ALL current and future trade price increases for fixed price components, as well as temporary fence, toilet, and other site hire costs. Simply untrue and was a complete shock to us since many of the selections were simply things like colors, and profiling for joinery, etc which were not needed until production would begin which in fact we are still waiting on builder to provide layout/drawings for...

So, currently the construction end date on the contract is ~5 months overdue, which he is not taking any responsibility for.

He has suspended works and is holding us at ransom to pay for variations that are grossly inflated and never agreed on or signed for. And is passing all current and future cost increases to us (unknown figures).

Refuses to communicate or negotiate with us, and we have no choice now other than seeking legal advice, claiming against icare, and lodging a dispute through fair trading.

I genuinely feel the builder has misappropriated our funding and used it to bankroll other construction sites, and due to covid losses is trying to pass the buck to us to cover his losses even though its a fixed price contract through inflating variations we never agreed to.

We have funding to pay for outstanding originally agreed variations, but fear he is operating insolvent and will simply take our payments and declare bankruptcy and we can never retrieve that money.

How can a builder with 90% of the progress payments in hand not be able to complete the home to even fitout stage, and declare he has no money and wants his variations paid when he never asked previously?

Furthermore, how can ~$30k worth of outstanding variations cause all of the above and put a stop to work on a ~$1m build - sounds to me like there is more going on that this issue of variations and this builder has the telltale signs of going bust.

Should I lodge a dispute with Fair Trading, notify iCare insurance provider, and what about notifying my bank about this - will they investigate him and put a halt on his licence to not be able to resume work on other sites?

What can I / should I do and how do I protect myself, more importantly can the builder legally be allowed to stop construction and demand payment for variations or is he in breach of his obligations/agreement to build this home.