Grech v Biltar Pty Ltd [2025] VSC 636 (8 October 2025)
Common sense would suggest that if a builder constructs a defective dwelling, they would immediately be stopped and required to fix those faults.
But is that really how the system works in Victoria? The process is far less straightforward than most people assume. This is where reality begins to diverge from what seems logical, and the rights of owners and obligations of builders become entangled in a web of legislation, questions of insurance, common law and equity, often leaving homeowners surprised by just how difficult it can be to compel a builder to return and fix their own mistakes.
Overview
In Grech v Biltar Pty Ltd [2025] VSC 636, the Court was asked to determine whether a clause in a settlement deed – requiring the builder to carry out rectification works of defects – was enough on its own to justify an order for specific performance.
At first glance, it may seem obvious: if the parties agreed that the builder must fix the defects, shouldn’t the court simply enforce that agreement? However, as this case makes clear, the inclusion of such a clause does not give rise to an automatic right. Specific performance is not a contractual entitlement; it is an equitable remedy, available only in limited and exceptional circumstances.
To understand why the Court reached this conclusion, we need to step through the facts.
The Deed of Settlement
The plaintiff, as owner of a property, entered into a building contract with the defendant on 13 April 2022 for the construction of a double-storey dwelling. The builder failed to complete the project by the agreed date (17 October 2023), and defects or delays occurred during construction. As a result of the delays and alleged defects, a dispute arose between the owner and the builder regarding the quality and completion of the works.
After a dispute arose during construction, and to avoid ongoing litigation or to resolve the dispute, the owner and builder entered into a settlement deed on 21 May 2024. The deed of settlement explicitly required the builder to carry out rectification works identified by an independent expert, complete these works within a set timeframe, and perform the work to the satisfaction of that independent expert.
The defendant failed to complete the rectification works within the agreed timeline under the Deed, citing difficulties in coordinating necessary trades and seeking an extension from the plaintiff, which was refused.
Under clause 7.4(b), if the builder failed to properly carry out the rectification works required under clause 5 to the expert’s satisfaction, the owner was entitled to take the matter to court and seek an order requiring the builder to perform the terms of the deed, along with interest and costs.
The plaintiff filed proceedings for an order of specific performance to require the defendant to perform its obligations under the Deed, indicating a lack of confidence in the defendant’s ability to meet its commitments without a court order.
In simple terms, the sequence was as follows:
The parties entered into a building contract → defects and delays occurred → a dispute arose → they resolved it by entering into a settlement deed → an expert identified the defects → the builder was required to fix them → the builder failed to do so → the owner went to court seeking specific performance.
Rules: Specific Performance v Damages
Associate Justice Efthim reaffirmed the established principles governing equitable relief, emphasising that specific performance is not automatically granted upon request. This is because such performance:
- Requires ongoing supervision;
- Creates scope for further dispute; and
- Demands cooperation between parties, which is difficult as such parties are usually already in conflict/mistrust eachother
The court will only exceptionally decree specific performance of building contracts due to practical difficulties in enforcement, unless three criteria are met: (i) the building work is defined with clarity in the contract, (ii) the plaintiff demonstrates a substantial interest in contract performance that cannot be adequately compensated by damages, and (iii) the defendant has possession of the land on which the building work is to be undertaken.
Specific performance is a discretionary equitable remedy, not something a party is entitled to as of right. Its availability depends on the Court’s assessment of the circumstances in line with established principles.
Application to case
Owner’s argument
In this case, the owner contended that damages would be insufficient, pointing to the difficulty and expense of engaging a replacement builder in a regional area, as well as concerns about the builder’s financial stability. While the Court acknowledged the builder’s cash-flow issues, it held that these factors alone were not enough to warrant an order for specific performance.
Judgment and Reasons
The Court held that damages were an adequate and more appropriate remedy in the circumstances. A key factor was the lack of clarity in the defects reports and the rectification obligations under the Deed, which made any order for specific performance too uncertain to enforce. The Court emphasised that it will not make orders requiring performance of building works where the required scope is not clearly defined.
The Court also considered the practical realities between the parties. The builder’s delays were partly due to cash-flow issues – exacerbated by the plaintiff’s late payments – which resulted in trades being terminated and work stalling. The relationship between the parties had significantly deteriorated, and the Court found that forcing ongoing cooperation under a court order would be impractical and likely to cause further disputes.
Importantly, the builder was covered by VMIA insurance, which provides protection up to the statutory cap in the event the builder is unable or unwilling to complete the works. There was no evidence that the cost of rectification would exceed that cap. As such, concerns about the builder’s solvency did not justify equitable relief.
Associate Justice Efthim further observed that issues such as cost, delay and inconvenience in engaging a new builder are common in building disputes and do not warrant specific performance. An order requiring specific performance would also require ongoing judicial supervision, which the Court is generally reluctant to undertake in construction matters.
For these reasons, the Court declined to order specific performance and held that damages were sufficient to achieve justice between the parties.
Conclusion
While such clauses are meant to help resolve defects and make sure the builder follows through with their obligations, they only work in limited situations, specifically when the obligations are clearly defined and the arrangement is practical to enforce.
This case serves as a reminder that, in most disputes where animosity has arisen between the parties, the best outcome is one that brings the relationship to an end, rather than trying to fix the broken pieces. When the scope of work is unclear, the builder’s financial stability is uncertain, or the relationship has already broken down, a clause requiring immediate rectification works can lead to further conflict rather than resolution. In many cases, accepting a monetary settlement and moving on is a faster, cleaner and more effective solution.
If you have a concern about your construction, please get in touch with Warlows Legal today and our team will be glad to assist you.
Grech v Biltar Pty Ltd [2025] VSC 636 (8 October 2025)
