Can a builder make changes to a domestic building contract?

Any change to building plans are usually described as ‘variations’. In Victoria, the Domestic Building Contracts Act 1995 (Vic) sets out procedures that should be followed to allow a variation to any plan or specifications set out in, or attached to, a major domestic building contract. 

What is a major domestic building contract?

Simply put, a contract for the carrying out of domestic building work in which the contract price is more than $10,000.00 (or any higher amount fixed by the regulations).[1]

Can a builder request a variation to the plans?

Yes. The owner of the building, the builder, and/or the surveyor (or any other authorised person under the Building Act 1993 (Vic)) can all prepare and give notice to vary any plans or specifications set out in the contract.[2]

How can plans be varied in a major domestic building contract?

To vary plans set out in a major domestic building contract, a builder must provide to the owner a Notice or Variation Notice, which must:[3]

• describe the variation the builder wishes to make; and

• state why the builder wishes to make the variation; and

• state what effect the variation will have on the works, as a whole, that are being carried out under the contract and whether a variation to any permit will be required; and

• if the variation will result in any delays and their reasonable estimate as to how long these delays will be; and

• state the effect the cost of the variation will have on the contract price.

Is consent to a variation needed from the owner?

A builder cannot proceed with any variation without written consent from the owner, which must be attached to the Variation Notice described above.[4]

However, a builder may bypass the need for written consent from the owner, if:[5]

• a building surveyor (or other authorised person) requires the variations to be made by way of a Building Notice or Building Order pursuant to the Building Act 1993 (Vic); and

• a copy of that Building Notice or Building Order was attached to the Variation Notice provided to the owner by the builder; and

• there are circumstances beyond the builder’s control; and

• the building’s owner does not advise the builder in writing within five (5) business days of receiving the Variation Notice that they wish to dispute the Building Notice or Building Order.

Can a builder claim payment for the variation?

A builder cannot claim or recover any money from an owner in respect of a variation unless they: [6]

• complied with the above requirements; and

• can establish the variation was made necessary by circumstances that could not have been reasonably foreseeable by the builder at the time the contract was entered into.

Alternatively, a builder can apply for an order from the Victorian Civil and Administrative Tribunal that the building’s owner pay for the variation, but the Tribunal must be satisfied that:[7]

• there are either exceptional circumstances or that the builder would have suffered significant hardship if he had to comply with the above requirements; and

• that it would not otherwise be unfair to the owner.

The builder is otherwise entitled to recover the cost of carrying out the variation as well as a reasonable profit.[8]

What can’t be sought by a variation notice?

Prime cost items[9], being items that either have not been selected or whose price is unknown at the time of entering into the contract, including fixtures or fittings.[10] Instead the builder should include a reasonable allowance for these items in the contract.

Provisional sum items, being any additional work that might be required, that the builder should also allow a reasonable allowance for in the contract.

How can DSA Law help?

If you have any questions or issues in relation to building contracts, please Contact Us or one of our Construction Lawyers at DSA Law on (03) 8595 9580 and let us assist you.

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[1]Domestic Building Contracts Act 1995 (Vic) s 3.

[2]For a summary, Consumer Affairs Victoria provides a quick checklist for what variations can be made to a domestic building contract: Consumer Affairs Victoria, Changing a major domestic building contract – checklist (22 April 2020) Consumer Affairs Victoria <https://www.consumer.vic.gov.au/housing/building-and-renovating/checklists/changing-a-major-domestic-building-contract>.

[3] ibid s 37(1).

[4] ibid s 37(2)(a).

[5] ibid s 37(2)(b).

[6] ibid. s 37(3)(a).

[7] ibid s 37(3)(b).

[8] ibid s 37(4).

[9] ibid s 3.

[10] ibid s 37(5).