BUILDING DISPUTES IN WESTERN AUSTRALIA
Since 2011 the adjudication of complaints relating to home building contracts and ‘regulated building services’ has been simplified for consumers and service providers. The Building Commission, and the State Administrative Tribunal in certain cases, has jurisdiction to hear complaints arising under the Home Building Contracts Act 1991 (“HBCA”) and the Building (Complaint Resolution and Administration) Act 2011 (“BCRA”).Builders also have recourse to the rapid adjudication processes provided by the Construction Contracts Act 2004in relation to payment disputes.
Home Building Contract disputes
Contracts for building work between $7,500 and $500,000 are classified as a ‘home building contract’ by the HBCA. The HBCA regulates home building contracts, including by prescribing terms to be included in the contract and requiring notices, home indemnity insurance and other procedures to be carried out or obtained prior to entry into a contract. Certain terms are also prohibited from inclusion in a home building contract.
As the HBCA relates specifically to matters relating to the contract, complaints arising under this act are primarily contractual in nature.
Many building service providers incorrectly assume the HBCA only applies to builders undertaking substantial work on a home, such as the construction or renovation of a new home. In fact the HBCA extends to owner-builders and all associated building work, such as landscaping and cabinetry.
The HBCA contains civil penalty provisions for certain breaches of the act by a builder, for example requiring payment of a deposit that exceeds 6.5% of the contract price or undertaking home building work without obtaining the requisite insurance. This can result in the Building Commission commencing a prosecution and significant infringements subsequently being imposed on a builder. It is therefore essential that all providers of home building work, including associated work where the provider directly contracts with the owner, carefully review the provisions of the HBCA and ensure their written contracts comply with the HBCA before they are entered into.
The Building Commission has jurisdiction to hear complaints commenced within 3 years from the date the dispute arose. Remedies for an owner and a builder in relation to non-fulfilment of conditions imposed by the HBCA are set out in Schedule 1 of the Act, and include termination of the contract by the party not in breach.
The Commissioner has a number of remedial orders which can be made under the BCRA in respect of home building contracts, including orders restraining or requiring certain action by the builder, an order that a party pay an amount due under the contract or declaring that an amount is not payable, and an order requiring a party to pay specific compensation arising from a breach of the contract or the HBCA. Orders declaring a provision or a contract void can also be made in respect of specific breaches of the HBCA.
Workmanship disputes
A person adversely affected by the carrying out of a ‘regulated building service’ can make a complaint to the Building Commission on the basis that the building work was not carried out in a proper and proficient manner, or was faulty or unsatisfactory. Complaints made under the BCRA are therefore known as ‘workmanship complaints’.
The class of persons ‘adversely affected’ by a regulated building service extends beyond the owner who contracted with the builder, to a subsequent owner of the property or a neighbour for example. The complaint must however be made within 6 years from the date of practical completion where work was not carried out under a permit, or within 6 years from a notice of cessation or a notice of completion where work was carried out under a permit.
The term ‘regulated building service’ is defined in the BCRA as a building service carried out by a registered builder or approved owner-builder, and home building work under the HBCA. ‘Building service’ includes building work, demolition work (within the meaning of those terms in the Building Act 2011*), plumbing work and other prescribed works.
An aggrieved party must give 14 days’ notice to the other party before commencing a complaint, designed to encourage the parties to reach an informal resolution of the dispute with the need to resort to the formal complaint process.
Once the complaint is commenced, the Commissioner has the power to dismiss the claim, or require further details of the claim to be provided in deciding whether to accept or dismiss the claim. Once the claim is accepted, the Commissioner must cause an investigation to be carried out by an inspector, who subsequently produces a report. The report may include recommendations as to how the complaint should be dealt with. After receiving the report, the Commissioner may commence a conciliation process at which both parties must attend generally without their legal representatives present.
Building remedy orders may be made by the Commissioner or SAT if satisfied that the work was not carried out in a proper and proficient manner or was faulty or unsatisfactory. If the compensation or value of the work orders being sought by the aggrieved party exceeds $100,000, the Commissioner must refer the matter to the State Administrative Tribunal, which has jurisdiction up to $500,000.
The Commissioner or SAT can also award compensation in lieu of a building remedy order if it is just and expedient to do so, for example where a builder has shown itself to be incapable of performing any building work to the standard expected of a professional builder, or where the builder has refused to carry out the work.
Claims outside the BCRA
For latent defects that are not identified by a consumer within the 6 year limitation period provided in the BCRA, it may be necessary for the consumer to resort to remedies under the building contract, if still available, or a negligence claim against the builder. Such claims would need to be commenced in a Western Australian court, depending on the value of the claim.
For causes of action based upon a builder’s professional negligence, a consumer will typically have a limitation period of 6 years from the date the damage caused by a latent defect was discovered by the consumer, or was capable of being discovered by the reasonable diligence of the consumer.
* The Building Act 2011 defines ‘building work’ as: (a) the construction, erection, assembly or placement of a building or an incidental structure; or (b) the renovation, alteration, extension, improvement or repair of a building or an incidental structure; or (c) the assembly, reassembly or securing of a relocated building or a relocated incidental structure; or (d) the changing of ground levels of land for the purposes of work of a kind mentioned in paragraph (a), (b) or (c) to an extent that could adversely affect land beyond its boundaries; or (e) site work on any land for the purposes of, or required because of, work of a kind mentioned in — (i) paragraph (a), (b), (c) or (d); or (ii) paragraph (a) or (b) of the definition of demolition work; or (f) other prescribed work,
‘demolition work’ is defined as (a) the demolition, dismantling or removal of a building or an incidental structure; or (b) the changing of ground levels for the purposes of work of a kind mentioned in paragraph (a) to an extent that could adversely affect land owned by a person other than an owner of the land on which the building or incidental structure that is the subject of the demolition work is located; or (c) other prescribed work, but does not include work of a kind prescribed for the purposes of this definition as not being demolition work;
‘incidental structure’ means a structure attached to or incidental to a building and includes — (a) a chimney, mast, swimming pool, fence, free-standing wall, retaining wall or permanent protection structure; and (b) a part of a structure.
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