Liquidated damage claim post hanodver

BBJB · Sep 10, 2024 4:17 pm

I recently finished my build with a major builder in NSW. As per the contract I was offered some money ($4500) as the liquidated damages.
But my question is.

The build for 4 bedroom house took around 16 months to finish and the contract period was 44 weeks. (Build period Nov 2022-March 2024)

1)When the liquidated damages period was calculated they builder added 6 weeks of Christmas holidays( 3 x 2 times). Cant the builder claim 2 x times the X'mas holidays? even if the build was delayed due to their problems.

2) The builder is claiming 90days as rain days as per the data from BOM even though it didn't affect the build. When asked about this , it is in there contract that they can claim rain days and don't have to give a period of extension notice.

Should I be happy with what I have been offered(not accepted yet) or or take the builder to NCAT.
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Ashington Homes · Sep 10, 2024 4:52 pm

This is a really good point.

I used to manage & administer construction contracts for a living and I am 100% certain that rain delays can only be claimed for critical path items ie if you are about to pour a slab and it rains then you can claim for the delay due to the rain and then recovery days.

But then say they are waiting for the slab to cure and it rains during that 1-2 week period, as frames are not on the critical path they can not claim for those days.

Likewise, if say you have your roof on and it rains, they can not claim a rain day for rough ins being delayed.

So in effect the number of rain days which can normally be claimed are limited to outdoor items such as slab, external walls, external paint and roofing, and it can only be those days where work was planned to occur.

And then normally, the builder is meant to come up with a plan to fast track construction to make up time.

So it is not as straight forward as they are making it out by just highlighting days that it rained and using all of those.

Whether or not it's worth going to NCAT is up to you as there will be a fair amount of time that you will need to put in to prove your point, and you will need their construction program ( if they had one) and the cross check that against the BOM data.

I hope that makes sense

Cheers

Simeon

Raider82 · Sep 11, 2024 9:26 am

This really depends on your contract.

You said that the contract says that they can claim rain days as extensions of time, are there any qualifications to that? As @Ashington Homes said, it really only should be where the rain has actually delayed critical work. But unless you've been keeping records of when the critical work was being done and therefore exactly which rain days you think they should be able to claim and which ones they shouldn't, it's going to be hard to argue your case, even if you're right. The tribunal likely isn't going to accept an argument of it being excessive unless you can show why it's excessive.

As for the Christmas break, again, check your contract. For example in my build on a standard HIA contract, there was a clause that stated that the builder was able to claim for the end of year shutdown period if construction during the Christmas period could not have reasonably been foreseen at the start of construction. So in my case it doesn't matter who caused the delay, they're able to claim for it.

The other thing to consider is how much extra do you hope to get out of it? How much is the liquidated damages per day in your contract? Are you paying rent now? Interest only on the construction loan? At what point does the extra cost of fighting it become not worth it? Although you do say post handover in the title so maybe you're already living there and this doesn't apply to you. But something to think about.

Don't get me wrong, I'm definitely not on the side of the builder here. At the end of the day if you're not happy with what they've offered and think you've got a case, go for it. Just make sure you've got everything in order before you do. And if in doubt, get legal advice.

Ashington Homes · Sep 11, 2024 9:41 am

Raider82

This really depends on your contract.

You said that the contract says that they can claim rain days as extensions of time, are there any qualifications to that? As @Ashington Homes said, it really only should be where the rain has actually delayed critical work. But unless you've been keeping records of when the critical work was being done and therefore exactly which rain days you think they should be able to claim and which ones they shouldn't, it's going to be hard to argue your case, even if you're right. The tribunal likely isn't going to accept an argument of it being excessive unless you can show why it's excessive.

As for the Christmas break, again, check your contract. For example in my build on a standard HIA contract, there was a clause that stated that the builder was able to claim for the end of year shutdown period if construction during the Christmas period could not have reasonably been foreseen at the start of construction. So in my case it doesn't matter who caused the delay, they're able to claim for it.

The other thing to consider is how much extra do you hope to get out of it? How much is the liquidated damages per day in your contract? Are you paying rent now? Interest only on the construction loan? At what point does the extra cost of fighting it become not worth it? Although you do say post handover in the title so maybe you're already living there and this doesn't apply to you. But something to think about.

Don't get me wrong, I'm definitely not on the side of the builder here. At the end of the day if you're not happy with what they've offered and think you've got a case, go for it. Just make sure you've got everything in order before you do. And if in doubt, get legal advice.

Raider82

That is very well written advice!

The point that I failed to make yesterday is that yes it does partly rely on the terms of the contract, but what people don't understand is that there are general construction law principles and legislation which can sometimes over ride the clauses in the contract, especially if you go to NCAT or arbitration. Liquidated damages is an area of construction law which has been litigated at length and there is so much precedence around how these damages can and cannot be calculated.

But for your own individual circumstances you need legal advice.

The cost of legal advice and time spent arguing this is going to add up extremely quickly as you pointed out.

Thanks again for your excellent post

Cheers

Simeon

BBJB · Sep 12, 2024 8:58 pm

Thank you for your replies, I think it will be really hard going after a big builder and probably it will cost more in legal fees.