In the recent case before VCAT of Schultz trading as Panther
Designer Homes and Ors v Duncombe (Domestic Building) 
VCAT 1165, the builder and the owner had agreed in the
contract to exclude the foundations from the contract price. The
builder subsequently claimed the foundations work as a variation,
which the owner paid. However, when the project resulted in
litigation, the owner counterclaimed against the builder for,
amongst other things, a return of the amount paid for the
foundations variation, arguing that the variation was contrary to
the Domestic Building Contracts Act.
Under the Domestic Building Contracts Act it is an
offence for a builder to enter into a contract without obtaining
foundations data. Further, after entering into a contract, a
builder cannot seek from the owner an amount of money not already
provided for in the contract if the additional amount could
reasonably have been ascertained had the builder obtained all the
Senior Member Riegler dismissed this element of the owner's
counterclaim, finding that "the present case is somewhat
different to the mischief sought to be prohibited by the Act".
He stated that "the parties were free to negotiate the terms
of the contract as they saw fit" and concluded that "the
parties agreed to exclude the cost of the foundation variation from
the contract price, notwithstanding that this may have left some
uncertainty as to the final contract price".
Will the decision be followed?
The decision however, is arguably contrary to the express
provisions and purpose of the Domestic Building Contracts
The ruling that parties can agree to exclude foundations from
the contract price and then treat the foundations work as a
variation, may not ultimately survive any appeal or a more focussed
analysis in a future case. In this case neither party was
represented by lawyers and the issue was on the periphery of the
major issues in dispute.
The facts in the case actually appear to fall perfectly within
the prohibition under the Domestic Building Contracts Act.
As the foundations work was expressly excluded from the contract
price, the variation claimed may well have been "an amount of
money not already provided for in the contract" which
apparently could "reasonably have been ascertained had the
builder obtained all the foundations data required" prior to
entering the contract. It would then have followed that the builder
would not have been entitled to claim the foundations
Further, the parties to a domestic building contract are not
always free to simply negotiate such terms as they see fit since
contracting out of the Domestic Building Contracts Act is
void unless it imposes greater or more onerous obligations on the
On one view, the exclusion of the foundations work from the
contract price is exactly the type of behaviour the legislation is
intended to prevent. Contracting in this manner results in an
uncertain price for the owners. It also follows that the owners,
who have no building expertise, will bear the risks of a cost-blow
out for the foundations work because the experienced builder has
failed to obtain all the foundations data and assess and price all
the works before entering the contract.
Even where builders are prevented from excluding foundations
work from the contract price, diligent domestic builders have some
protection under the Domestic Building Contracts Act for
the cost of foundations work that could not reasonably have been
anticipated. The builders have to obtain the foundations data only
to the extent of a builder exercising reasonable care and skill.
Further, the builders can still claim for a variation if the cost
of the foundations work exceeds what could reasonably have been
ascertained from that foundations data.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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