Homeowners Win Refund After Builder Fails to Engage with VCAT

In a recent Victorian Civil and Administrative Tribunal (VCAT) ruling, homeowners Danielle Mengel and Kingsley Njoku successfully claimed a refund of $19,749 from Windrock Developments Pty Ltd after a contract dispute over escalating building costs. This case highlights the importance of transparency in the building process and the consequences of failing to engage in Tribunal proceedings.

Dispute Over Cost Escalation and Contract Termination

The homeowners initially entered into a major domestic building contract with Windrock Developments Pty Ltd in July 2021, agreeing to a contract price of $402,800. However, after months of delays and disputes, including a legal matter with a neighbour over protection works, the builder suddenly revised the contract price in 2022, increasing it by more than $76,000, with no clear explanation of how this additional cost was calculated. The revised price of $478,966 exceeded a 15% increase, triggering the homeowners’ right to terminate the contract under section 41(1) of the Domestic Building Contracts Act 1995.

Despite repeated requests for a cost breakdown, the homeowners received no meaningful response from Windrock Developments. Feeling that the price escalation was unjustified, Mengel and Njoku terminated the contract in September 2022 and sought a refund of their $20,140 deposit.

Builder’s Minimal Engagement and Overseas Absence

Throughout the Tribunal process, Windrock Developments Pty Ltd, owned by Deny Sadik, failed to meaningfully engage with VCAT’s proceedings. Despite being aware of the dispute, the builder neglected to provide a breakdown of the claimed costs or file any defence documents. Notably, Manuell Sadik, who is not the director but was involved with the company, attempted to delay the hearing by claiming he was overseas. He provided no details about his location or itinerary and ignored requests to appear via Zoom, a method that would have allowed him to attend from abroad.

The Tribunal also noted that Windrock Developments had previously communicated with the Tribunal but chose not to file a counterclaim, submit discoverable documents, or engage fully with the process. This lack of participation signalled an intention to minimise preparation costs and leave the Tribunal to determine the outcome based solely on the homeowners’ evidence.

Tribunal’s Findings and Refund

The case ruled in favour of the homeowners, finding that Windrock Developments was not entitled to retain the full deposit. While the builder had carried out some preliminary work—such as soil reports, obtaining council information, and a bushfire attack level report—the majority of the claimed costs lacked supporting evidence. For example, charges for drawings and engineering certificates were unsupported, and some of the builder’s claims were deemed inflated.

Ultimately, the Tribunal determined that Windrock Developments was only entitled to retain $1,891 for verified expenses. The remainder of the deposit, amounting to $19,749, was awarded to Mengel and Njoku, along with a reimbursement of the $224.80 filing fee.

Lessons from the Case

This case underscores the importance of builder accountability and the necessity for clear, documented cost breakdowns. For homeowners, it is crucial to scrutinise any significant price increases and be prepared to seek legal action if builders fail to provide adequate justification. Builders, on the other hand, must understand the risks of failing to engage in Tribunal processes, as seen with Windrock Developments, whose minimal participation resulted in a substantial financial loss.