A Cautionary Tale for Builders

Medco Residential Pty Ltd has been fined $10,000 and formally reprimanded by the State Administrative Tribunal after being found guilty of unconscionable and misleading conduct. The case, involving unjustified demands for progress payments and contract price increases, shines a light on practices that erode trust in the building industry.

Medco entered administration in July last year. The company’s conduct under then director Damien Thomas Clancy in 2022 resulted in legal action that every builder should take note of.

What Happened

In two separate cases, Medco Residential acted in breach of home building contract laws:

Maida Vale

• Medco demanded a lock up stage progress payment when that stage had not been reached.
  
• The company attempted to increase the contract price by $57,053 without a valid reason.
  

Hammond Park

• Medco sought a roof cover progress payment despite work not being completed to approved plans.
  
• The company pursued an unjustified $50,000 price increase.
  

Medco claimed these increases were due to delays in obtaining building permits. It was later revealed that no permit applications had ever been lodged.

The State Administrative Tribunal found this conduct to be both misleading and unconscionable. Building Commissioner Peter Stewart summed it up: “Demanding a progress payment without providing the corresponding service or materials is illegal under home building contract laws.”

The Key Lessons for Builders

Progress payments must be earned

Demanding payments for incomplete stages of work is illegal and will damage your reputation. Builders must tie invoicing directly to work that is demonstrably complete. Sloppy paperwork or inaccurate claims can lead to serious consequences.

Justify variations with evidence

Any price increase needs to be backed by clear documentation and communicated transparently to homeowners. Blaming delays or external factors without evidence will not hold up under scrutiny and risks legal penalties.

Regulatory compliance is non negotiable

Permit applications and approvals are basic requirements of any building project. Builders must have systems in place to ensure these are submitted on time and tracked properly. Cutting corners on compliance exposes builders to significant risk.

Your reputation is your greatest asset

Incidents like this one damage public confidence in builders. The good builders are those who play by the rules, communicate clearly and deliver what they promise. Integrity is a competitive advantage in today’s market.

Learn from the mistakes of others

Medco’s situation shows how failing in basic obligations can snowball into legal, financial and reputational disaster. Builders who invest in strong systems, transparent practices and customer trust will build more resilient businesses.

The Good Builder Take

We believe that trust and transparency are as important as bricks and mortar. Builders who stay accountable at every stage not only protect their businesses but help lift the reputation of the entire industry.

If you have a story about improving your business processes or building customer trust, get in touch. We would love to feature it.

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Author: TGB Editorial