42 / 116
4 2
PLUMBING CONNECTION
SPRING 2016
LEGAL MATTERS
PAUL COTT
DAMAGES FOR BUILDING
CONTRACT BREACHES
T
here are multiple ways that a building owner or
builder (including subcontractors and others such as
architects for example, among others) can breach
a building contract. Some of the main ways that such
breaches can occur include the following: not paying monies
owed on time or at all, ‘locking out’ builders from sites,
not supplying specified goods and/or services, stopping or
suspending work on a project, conducting defective works
and interfering with works among others.
REMEDIES
Apart from obtaining from a court or a tribunal (VCAT
in Victoria) an order for specific performance (an order
directing a party to perform its contractual obligations)
or an injunction (an order prohibiting or compelling a
party to do something) a key remedy a party can obtain in
circumstances as described above is damages.
Often the type of, and the extent of the remedy awarded,
depends on how significant the breach is, how many
breaches there are, and whether the breaches are ‘as to’
fundamental terms (such as terms as to payment or as to
time for completion) of the contract or less fundamental
ones.
Damages are awarded with the objective of providing
recompense or reimbursement to someone for actual
financial loss incurred as a result of, or caused by (in law)
another party’s breach of contract.
They are not, as is commonly thought, awarded to provide
punishment for someone having done something wrong.
They are not meant to be ‘penal’ or ‘punitive’ in character,
even though, commonly, the innocent party sees the ‘guilty’
party as deserving of punishment (even if, in a moral sense,
they are).
In the building (and generally) contract setting, damages
are meant to put the innocent party in the same position
as they would have been in if the contract breach had not
occurred.
MEASURE OF DAMAGES – HOWMUCH?
Courts and/or tribunals calculate the amount of damages
to be awarded by how much, as above, a party is said to
have lost as a result of the contract breach. They will award
an amount which will, or which will likely, as close as it is
PAUL COTT
EXPLAINS SOME OF THE MYRIAD WAYS BUILDING CONTRACTS CAN BE BREACHED AND WHAT ACTIONS
TO TAKE SHOULD YOU FIND YOURSELF IN THE UNFORTUNATE CIRCUMSTANCE.
possible to do so, bring a party back into the position they
would have been in had the contract not been breached.
Any damages awarded must flow as a natural result of the
breach and not as a consequence of something else or what
someone did or did not do. Basically, what we are saying is
that the losses being claimed for must be ‘caused by’ the
breach by the other party to the contract.
Note that it is possible for both parties to a building
contract, if they are both at fault in the sense of breaching
the contract either simultaneously or separately, to be
awarded damages (and on the converse, have damages
awarded against them).
Just because a court or a tribunal finds it very difficult,
even nigh on impossible to calculate what actual damages
will be awarded (for example, it will nearly always be required
to factor in contingencies into such calculations, so in
that sense awarding damages is to some extent based on
a prediction as to future events, damages being based on
what would have been the situation less a breach) does not
mean damages will not be payable.