This document summarizes two building dispute cases that were governed by the same contract and dispute resolution clause. In the first case, the mediator was appointed to a dispute between an owner and builders over an incomplete property. Key issues were whether the owner had to pay for agreed variations and if quantum meruit applied. An arbitration found in favor of the owners after a quantity surveyor reviewed variation costs. The second case involved mediating a financial dispute, where the mediator had the parties clarify invoices during a break and they agreed to a settlement when he returned, signing a release deed and providing payment. The mediator was pleased with the successful resolution.

1. TWO BUILDING DISPUTE
CASE STUDIES
An arbitration and mediation of two building disputes governed by the
same contract including the dispute clause
John Livermore
Kon gress Hobart September 25

2. • The contract for both cases was under the Master Builders
Association of Tasmania Builder /Owner Agreement Document B.O.4
• I was appointed by the Director of Consumer Affairs and Fair Trading
as a mediator/arbitrator with the dispute regulated under cl 26(ii) of
that contact
• Cl 26(ii) had reached its final form after IAMA Tasmania in 2005
successfully tendered to examine and amend the dispute clause
• Following 5 meetings of the MBA/Consumer Affairs Panel ( of which I
was coordinator at the Man of Ross hotel) the clause was finalized.

3. CAN MEDIATION PRECEEDE ARBITRATION?
• The clause (circulated) provided for a 10 day period for the parties to
resolve the dispute; if no agreement occurred after 5 days the parties
had to appoint an Expert from a panel nominated jointly by the MBA
and Consumer Affairs.
• If the parties did not agree on the Expert that person would be
appointed by the Director of Fair Trading and Consumer
Affairs(DFTCA). 14 days after being appointed the Expert was to
determine the dispute and provide written reasons for it
• Where the Expert was appointed by the DFTCA after 14 days from
that appointment a mediation date was set by the
mediator/arbitrator
• If by 4pm on the mediation day the parties had resolved the dispute

4. CAN A MEDIATOR ALSO BE AN ARBTRATOR OF
THE SAME DISPUTE?
• The issue of conflict between the role of arbitrator and mediator in
the same dispute raised much discussion on the Ross panel
• How can this be resolved?
• Your suggestions?

5. BUILDING DISPUTE ONE
• I was appointed in 2010 by the Director of CA FT as a mediator in a dispute
under cl 26(ii) (dispute resolution) of the Master Builders Association of
Tasmania Builder/Owner Agreement Document B.04
• The dispute was between an owner and builders of a Devonport property
to be built within 130 days of the contract date
• The owner terminated the agreement under the contract on the basis that
the property had only reached lock up stage and was not completed.
• The builders claimed that the owners failed to pay in full the last two
progress payments and the builders under the contract suspended the
work until payment was received
• A mediation did not resolve the dispute which under cl 26(ii) moved to an
arbitration

6. Two key issues emerged from submissions
put by the parties’ counsels:Variations
The owners claimed that they were not required to pay the remainder of the
progress payments requested by the builders or any further payments as they did
not agree with the variations and the costs of the variations undertaken by the
builders.
The owners also claimed that the variation reconciliation issued by the builders had
not been correctly added
The contract under cl 14 required:
the owner to put the variation request in writing to the builders
The builders to notify the owner in writing if they would undertake the variation
and irs cost
The variation to be put in writing and signed by both parties

7. • The builder’s counsel argued that if the cl 14 procedure was not followed it
did not mean work under a variation could not be compensated
• That the parties by intent and performance agreed to vary the terms of
cl14 so that notification was not required to authorise a variation
• The builders claimed that the owners admitted in their submission that the
cost of variations was a matter of negotiation which was never resolved by
agreement
• The owner’s counsel claimed that they never agreed to the price of any
variation and the fact that the builders issued three versions of its variation
claims proves the builders never held a signed off list of costed variations
• Which line of argument do you support (a) the builder (b) the owner?

8. Variations
• I had indicated once the arbitration had commenced that the issue of
variations would require the contracting of a quantity surveyor to
review all related documents connected with the variations
• The parties contributed equally to cover the cost of a report on the
variations and costing. This report formed the basis of the final award
• Would it have made any difference if the arbitrator had been a
qualified builder and/or a quantity surveyor?
• When should an arbitrator advise parties of the need to bring in an
expert?

9. Quantum meruit
• The builders claimed the cost of extra work be recovered under
quantum meruit. The arbitrator found as fact that the extra work
performed by the builders was carried out under the existing MBA
contract and should be paid under those terms
• Quantum meruit is ruled out where an express contact exist as in this
case (Christiani & Neilsen v Goliath Portland Cement Co (1995) 2 Tas L
R 122)

10. The Award
• The award found in favour of the owners. The arbitrator did not find
that the owners had waived the conditions for variations under cl14
• The arbitrator held that the contract between the owners and the
builders to be valid even if they (in the view of each other) were in
breach of contract
• The calculations in the surveyor’s report were applied in determining
what was owed between the owners and the builders

11. MBA Domestic Building Contract
• The MBA replaced B.O.4 with Domestic Building Contract Document
DB Edition 2
• Cl 26 dealing with dispute resolution now provides a revised
procedure for disputes or differences between parties arising from
the above Agreement
• The dispute procedure is set out at www.mbatas.org.au.
• The party issuing notice of dispute can apply to have a Panel Expert
appointed from a Panel nominated jointly by the MBA and CAFT .The
Panel may include a person appointed as an adjudicator under the
Building and Construction Security of Payments Act 2009(Tas)

12. MBA Contract
• If a party is dissatisfied with the Panel expert’s determination that
party can request a review of the determination under the MBA
Rules. The Panel Expert who made the initial determination cannot
act on the review. The part requesting the review is responsible for
the full cost of the review
• This revised cl26 differs from the earlier version as it does not provide
that the provisions in the clause are intended to be an arbitration
agreement under the Commercial Arbitration Act 2011(Tas).
• It also does not provide the finality of an award as the initial
determination is subject to a review

13. Variations
• The Domestic Building Contract also changes the provisions of the
original cl14 .
• The new clause still requires the variations to be in writing and
signed by the builder and owner
• However the clause now provides that the notification required
above does not prevent the builder from claiming for work done
where the owner is aware that the work was being done

14. BUILDING DISPUTE TWO:MEDITATION
• 9.30 At the request of the builder’s lawyer I commence mediation in
Huonville. I receive an equal cash payment from both parties.
• I outline the purposes of the mediation.
• The owner outlines the issues and acknowledges that the builder has
allowed him to draw on the builder’s account for materials in
construction
• 10.30 The builder counters with his version of events. Both confront
me with invoices and the builder says”you’re the mediator-you sort
them out”.I reply ” I’m going for a 30 minute coffee break-you sort
them out

15. Mediation
• 11.00 I return and the financial position has been clarified.
• The parties agree to settle payment on the spot.
• 12.00 The lawyer enters with a prepared deed of release for both to
sign. The owner provides a cheque to the builder for the sum owing.
• 12.15 The lawyer reminds the owner to go to Kingston police station
immediately to revoke a restraining order against the builder
• 12.30 I depart for Hobart on a bright sunny afternoon with a song in
my heart and money in my pocket

16. For more details see www.johnlivermore.com
Email:johnlivermo@bigpond.com