When a Tasmanian Builder Can Lawfully Terminate a Building Contract

What it is

Walking off a Tasmanian job is the most expensive decision a builder can make. Get the grounds or the procedure wrong and the termination is itself a breach, the owner accepts it as repudiation and the builder pays for someone else to finish the house.

The first thing to establish is what the statute gives you. For Tasmania, nothing.

The Act is silent on termination grounds

The Residential Building Work Contracts and Dispute Resolution Act 2016 (Tas) creates no statutory right for a builder to terminate. The word termination appears once in the operative Act, at section 63, and only to confirm that terminating a contract does not strip TASCAT of jurisdiction over what happened beforehand.

That silence is the point. It is not universal. Victoria gives a builder a statutory termination right at section 49X of its Domestic Building Contracts Act 1995. Tasmania has no equivalent. Neither do most states. A Tasmanian builder who terminates is exercising a contractual right or a common law right, never a statutory one.

So the contract has to carry it

Because the Act is silent, the Director of Building Control's Determination on Mandatory Contract Provisions fills the space. It requires every residential building work contract to state the circumstances in which the contract can be terminated by either party. It separately requires the contract to state the remedies for breach and lists termination as one of them.

A contract vague about termination is not merely risky drafting. It fails a mandatory contract provision.

Follow your own procedure exactly

Most contracts require a notice to remedy or show cause: a written notice specifying the default, giving a period to fix it and only then permitting termination if the default continues. That step is contractual rather than statutory, which tempts builders to treat it as optional. It is not.

Terminating without the notice, before the remedy period expires or on a ground the contract does not list means the builder has purported to end a contract it had no right to end. That is a repudiation. The owner may accept it and sue for the cost of completion above the contract price plus delay losses.

Repudiation cuts both ways. An owner who refuses access, refuses to pay a valid claim or makes clear they will not perform may repudiate, giving the builder a right to accept and terminate. The bar is high. An honest mistake about contractual rights is usually not enough.

What the builder can recover

On a valid termination the builder recovers what the contract provides, typically the value of work performed and unpaid plus damages for loss of bargain. Section 62(7) tells TASCAT to take into account the reasonable price or cost of the work and the price specified in the contract, so an inflated final claim will not survive scrutiny.

A harsh termination clause is not a safe harbour either. Section 62(2) lets TASCAT declare a term unjust, declare it void or vary it, weighing factors in section 62(5) including whether the builder knew the term would cause the owner undue hardship. Section 78 voids any arrangement that defeats or evades the Act.

The dispute pathway

Either party may lodge a notice of dispute with the Director of Building Control. Section 47(1A) requires it within 6 years after the date of practical completion, or within 6 years of the work being performed if there is no such date. CBOS requires a genuine attempt to resolve the matter first and bars the notice if court action is on foot.

The Director accepts or rejects within 10 business days, then establishes a mediation panel within 2 business days. Section 54 allows 20 business days from that point. Mediation is voluntary. If it fails, TASCAT determines the matter in the Civil and Consumer stream, with power under section 62(2) to order money, damages, rectification or completion. Section 65 lets the Supreme Court or the Magistrates Court refer proceedings to TASCAT. Section 46(1) preserves the right to go to court instead.

Why the stakes are higher in Tasmania

Tasmania has no compulsory home warranty insurance. It was abolished in 2008. The Residential Building (Home Warranty Insurance Amendments) Act 2023 commences on a day to be proclaimed that has not arrived. No insurer stands behind a wrongful termination. The contract and the statutory dispute pathway are the owner's only protection, which is why TASCAT looks hard at whether the builder followed its own clause.