Four investor tips to keep you out of tribunal

As many property investors can attest to, a trip to the Civil and Administrative Tribunal can be a daunting and expensive experience.

In a building dispute seen before QCAT earlier this month, applicant Abheshek Sodhani sought a total of $19,352 (with interest) plus an undecided amount at the discretion of the tribunal, from Queensland residential property developer Path Developments, who oversaw the construction of his new three bedroom duplex. The tribunal dismissed his claims, resulting in a loss of time and resources for Sodhani.

Property Observer takes a look at QCAT’s decision to deliver some tips that could save you from a trip to the tribunal.

Clarify any contentious terms before signing any contracts

While it may seem obvious, subjective or unclear contracts appear to be one of the greatest causes of disputes between investors and contractors.

One of Sodhani’s complaints at QCAT was that Path Developments had not provided the strata title in the course of completing his property. Sodhani claimed that he had to make additional payments to Path Developments above the cost of the price stated in their contract ($318,000) to obtain a strata title.

According to Sodhani, his contract with Path Developments stated that the strata title should be paid for by the builders, and no costs relating to the strata title should be paid by the client.

However, a closer look at a special condition in the contract shows that it in fact states: “payment for strata title by builder. Documentation by client.”

Path Developments argued that the costs paid by Sodhani were in obtaining documents for the strata title, and that they had in fact paid a total of $8880 getting the strata title itself. The tribunal agreed.

The tribunal’s decision shows that it pays to double check any unclear items on contracts. Even QCAT agreed that the terms were ambiguous, stating that “unfortunately the special condition is not explained any further in the contract.”

Sodhani also claimed that he missed out on four months of rental payments, and had to bear additional interest costs because the property wasn’t completed four months late. But the tribunal ruled that there was no particular date specified in the contract for the completion of the property, and that the date that the contract is signed is not an indication of the commencement of construction.

It’s worth taking the extra time to enquire about any subjective items.

Seek advice when you need it

As evidence to his claim, Sodhani provided a letter carrying the name (but not the signature) of Peter Luckmann, Path Development’s director. The tribunal decided that the letter was not part of the existing contract, and had no bearings on his decision.

If you think you have an agreement in writing, it’s worth having the document checked against any existing contracts, and written up formally – which is something that will most likely require the help of a lawyer.

A lawyer can also spend an hour combing your contract for anything that might need clarification. Investing is tricky enough as it is – while lawyers are expensive, if you’re unsure of any terms, it’s worth hiring someone to advise you.

Keep all your receipts

QCAT noted that while Path Developments provided invoices for all the payments they made obtaining the strata title, Sodhani did not present any proof of payment for any of the additional documentation. Even if QCAT did agree that Sodhani shouldn’t have borne the extra costs, it would have been impossible to assess just how much he was owed.

Do your research

Sodhani also claimed that his property wasn’t built as per the specifications outlined in his contract with Path Developments. According to Sodhani, there was a 7.9 square metre difference between the size of his property as submitted by a certification group to the council, and the final survey plan. As such, he claimed that he was owed a reimbursement for loss of land to the tune of $1,016 per square metre of difference.

But Path Development argued that survey plans for strata titles are measured differently than building plans, accounting for the apparent difference in size. In fact, Path Development stated that after building Sodhani’s property as per its approved working drawings, he actually ended up with an extra 2.1 square metres above what was specified in his contract. The tribunal agreed.

If you feel as though you haven’t received what you agreed to in your contract, it’s worth looking a little deeper – call up a surveyor or take a look at the publicly available information from your local Department of Planning.

Do you have any other tips for avoiding a trip to the tribunal?