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Residential Focus

24 August 2022

#Property, Planning & Development, #Construction, Infrastructure & Projects

Published by:

Nicholas Achurch

Residential Focus

Failure to be appropriately licensed to carry out works may result in a serious breach, entitling termination and damages

In this edition, we look at a recent decision in the Tribunal, where a builder was found to be in serious breach of a contract where it failed to ensure that it and its subcontractors were appropriately licensed to carry out the works.

This decision serves as a reminder to builders to ensure that they are only performing works which they are authorised to carry out under the Home Building Act 1989 (NSW)(Act).

Background

In December 2020, the owner entered into a contract (Contract) with the builder to carry out works at the property. The Contract was partly in writing and partly oral. The written component of the Contract comprised text messages. The Contract price was $108,000.

The owner alleged that in March 2021, the parties entered into an additional written contract for additional works. 

The Tribunal found that the total price of the two contracts was $143,200, and that the owner had paid $120,000 to the builder in respect of those contracts.

At all material times, the builder held a licence under the Act which authorised him to carry out painting and decorating works only. The scope of work under the Contracts exceeded that authority.

In May 2021, the owner discovered the builder’s licence position. The owner requested that the builder stop work at the property.  

The builder admitted that the owner told him to stop work and claimed that the owner unlawfully terminated the Contract. The builder claimed that the owner’s conduct constituted a repudiation of the Contract. The builder claimed that he accepted the repudiation and terminated the Contract.

The owner claimed that the builder had repudiated the contract by agreeing to carry out work under the Contract for which he held no licence under the Act.

According to section 12 of the Act, in so far as it related to the builder, “an individual must not do any residential building work, or specialist work, except as the holder of a contractor licence authorising its holder to contract to do that work.”

The owner’s claim was primarily for a return of the consideration which she had paid to the builder. The builder claimed for unpaid works.

The written elements of the Contract were in Mandarin, and the requirements of the Act concerning the nature and form of contracts were not followed. The parties’ translations of the Contract differed in some respects.

Tribunal’s findings as to the builder’s repudiation

The Tribunal found that the builder had was in serious breach of the Contract, which was sufficient enough to entitle the owner to terminate. 

Although the requirement for the builder to be appropriately licensed was not an express term of the Contract, it was implied by virtue of the statutory warranties contained in section 18B(1) of the Act, specifically the warranty that “work will be done in accordance with, and will comply with, this or any other law”.

In this regard, the Act at section 21(1)(a) authorised the builder only to contract to do any residential building work that was described in his contractor licence when it was issued, namely decorating and painting. Further, section 12 establishes an offence under the Act do work outside of the authority conferred by the licence.

The owner was found to be entitled to damages to rectify any defective work carried out by the builder before 7 May and also damages for the cost to complete work not then completed by the builder.

Takeaway

Straying from your licence category is not only an offence under the Act, but has severe consequences under your contract, even if it is not an express term that an appropriate authority is held.

In this regard, it is not enough to have a licence, the scope of the authority and the scope of the work must align.

Authors: Christine Jones & Nicholas Achurch

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Published – articles, papers, reports

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WorkSafe Victoria and SafeWork NSW are teaming up to help employers and tradies in Mildura and Buronga reduce the risks of falls, crystalline silica dust and other construction safety hazards. Read more here.

Australian Building and Construction Commission - Industry Update August 2022
The ABCC has released their monthly industry update, with this month’s edition focussing on significant changes to the building code, removal of WRMP requirements, and the litigious matters that the Commission is involved in. Read the August 2022 edition here.

Cases

YTO Construction Pty Ltd v Bhatt [2022] NSWDC 348
CONSUMER LAW – misleading or deceptive conduct – whether representations were misleading or deceptive – whether representations made to an adjudicator were also made to the plaintiff - whether the representations were made in trade or commerce – whether defendant made the representations – whether defendant was involved in making the representations – whether plaintiff suffered loss or damage because of the representations

Rengasamy v Chief Commissioner of State Revenue [2022] NSWCATAD 272
TAXES AND DUTIES — First Home Owner Grant (New Homes) — substantially renovated home

Wong v Novakovic [2022] NSWSC 1072
CONTRACTS – Unjust contracts – Contracts Review Act 1980 (NSW) – Whether contract unjust in the circumstances at the time the contract was made – Contract not unjust in the relevant sense despite cross claimant having been under some pressure to sign it. POSSESSION – Leave to issue writ of possession –Leave granted.

Sillitoe v Commissioner for Fair Trading [2022] NSWCATAD 263
HOME Building Act – whether evidence establishes a wide range of building construction work experience – whether experience relevant industry experience – Individual contractor licence – General building work – whether evidence that work performed can be verified by witnesses who are not supervisors

O’Loughlin v Commissioner for Fair Trading [2022] NSWCATAD 281
ADMINISTRATIVE LAW – administrative review – licensing – endorsed contractor licence – restoration of authority – whether failure to renew due to inadvertence – whether just and equitable to allow restoration of authority – whether Applicant meets requirements for issue of licence – application of Instrument –qualifications

Life Structures Pty Ltd v Burton [2022] NSWCATAP 272
BUILDING AND CONSTRUCTION – Whether s 18G of the Home Building Act 1989 (NSW) operated to render void or read down a contractual provision

Legislation

NSW
Protection of the Environment Operations (Clean Air) Amendment Regulation 2022 (2022-468) – published LW 19 August 2022
Environmental Planning and Assessment Amendment (Avoided Land) Regulation 2022 (2022-460) – published LW 17 August 2022
Electricity Infrastructure Investment Amendment (Governance and Fees) Regulation 2022 (2022-465) – published LW 19 August 2022
Environmental Planning and Assessment Amendment (Housing Supply) Regulation 2022 (2022-448) – published LW 12 August 2022
Protection of the Environment Operations (General) Regulation 2022 (2022-449) – published LW 12 August 2022
Workers’ Compensation (Dust Diseases) Amendment (Scheduled Diseases) Regulation 2022 (2022-455) – published LW 12 August 2022

Environmental Planning Instruments
Nambucca Local Environmental Plan 2010 (Amendment No 27) (2022-471)–published LW 19 August 2022
Parkes Local Environmental Plan 2012 (Amendment No 8) (2022-472) — published LW 19 August 2022
State Environmental Planning Policy (Biodiversity and Conservation) Amendment (Strategic Conservation Planning) 2022 (2022-461) — published LW 17 August 2022
Wollongong Local Environmental Plan 2009 (Amendment No 52) (2022-473) — published LW 19 August 2022

Disclaimer
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.

Published by:

Nicholas Achurch

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