Variations to Residential Building Contracts in Tasmania

What it is

A variation in Tasmania is an addition of residential building work to, or an omission of work from, what the contract requires. The definition sits in section 4 of the Residential Building Work Contracts and Dispute Resolution Act 2016 (Tas). For a cost-plus contract there is a filter: an addition or omission is a variation only if it is not reasonably contemplated by the contract.

Note what a variation is not. Selecting a dearer tap under a prime cost item, or spending past a provisional sum allowance, is not a variation. Those are separate mechanisms with their own warranty under section 30.

Tasmania does legislate variations

This should not be assumed, because not every state does it and some leave variations entirely to the contract. Tasmania legislates them in detail, across sections 17 to 21. Every obligation sits on the builder and each carries its own penalty.

Section 17(1) is the base rule. The builder must ensure any agreed variation is put into written form within the shortest practicable time and, where the variation is an addition to the work, before any work to which the variation relates begins to be performed.

What a variation document must contain

Section 18(1) requires the variation document to comply with the formal requirements. Section 18(2) lists them. The document must:

• be in English and readily legible
• describe the variation
• state the reason for it, where the builder sought the variation
• state the builder reasonable estimate of the period of delay, where the variation will cause one
• for a fixed-price contract, state the change to the contract price, or how that change is to be determined
• for a cost-plus contract, state a fair and reasonable estimate of the costs associated with the addition or omission
• where the contract provides for progress payments, make appropriate provision for payments to reflect any change to the contract price

Section 19 requires the builder to sign the document as soon as practicable and to take all reasonable steps to have the owner sign it. Section 20(1) requires a signed copy to reach the owner within 5 business days of the variation being agreed. Where the builder took all reasonable steps but the owner would not sign, section 20(2) lets a copy signed by the builder alone satisfy the duty.

Sign first, build second

Section 17(5) is the sharpest provision. Where a proposed variation is to come into existence on signing, and the variation document is to be the first and only agreement for it, the builder must ensure that no work to which it relates is performed until the document is signed by both parties. That covers additions and any variation sought by the owner.

Section 21 adds an approvals gate. Where the varied work needs a building surveyor consent, or a permit under the Building Act 2016 or the Land Use Planning and Approvals Act 1993, the builder must attach that document to the owner copy and must not perform the work until it has.

The urgent work exception

Section 17(2) disapplies the before-you-start rule where the work is required urgently and it is not reasonably practicable to produce a variation document first. Section 17(3) gives the example that matters: a site condition requiring an alteration that could not have been discovered beforehand by reasonably diligent investigation.

The exception is narrow, and it suspends the timing rather than the paperwork. CBOS states that the builder must still tell the owner the costs and the reasons the variation is needed, must obtain the owner confirmation, and must put the variation in writing as soon as practicable after the work has commenced.

Recovery: the gap in the Act

Here is what the Act does not say. Nothing in sections 17 to 21 bars a builder from recovering for a variation that was never documented, and there is no relief provision letting a tribunal excuse non-compliance on conditions. The sanction is a fine rather than forfeiture: a maximum of 300 penalty units for a body corporate and 100 penalty units for an individual.

Builders should not read that as comfort. Section 78(1) voids any arrangement whose purpose or effect is to defeat, evade or avoid the Act. An undocumented variation still has to be proved, and the builder carries the onus on scope, price and agreement with no signed document to point at. Western Australia takes a similar line, requiring a variation to be in writing, dated and signed by both parties, with a copy given to the owner before the work commences.

The verbal instruction trap

An owner says move the window, the builder moves it, and nobody writes anything down. The builder has now breached sections 17, 19 and 20, has performed work contrary to section 17(5) if it was an addition, and holds nothing establishing the price change.

Write it before you build it. Where the work is genuinely urgent, confirm the cost and the reason in writing the same day and paper it properly afterwards.