Jolin Nominees v Daniel Investments: a “safety valve” for variation

Construction Case Law – Variation Costs

Builders and owners alike understand the theory: domestic building contract variations should be documented, priced, and approved in writing before the work is done. In practice, however, projects regularly drift into informal “can you just…” requests, with costs and time impacts discussed (if at all) after the fact.

The Victorian Court of Appeal’s decision in Jolin Nominees Pty Ltd v Daniel Investments (Aust) Pty Ltd [2022] VSCA 209 (and the earlier Supreme Court reasons from which it arose) is a reminder that the Domestic Building Contracts Act 1995 (Vic) (‘DBCA’) is designed to protect owners from surprise variation claims, but it is not intended to create a windfall where an owner has requested and received additional work without paying for it.

In short:

The DBCA’s notice requirements matter and remain the safest path for builders.
But s 38(6)(b) can operate as a statutory “safety valve” where strict enforcement would cause a builder significant or exceptional hardship and it would not be unfair to the owner for the builder to recover the variation money.
Critically, where variations are allowed through this mechanism, s 39 can link the allowed variations to time: the contract’s completion date can be adjusted to reflect the time reasonably required to perform that variation work, materially affecting liquidated damages exposure.

Background in brief

The dispute arose out of a domestic building project in which an owner engaged a builder to demolish an existing dwelling and construct six townhouses under a standard form Victorian new homes contract. During the job, the owner requested multiple variations, but the parties did not comply with the statutory variation formalities. The proceeding ultimately turned on whether the builder could recover the cost of owner‑requested variations (despite non‑compliance) and whether the time taken to perform those variations could extend the contractual completion date.

The statutory context: why the “paperwork” exists

For owner‑initiated variations under s38, the DBCA establishes a structured process:

the owner gives the builder written notice of the requested variation;
for anything other than minor/no‑delay variations within the 2% threshold, the builder must provide a notice addressing effect on the work, time impact, and cost impact; and
the builder must not give effect to the variation unless the owner signs the request attached to the builder’s notice (subject to narrow exceptions).

The policy is obvious: avoid informal changes producing later disputes about price and delay.

The High Court has previously described these provisions as protective, aimed at preventing disputes caused by informal oral variations and “surprises” about price and time consequences. The DBCA generally prohibits recovery for owner‑initiated variations unless the required formality is followed, subject to one statutory exception that permits recovery of cost plus a reasonable profit margin in appropriate cases.

What the “hardship” exception is really about

The key provision is s 38(6)(b). It empowers VCAT to allow recovery even where the statutory notices were not complied with, if VCAT is satisfied that:

there are exceptional circumstances or the builder would suffer a significant or exceptional hardship by the operation of the general prohibition; and
it would not be unfair to the owner for the builder to recover the money.

The significance of Jolin is not that the formality requirements are optional (they are not), but that the courts endorsed a broad, practical construction of the hardship inquiry. The question is not confined to whether the builder found it difficult to comply with the notice regime at the time. Rather, the inquiry is directed to the consequences of non‑payment in the circumstances of the particular case.

Two implications flow from that approach:

“Hardship” is not automatically satisfied every time a builder is unpaid for a variation. Otherwise, the exception would swallow the rule.
But equally, the enquiry is not artificially narrowed to “hardship in compliance”. It can include the real financial consequences to a builder of being unable to recover substantial costs incurred in performing owner‑requested work.

Practically, that means evidence about the builder’s financial position, the profit margin on the job, the size of the variation cost relative to the contract, and the causal narrative for why the change arose may all be relevant to the hardship assessment.

“Not unfair”: a balancing exercise, not a tick‑box

The second limb of s 38(6)(b) is where the DBCA’s consumer‑protection purpose does real work. Even if hardship is established, VCAT must also be satisfied it is not unfair to the owner for the builder to recover.

Jolin illustrates that “fairness” is a multi‑factor evaluative judgment. Relevant considerations may include:

whether the owner knew of and directed the variation work;
the benefit received by the owner from the additional work;
whether the variation was driven by deficiencies in the owner’s plans/specifications (which can cut against an owner framing the work as merely “within scope”);
the extent to which the owner was deprived of the statutory protections (informed choice about cost/time); and
whether the owner refused to engage on pricing/time consequences during the project but later sought to rely on the statutory bar.

The key practical point is that the fairness limb does not reduce to “the owner got the benefit, so the builder gets paid”. But where the evidence supports a clear narrative of owner request + owner benefit + substantial builder outlay, the fairness analysis becomes significantly harder for an owner to resist.

The time dimension: variations aren’t only about money

Many domestic building disputes are fought as much over time as over price, because time drives liquidated damages and often financing pressure.

A pivotal part of the Jolin reasoning is the link between:

s 38(6)(b) (allowing a payment order for variations notwithstanding non‑compliance); and
s 39 (the statutory “machinery” provision dealing with the consequences of variations on the contract, including completion timing).

In broad terms, s 39 operates so that where the plans/specifications are varied “in accordance with” the DBCA’s variation provisions, the contract is treated as varied accordingly, including by adjusting the completion date to reflect the additional time properly attributable to the variation.

The practical significance is this: if VCAT allows recovery for a variation under s 38(6)(b), it is difficult for an owner to maintain the position “we won’t pay for the variation, but we’ll still hold you to the original completion date and claim liquidated damages”. The statutory scheme is aimed at preventing precisely that kind of double recovery or windfall.

Contractual notice clauses: still important, but not necessarily a complete answer

Most domestic building contracts include an extension of time (‘EOT’) clause that requires notices within specified timeframes. Owners often argue that failure to follow the contract’s EOT notice mechanism is fatal to any extension.

Jolin is a reminder to treat that submission cautiously:

A contractual notice clause may be construed as a procedural requirement (or dispute‑management mechanism) rather than a strict condition precedent to entitlement.
Even where contractual notice requirements are important to evidence and administration, they do not necessarily “override” the DBCA’s operation where the statute provides for a variation‑driven completion date adjustment.

This is not a suggestion that builders should ignore contractual notice provisions. They remain best practice and often decisive on the facts. But Jolin shows that the statutory framework can materially shape the outcome even where the contract has been poorly administered.

Practical takeaways

For builders

Keep doing the basics: written variation requests, written cost/time notices, signed approvals.
If you are “behind” on paperwork, preserve evidence: emails/texts directing the change, site instructions, revised drawings, engineer communications, invoices, subcontractor claims, and programme impacts.
If relying on s 38(6)(b), prepare to prove:
- the variation was owner‑requested (or treated as such in substance);
- the actual cost and a reasonable profit margin (the statutory measure is not a blank cheque); and
- why non‑payment would be significant in context (margin, cashflow, scale).
Treat the time issue as inseparable from money: quantify the delay attributable to variations and link it to the statutory mechanism (and any contract EOT provisions where available).

For owners

Treat variation paperwork as risk control, not red tape.
Do not assume “no paperwork = no payment”. Where you have clearly requested and received changes, s 38(6)(b) may still expose you to payment orders.
Engage early on pricing and time impacts; refusing to engage may become part of the fairness narrative.

Closing note

Jolin does not weaken the DBCA’s consumer‑protection purpose. It reinforces it — while recognising that rigid formalism should not produce a windfall where an owner has instructed, received and retained substantial additional work.

If your project has drifted into informal variations, the case is a timely prompt to reset administration before disputes crystallise.

This article is general information only and is not legal advice.

Jolin Nominees v Daniel Investments: a practical “safety valve” for variation costs and consequential extensions of time under Victoria’s DBCA