Bessant v Metro Pacific Pty Ltd [1999] VCAT 56

4. The parties entered into a Contract for the Sale of Real Estate ("the contract") dated 8 September 1997 for the sale of a unit "off the plan" for a total price of $352,000.00. The Vendor is the developer and owner of the site but is not the builder. The units were to be built by a nominated builder (another builder was subsequently substituted) and a copy of the building contract between the Vendor and the builder was annexed to the contract.

5. Special Condition 9.3 of the contract provides that the Contract Price is divisible for stamp duty purposes - $130,000 being nominated as the value of the land, and $222,000 as the value of construction works after the contract was entered into.

6. Special Condition 15(1) provides that the property includes a home as defined under the Domestic Building Contract Act 1995 but also contains an acknowledgement (sc 15(2))by the Purchaser that the Vendor is not a builder as defined by the Act. However, I do not accept that the parties are able to contract out of the provisions of the Act by the inclusion of such an ackowledgement. Their true status is, in my view, a matter of law considering the provisions of the Act.

7. The relevant clause of Special Condition 15 are set out below:

15.4 The construction of the said home is by the Builder pursuant to the Building Contract and in accordance with Building Permits issued by the relevant Building Surveyor and Planning Permits issued by the City of Stonnington, and the Finishes Schedule and Specifications, copies of which are annexed to the Vendor's Statement

15.5 The Vendor and the Purchaser acknowledge and agree that the home is to be constructed in accordance with the Building contract

15.6 The Builder is a Registered Builder in accordance with the Building Act

15.7 The Builder shall construct the home in accordance with the Building Contract which is a Major Domestic Building contract.

15.8 The Vendor may vary the Plans, Specifications and Standards attached to the Section 32 Statement in accordance with the Terms and Conditions of the Building Contract.

15.9 The Purchaser shall comply with the obligations under the Building Contract on the part of the Owner as if the Purchaser were the Owner under the Building Contract.

15.10 The Vendor shall ensure that home is constructed in accordance with the Terms and Conditions of the Building Contract.

15.11 Payment of all monies due by the Purchaser to the Vendor shall be in accordance with this Contract, and in accordance with the Terms of the Building contract."

18.1 The Builder shall undertake the building of the home in accordance with the Building Contract and construction is to be completed within three (3) months after the issue of the Town Planning Approval for construction of the home.

18.2 In the event that the Occupancy Permit is not issued within three(3) months after the issue of the Town Planning Approval herein the Vendor agrees to pay compensation by way of penalty of $250.00 per week until the date the occupancy permit has issued.

8. Special Condition 24 relates to further Works - all building works - which the "Vendor shall carry out, at its own expense"

9. It is clear from these special conditions that the Vendor has assumed responsibility for ensuring that the building works will be carried out in accordance with the provisions of the building contract. Although the Builder is not a party to this contract, the Vendor has made certain representations to the Purchaser as to the carrying out of the building works by the Builder, and as such it is impossible for the Vendor to argue that it does not "manage or arrange the carrying out of building work". It is clear from the Special Conditions that this is precisely the role the Vendor has assumed and as such it falls within the definition of "builder" in the Domestic Building Contracts Act 1995. Accordingly, I find this Tribunal has jurisdiction to consider this claim pursuant to the provisions of s54 of the Act.

10. Further, Special Condition 16 sets out the manner of payment of the Contract Price:

16.1 The Purchase Price under the Terms of this Contract is $352,000 payable as follows:

A deposit of $35,200.00 on the signing of this Contract:

$94,800.00 within fourteen days of the notification by the Vendor to the Purchaser of the registration of the Plan of Subdivision....

As to the remaining $222,000.00 to be paid, that sum shall be paid by the Purchaser to the Vendor after registration of the said Plan of Subdivision and in accordance with the Terms and Conditions of the Building Contract between the Vendor and the Builder and in the following proportions:

$22,200.00 as base stage (as defined in the Building Contract)

$33,300.00 at frame stage (as defined in the Building Contract)

$77,700.00 at lockup stage (as defined in the Building contract)

$55,500.00 at fixing stage (as defined in the Building Contract)

$26,700.00 upon completion (as defined in the Building contract).

16.2 The Purchaser shall, prior to commencement of construction of any Building Works, provide an Irrevocable Authority to the Vendor' solicitors irrevocably authorising the Vendor's solicitors to release the payments of the Price to the Vendor in the proportions set out in Clause 16.1 upon receipt by the Purchaser of written advice from an independent Valuer/Builder/Quantity Surveyor that the Works have reached the stage set out in Clause 16.1 (which stage is as defined in the Building Contract.

It is the final two payments - fixing stage and completion - in relation to which the Rescission Notice was issued and the dispute between the parties relates.

10. It is apparent that there are effectively two contracts between the Vendor and the Purchaser, and although title does not pass until payment of the total contract price - the first relates to the sale of the land and the second is clearly a major domestic building contract as evidenced by the Special Conditions referred to above.

11. I am satisfied that the dispute in relation to the Rescission Notice is a domestic building dispute for the purposes of s54 of the Act as it arises from an alleged breach by the Purchaser of the terms and conditions of a major domestic building contract.