In breaking news, Australia’s largest home builder Metricon Homes, may be headed towards financial turmoil, with home-owners fearful that the builder will follow in the footsteps of other home-building companies to have recently collapsed in the Australian construction industry, including Privium, Condev, Porter Davis Homes, Probuild. In this article, Law Clerk Riley Hickey, and Senior Associate Lachlan Boyle investigate the current climate of the construction sector and the recent controversies surrounding Metricon Homes.

Building contracts to go ‘belly-up’ – Commercial Dispute

Metricon Homes is just one of a slew of remaining building companies who have given an ultimatum to their customers on fixed-price contracts: choose to cop exorbitant price increases on remaining construction or sacrifice their deposit and their dreams of a new home. This drastic measure is an inevitable consequence of soaring inflation, labour and material costs and global supply restraints, forcing companies such as Metricon to make some difficult decisions to ensure their survival. The coordinated attempts to encourage homeowners to ‘walk away’, after securing thousands of additional building contracts which were not feasible to complete profitably.

ABC News reports that some customers faced the grim reality of an additional $266,000 in extra fees under a new contract to finalise the completion of their home. For homeowners already facing increased financial stressors of the current economy, this news comes as an abrupt shock, especially considering that customers are forced to involuntarily forfeit their deposits should they refuse to accept the new contractual terms and pricing schedule.

On 9 August 2023, the NSW watchdog New South Wales Fair Trading revealed that it has launched an investigation into the remarked ‘top builder’, considering its recent activities have caused an unprecedented surge in customer complaints.

The recent controversies surrounding Metricon Homes have sparked rumours that its fate and future involve impending insolvency, with dispute lawyers ready at the wings to assist customers with building disputes, contract disputes, business disputes, or commercial disputes.

A small percentage of customers have incurred delays in taking possession of their land title, construction approval, DA approval, finance approval or other interruptions impacting timelines outside of Metricon’s control, which has meant that their contract has expired before construction of their home has started,” a spokesperson said in a statement.

Commercial Dispute – Breach of Contract?

Metricon has targeted numerous customers with accusations that they have breached contractual terms within their contract, including for not providing details of finance obtained from lending bodies. In the alternative, some customers have alleged that they have incurred delays inside or outside Metricon’s control.

Further, many customers have incurred delays in taking possession of their land title, construction approvals, DA approval, finance approval or other interruptions impacting timelines outside of Metricon’s control, which has meant that their contract has expired before the construction of their home has started.

Both instances described above may involve causes of action relating to breaches of contract. Contractual Breaches can be relevantly categorised as follows:

(a)      An actual breach (due to a failure to perform a contractual obligation in accordance with the contract); or

(b)      An anticipatory breach (where, prior to the performance of the parties’ contractual obligations, there is an intention evidenced that a party no longer intends to be bound by the contract or perform their obligations in an inconsistent manner).

Relevantly, a party will only be able to terminate a contract is:

(c)       The contract expressly stipulates a right to terminate;

(d)      A party has breached a condition (or essential term) of the contract;

(e)      A party has breached an intermediate term which is sufficiently serious; or

(f)       There is an anticipatory breach (amounting to a repudiation of the contract).

We otherwise note that wrongful termination may constitute a breach or repudiation of a contract, which may allow the other party to seek to recover damages against the terminating party.

If you have been notified about a purported breach of contract from Metricon Homes, we encourage you to seek legal advice at the earliest available opportunity. Alternatively, if you have received a termination letter prior to being provided an opportunity to rectify an identified issue, causes of action and recourse may be available to you.

RAMSDEN LAWYERS – HOW WE CAN HELP WITH COMMERCIAL DISPUTES

Building disputes, contract disputes, business disputes, and commercial disputes are unfortunate consequences of commercial trading activities, with Metricon, the most recent company feeling the heat from unsurprisingly disgruntled homeowners faced with extra fees for incomplete builds.

When disputes arise, it can result in a considerable expenditure of time and cost to reach an amicable resolution between the parties. Our Litigation and Dispute Resolution Division has considerable expertise in managing disagreements and conflicts of concerning contract disputes, business disputes or commercial disputes between parties.

If you are seeking legal advice, Ramsden Lawyers can assist you. We are happy to arrange an obligation-free initial consultation with our dispute lawyers to assist you in navigating the relevant legislation for your circumstances. Our Litigation and Dispute Resolution Division has specific expertise in helping individuals and (excluded) corporations navigate their contract disputes, business disputes or commercial disputes and assess what options may be the most preferable to progress the dispute.

The content of this article is intended to provide general guidance to the subject matter and must not be relied on as legal advice.  Specific advice should be sought about your circumstances.