1. The respondent must pay to the owner damages in the nature of interest in the sum of $14,995.28.
2. The proceeding is concluded save for any permissible application made under Victorian Civil and Administrative Tribunal Act 1998 (Vic) concerning correction or enforcement of any award which has been made.

1. This determination is concerned with the application by the applicant Nerwa Constructions Pty Ltd (ACN: 146 593 222) ('the builder') for an order for damages in the nature of interest. The respondent, Mr Ayad Koka disputes the claim.
2. In order to provide context for what follows, I note that the builder entered into a major domestic building contract ('the contract') on 27 September 2018 with Mr Koka. The builder came to the Tribunal seeking an order for damages for breach of the contract. One of the claims initially made by the builder was that Mr Koka had not paid the fixing stage claim of $90,750.00, which was invoiced on 8 April 2019. As the proceeding progressed, it became clear that the builder was also seeking payment for a large number of variations.
3. The final hearing began before me on 14 August 2023, and continued on 15, 16, 17, 18 and 28 August 2023.
4. The final hearing was not concluded on 28 August 2023, as the parties at that point had not presented expert evidence concerning the cost of rectifying defects and completing the works. However, following the first phase of the hearing, it was clear that the question of which party had breached the contract was going to be critical for the assessment of damages.
5. Because of the importance of determining whether the contract had been lawfully terminated by Mr Koka, I suggested to the parties, and ultimately directed, that the issue be determined as a preliminary question. As the evidence on the issue had closed, I considered the matter and published my determination with reasons on 6 October 2023. The orders and reasons ('2023 Reasons') were published with the citation Nerwa Constructions Pty Ltd v Koka (Building and Property) [2023] VCAT 1137.
6. Amongst other orders, I declared that Mr Koka had wrongfully terminated the contract. I further declared that when assessing the cost of rectifying defects in the work performed by the builder under the contract or in completing the works under the contract, the costs were to be assessed on the basis of what the rectification work or the completion work (as the case required) would have been to the builder at the time of termination of the contract in June 2019.
7. Once the preliminary question had been resolved, it was appropriate to conduct a further hearing at which the parties could be heard concerning the assessment of damages. This was conducted on 30 October 2023. Following the final hearing, the parties were given the opportunity to exchange final submissions.

1. The substantive decision of the Tribunal was published on 29 January 2025, with the citation Nerwa Constructions Pty Ltd v Koka (Building and Property) [2025] VCAT 79 ('2025 Reasons'). Relevantly, the Tribunal ordered that Mr Koka pay to the builder the sum of $86,249.00. The builder was given leave to make an application for interest, and both parties were given leave to make applications for costs or reimbursement of fees.
2. On 3 July 2025, following a further hearing, I made orders. One of the orders contained a typographical error, which was corrected under s 119 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) on 15 July 2025. The corrected order was to the effect that Mr Koka must, subject to another order, pay the builder's costs of and incidental to the proceeding on a standard basis, on the Tribunal's default scale of costs, such costs in default of agreement to be assessed by the Costs Court. The effect of the other order was that the costs recoverable by the builder were to exclude:

(a) the costs associated with any summons quashed by Acting Deputy President Kirton by Order dated 27 July 2021; and

(b) 90% of the costs of the preparation of the applicant's final submissions dated 1 February 2024.

1. As to interest, the builder had, in written submissions filed prior to the hearing, contended that interest should be awarded at the Penalty Interest Rate of 10% p.a. on the $86,249.00 in damages awarded for the period commencing with the filing of the application, 31 July 2019. The builder calculated the interest over what it submitted was the relevant number of days (2130 days) to be $50,331.60.
2. At the costs hearing, the Tribunal raised the issue of the relevance of clause 11.10 of the building contract, which was concerned with interest payable on outstanding payments. The builder accepted that it was appropriate to file and serve further submissions on the issue.

1. The builder filed amended submissions concerning interest dated 12 August 2025. To understand the significance of these submissions, it is important to note that in the determination of 29 January 2025 I had found that the builder was entitled be paid the fixing stage payment of $90,750.00 and that interest was due to be paid on this amount.[1]. I return below to the issue of the builder's entitlement to interest under the terms of the contract.

1. Furthermore, the builder had been partially successful in its claim for variations, receiving awards in respect of 9 of 16 separate claims. The total amount awarded in respect of variations was $27,535.00 out of a total claim for $64,721.25. Importantly, the builder, during the course of the works, had not complied with the requirements of s 38(1) of the Domestic Building Contracts Act 1995 (Vic) ('the DBC Act'). Accordingly, as pointed out at [44] of the Reasons, in order for the builder to recover payment for any variation it 'must satisfy the Tribunal that there are exceptional circumstances or that the builder would suffer a significant or exceptional hardship if the variation is not allowed, and that it would not be unfair to the building owner for the builder to recover the money.' This result follows from the operation of s 38(6)(b) the DBC Act.
2. The significance of the fact that the builder had to rely on s 38(6)(b) the DBC Act in order to recover payment for any variation meant that the entitlement to payment crystallised only when the Tribunal published it orders on 29 January 2025.
3. For this reason, I find that the builder is not entitled interest on the variations in respect of which it has received orders for payment.

INTEREST ON THE FIXING STAGE INVOICE UNDER TERMS OF THE CONTRACT

1. I now return to the builder's entitlement to interest in respect of the unpaid fixing stage invoice of $90,750.00. The builder claims interest at 10% from 8 April 2019, being the date that the fixing stage invoice was issued.
2. I disagree that this is the relevant date from which interest is to be calculated. The clause in the building contract concerning progress payments is clause 11.8. The obligation of the owner is to make progress payments to the builder in accordance with the agreed progress payment table set out in item 23 of the appendix. Under clause 11.9, the obligation of the owner is to pay the progress claim within the period stated in item 12 the appendix. Under clause 11.10, interest is payable by the owner to the builder if the owner fails to make any payment to the builder by the date due under the contract. The rate of interest is stated in item 15 in the appendix. Interest is payable from the date due for payment until the payment has been made in full.
3. Reference to item 23 of the appendix confirms the fixing stage payment was in the sum of $90,750.00. This of course is the sum awarded for the fixing stage payment.
4. Reference to item 12 of the appendix indicates that a progress claim is to be paid within seven days of the date of invoice. On this basis, interest is to run not from 8 April 2019 but from 15 April 2019. On this point, I differ from the builder's submission.
5. Under item 15 of the appendix, the applicable rate of interest is, given that nothing is stated, the default rate of interest, namely the rate fixed pursuant to section 2 of the Penalty Interest Rates Act 1983 (Vic). It is, no doubt, for this reason that the builder claims interest running at 10%. I agree that this is the relevant rate of interest.

CALCULATION OF INTEREST ON THE UNPAID FIXING STAGE INVOICE

1. I now turn to the calculation of interest due to the builder. Interest is to run from 15 April 2019 until the date of the award, namely 29 January 2025. I acknowledge that interest is to run under the terms of the contract until the amount has been paid in full, but I have no evidence before me about the date of payment. Certainly, the fixing stage invoice had not been paid as at 29 January 2025. After this determination, the builder can seek interest on all damages including damages in the nature of interest as part of the enforcement process.
2. The relevant number of days, in my calculation between 15 April 2019 and the date of the award, 29 January 2025, is 5 years of 365 days (up to 15 April 2024), a total of 1825 days, plus 2 leap years days (2020 and 2024) plus 289 days between 16 April 2024 and 29 January 2025, a total of 2116 days.
3. I acknowledge that Mr Koka, in his amended responsive submissions, argued that there should be a reduction of any interest award made in favour of the builder of 75% to account for the fact that there was a six-year timeframe between institution of the proceedings and its resolution which was contributed to by factors such as the COVID-19 pandemic and the Tribunal's resourcing issues, both of which were matters beyond the control of Mr Koka. There is some force in this submission, but I consider that I am constrained by the terms of the contract to take into account at least the period between the date due for payment of the fixing stage invoice and the date of the determination of liability for that invoice, namely 29 January 2025.
4. Any perceived injustice to Mr Koka will be ameliorated by the fact that in assessing the amount of interest to which the builder is entitled, I must take into account interest on the sum which was found to be due to Mr Koka in respect of his claims for defects. These claims were summarised at [407] of the Reasons, and total $41,056.00. It is also relevant to take into account interest on Mr Koka's successful claim to be reimbursed in respect of a number of invoices, totalling $27,280.26 I note that the builder, in its amended submissions concerning interest, concedes that interest on these figures, calculated at 10% (presumably under the Penalty Interest Rates Act 1983 (Vic)), must be taken into account.
5. When calculating the interest to which Mr Koka will be entitled, I will take into account the days between the date of institution of the proceeding, 31 July 2019, and 29 January 2025.

1. The relevant interest calculation in respect of this fixing stage invoice is as follows:

Interest on $90,750.00 at 10% per annum is $9,075.00 or $24.86 per day.

Interest at $24.86 per day for 2116 days is $52,603.76.

1. The amount awarded to Mr Koka in respect of defects: $41,056.00.

Interest on $41,056.00 at 10% per annum is $4,105.60 per annum or $11.25 per day.

The number of days between date of filing of application, 31 July 2019 and the date of award, 29 January 2025, is 5 years of 365 days (up to 31 July 2024), a total of 1825 days, plus 2 leap years days (2020 and 2024) plus 182 days between 1 August 2024 and 29 January 2025, a total of 2009 days.

Interest at $11.25 per day for 2009 days is $22,601.25.

1. The amount awarded to Mr Koka in respect of reimbursement of invoices: $27,280.00.

Interest on $27,280.00 at 10% per annum is $2,728.00 per annum or $7.47 per day.

Interest at $7.47 per day for 2009 days is $15,007.23.

1. The total interest to be allowed to Mr Koka is $37,608.48.

1. I have found above that the builder is entitled to interest of $52,603.76. I have also found that Mr Koka is entitled to set off against the builder's entitlement to interest the sum of $37,608.48. The net amount of interest due to the builder is $14,995.28.
2. I will make an order to this effect.