Banksia Pty Ltd wished to build a new office building on land it owned in Hawthorn. It entered into a building contract with Mario Bros Pty Ltd (Mario) for $1.5 million, with a 6 months completion time. Work commenced on 1 June 2019. On 1 October 2019, an unusually strong cyclone caused a lot of building damage in northern Australia. As a result of the unexpected increase in demand for building workers needed to fix the many damaged buildings there, Mario had difficulty finding enough tradespeople to complete the contract by the due date on 1 December 2019. This resulted in completion being delayed till the 30 June 2020 and the cost of the project also increased by $250,000.

Mario wishes to claim the additional costs of completing the project.

Part (b)

Assume that Mario had stopped work when they had completed three-quarters () of the work because they realised that they would lose money on the project.

Banksia invites tenders for builders to complete the project. The tendering process takes one month. The successful builder, A1 Contractors, is unable to start work on Banksia's project for a further three months because of other building works that they are involved with.

Banksia nevertheless engaged A1. As a result of the building not being completed by the original date, Banksia lost a major tenant who was going to lease an entire floor of the building at a rate of $20 per square metre above the market rate.

Advise Banksia and Mario of their legal rights.