Litigants in breach of statutory warranty claims must be aware of the overarching principle, established in section 48MA of the Home Building Act 1989 (NSW) (Act), that the NSW Civil and Administrative Tribunal (Tribunal) must have regard to the principle that rectification of the defective work by the responsible party is the preferred outcome.
Unsurprisingly, owners by and large seek money orders, whereas builders seek work orders. For a money order, the Tribunal must be satisfied that the making of a work order would be inappropriate. Harding v Horticultural Holdings Pty Ltd [2022] NSWCATCD 22 adds to the decisions which have given guidance on the application of that principle.
The builder quoted for the installation of a kitchen at the owners home. On 28 October 2020, the builder issued an invoice to the owners for (among other things) a “solid timber kitchen”. The invoice was the sole contract document in evidence.
The builder had neither a licence, nor appropriate insurance cover, to carry out the works. The whole of the installation work for the kitchen was undertaken by a licensed subcontractor.
The owners alleged that the builder had breached section 18B of the Act in that the work was not carried out with due care and skill or in accordance with the plans and specifications set out in the contract (as evidenced by the invoice). In particular, the owners alleged that the kitchen installed was not a “solid timber” kitchen as the timber used was not of furniture-grade quality. The materials were said to be damaged during manufacture and the installation and the paint finish was poor.
The owners sought a money order for the removal and replacement of the kitchen. The builder preferred a work order.
The Tribunal emphasised that section 48MA of the Act sets out the preferred outcome of the proceedings, which is not a mandatory outcome. The Tribunal affirmed the reasoning in the decision of Galdona v Peacock[1] which suggested that a money order should be made in place of a work order where, non-exhaustively:
The Tribunal traversed recent case law which suggests that section 48MA is a preference and not a right of the builder[2], and that the purpose of the section is to prevent owners’ unreasonable refusal of builders carrying out rectification work.[3]
Although the experts for both the owners and the builder agreed that the builder’s work was poor in quality and finish, it was:
The Tribunal preferred the owner’s expert on this issue, finding a breach of section 18B(1)(a) of the Act and that replacement of the MDF construction with solid timber was warranted.
The Tribunal preferred the owners’ position that a money order should be made over a work order, for the following reasons:
The Tribunal determined that in those circumstances it would not be appropriate to make a work order, as there was no evidence to persuade the Tribunal that if the subcontractor removed and replaced the subject kitchen, the outcome would be any better in terms of the quality of the work.
Owners and builders are reminded that section 48MA of the Act is the preferred outcome and not a mandatory outcome.
Builders seeking a work order should consider the decision as guidance towards steps they may take, in a dispute context, which will assist in persuading the Tribunal toward the preferred outcome.
The full decision can be read here.
Authors: Christine Jones & Nicholas Achurch
[1] [2017] NSWCATAP 64
[2] Kurmond Homes Pty Ltd v Marsden [2018] NSWCATAP 23 at [32]
[3] See paragraph [14].
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Brennan v Building Zone Constructions Pty Ltd [2022] NSWCATAP 96
APPEAL – failure to consider evidence of one party on the issue of quantum – decision not fair and equitable; Civil and Administrative Rules 2014; Civil and Administrative Tribunal Act 2013.
Salakis v Silvabuilt Pty Ltd; Silvabuilt Pty Ltd v Salakis (No 2) [2022] NSWCATAP 95
COSTS – usual order – costs follow the event – meaning of “event”; Civil and Administrative Rules 2014; Civil and Administrative Tribunal Act 2013.
Casazza v McGuinness [2022] NSWSC 348
CIVIL PROCEDURE – appeal and review – appeal from Local Court.
CONTRACTS – formation – identification of parties to an agreement – post-contractual conduct; Local Court Act 2007 (NSW).
Garawin Pty Ltd v 1A Eden Pty Ltd [2022] NSWSC 333
REAL PROPERTY – torrens title – caveats – application to remove caveats – Real Property Act 1900, s 74MA(2) – real property development joint venture conducted through trustee company as trustee of a unit trust – plaintiff a 50 per cent interest holder in the units in the unit trust – agreement to distribute the profits in specie in the form of lots of the development – distribution commenced but not completed – building under development the subject of defect proceedings – trust faced with unexpected external liabilities – further distribution suspended but plaintiff’s permitted to mortgage undistributed lots – freezing orders made by consent against lots to be distributed to second defendant – lots distributed to the third defendant – caveats placed on all lots respect parties – plaintiff seeks removal of caveats to enable distribution – whether caveats bad in form – what if any ancillary relief should be granted if caveats are removed; Design and Building Practitioners Act 2020; Home Building Act 1989, s 18B; Real Property Act 1900, ss 74MA(2), (3), 74P; Trustee Act 1925, s 102.
Leone v Captain Green Solar Pty Ltd [2022] NSWCATAP 78
PRACTICE AND PROCEDURE – procedural fairness – failure to give reasons – adequacy of reasons; Civil and Administrative Tribunal Act 2014 (NSW) – ss 80, 81; Home Building Act 1989 (NSW) – ss 18E, 48K(7).
Chen v Austral Built Pty Ltd [2022] NSWCATAP 67
APPEAL – error of law – scope of works in contract for residential building work – obligation of builder to provide sewer service diagram – work and services order made.
NSW
Passed by both Houses of NSW Parliament
Home Building Amendment (Medical Gas Licensing) Bill 2022
31/03/2022 – Home Building Act 1989 No 147.
Environmental planning instruments
Blacktown Local Environmental Plan 2015 (Amendment No 31) (2022–129) LW 1 April 2022.
Coffs Harbour Local Environmental Plan 2013 (Amendment No 26) (2022–130) LW 1 April 2022.
Kempsey Local Environmental Plan 2013 (Amendment No 31) (2022–131) LW 1 April 2022.
Moree Plains Local Environmental Plan 2011 (Amendment No 7) (2022–116) LW 30 March 2022.
State Environmental Planning Policy (Precincts–Western Parkland City) Amendment (Wilton Town Centre Precinct) 2022 (2022–119) LW 30 March 2022.
State Environmental Planning Policy (Transport and Infrastructure) Amendment (Miscellaneous) 2022 (2022–132) LW 1 April 2022.
Upper Hunter Local Environmental Plan 2013 (Map Amendment No 2) (2022–133) LW 1 April 2022.
Wagga Wagga Local Environmental Plan 2010 (Amendment No 44) (2022–117) LW 30 March 2022.
Ballina Local Environmental Plan 2012 (Map Amendment No 3) (2022–106) LW 25 March 2022.
Cumberland Local Environmental Plan 2021 (Amendment No 3) (2022–107) LW 25 March 2022.
Dubbo Regional Local Environmental Plan 2022 (2022–108) LW 25 March 2022.
Ku-ring-gai Local Environmental Plan 2015 (Amendment No 28) (2022–109) LW 25 March 2022.
Mid-Western Regional Local Environmental Plan 2012 (Map Amendment No 2) (2022–110) LW 25 March 2022.
Pittwater Local Environmental Plan 2014 (Map Amendment No 2) (2022–111) LW 25 March 2022.
State Environmental Planning Policy (Precincts–Western Parkland City) Amendment (Miscellaneous) 2022 (2022–112) LW 25 March 2022.
Wakool Local Environmental Plan 2013 (Amendment No 5) (2022–113) LW 25 March 2022.
Willoughby Local Environmental Plan 2012 (Amendment No 20) (2022–114) LW 25 March 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.
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