The recent case of Cairns Building and Construction Pty Ltd ATF P&T Kelly Trust t/as Phil Kelly Builders v Kaminaras & Anor [2021] QCAT 374 involved a dispute between home owners and a builder for the construction of a house.

In this case, the builder asserted that the works reached practical completion and issued a notice of this, along with a defects document and a final claim to Kaminaras (the home owners). However, the Kaminaras’ did not pay the final claim and hence each party purported to terminate the contract.  The Kaminaras’ sought to terminate on the grounds that the defects prevented the practical completion of the contract, and the builder argued that the defects did not defeat the completion of the house, and that the Kaminaras’ had repudiated the contract by refusing to make the final payment.

The builders claim rested on the definition of ‘practical completion’ in the contract, which stated that it would ‘not unreasonably affect occupation.’ The Tribunal decided that the defective work which included roof damage and underground drainage issues, was such that practical completion had not occurred.

More importantly, the contract specified that if the Kaminaras’ notified the builder of defects, then the builder was required to issue a further notice of practical completion – and until this was done the builders were not entitled to payment. As a result of the builders conduct, the Kaminaras’ were allowed to terminate the contract due to the builders repudiatory conduct in refusing to complete the work.

This case illustrates the consequences of failing to honour an obligation under contract and the implications of repudiatory contract which may disentitle contractors to payment.

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