Unlicensed building and its consequences
The Supreme Court of New South Wales has issued a stern warning to builders who repeatedly operate unlicensed in breach of the Home Building Act 1989 (NSW) (the Act). In NSW Commissioner for Fair Trading v Rixon (No. 4)  NSWSC 1, the defendant was convicted of contempt of court and sentenced to 18 months imprisonment (with a non-parole period of 12 months) for breaching orders prohibiting him from operating without a valid contractor licence.
Licensing requirements under the Act
Section 4 of the Act provides that a person must not contract to do any residential building work or specialist work except if they, or the partnership or corporation they’re contracting on behalf of, holds a valid contractor licence authorising its holder to contract to do such work. Section 12 of the Act prohibits the actual performance of residential building work or specialist work without a valid licence.
Section 5 of the Act prohibits an unlicensed person from representing that they’re prepared to do residential building work or specialist work. Furthermore, section 17 prohibits an unlicensed person from representing that they hold a valid contractor licence, supervisor certificate or tradesperson certificate when they do not.
The maximum penalty for breaching these sections is $22,000 for an individual and $110,000 for a corporation. Furthermore, individuals convicted of second or subsequent offences under sections 4 or 5 face a maximum penalty of $55,000 or 12 months imprisonment, or both.
Case study: NSW Commissioner for Fair Trading v Rixon
The defendant, Mr Rixon, had carried out residential building work on various occasions prior to April 2013 without holding a valid contractor licence. On 17 April 2013, consent orders were made (the Consent Orders) prohibiting Mr Rixon from:
On 9 May 2014, the Supreme Court of New South Wales convicted Mr Rixon of contempt of court for breaching the Consent Orders. Garling J sentenced Mr Rixon to 18 months imprisonment, suspended upon the condition of good behaviour, compliance with the Consent Orders and completing 300 hours of community service.
Throughout January and February 2015, Mr Rixon once again breached the Consent Orders by:
The ‘supervision only’ exclusion
Mr Rixon submitted the work he undertook was merely supervisory since he only coordinated and facilitated the exchange of money from Mr Gibara to the operator of an earthworks moving machine responsible for the earthworks necessary to erect the Colorbond fence.
The Court rejected this submission for three reasons: the owner’s evidence had not been challenged, Mr Rixon had not sworn an affidavit or given evidence and Mr Rixon had a number of convictions for offences regarding dishonesty.
Whilst the Court did not examine the supervision only exclusion from the definition of residential building work (Schedule 1 clause 2(3)(i) to the Act), it should be remembered that it excludes from the definition of residential building work the supervision only of residential building work:
(i) by a person registered as an architect under the Architects Act 2003, or
(ii) by a person supervising owner-builder work for no reward or other consideration, or
(iii) by any other person, if all the residential building work is being done or supervised by the holder of a contractor licence authorising its holder to contract to do that work.
Assuming that Mr Rixon sought to rely on (iii), this was not addressed in evidence.
Mr Rixon pleaded guilty to contempt of Court for breaching the Consent Orders. In sentencing, the Court held that:
Mr Rixon deliberately did the acts set out in the charges and did them knowing that they were in contravention of the [Consent Orders]. He could not have been in any doubt that he was not permitted to do the things the subject of the charges because only five months earlier he had been convicted of contempt for performing similar acts in breach of the same [Consent Orders] … put in place for the purpose of protecting members of the public in accordance with the underlying intention of [the Act], from unlicensed builders. The contempt, therefore, by breaching the [Consent Orders] not only undermines the authority and integrity of the Court but had the effect of injuring members of the public sought to be protected …
As a result, the Court sentenced Mr Rixon to a term of imprisonment of 18 months with a 12 month non-parole period.
Ultimately, the Court’s first decision of the year is a stern warning for repeat offenders who undertake or supervise construction work without a contractor licence. Those seeking to circumvent the Act must be mindful of the Act’s paramount obligation towards consumers, and the willingness of the Court to uphold these principles.
Editorial: Christine Jones, Eleanor Grounds & Christopher Yong
In the media
Who is responsible for balcony collapses?
On several occasions after first leasing a residential property in the NSW suburb of Collaroy in 2005, architect Joanne Gillies had complained to her landlord and the landlord’s managing agent about the structural integrity of her balcony (09 March 2018). More...
RBA shines spotlight on planning regimes
The Reserve Bank of Australia released a Research Discussion Paper today on The Effect of Zoning on House Prices, which reports that zoning raised detached house prices 73 per cent above marginal costs in Sydney, 69 per cent in Melbourne, 42 per cent in Brisbane and 54 per cent in Perth (08 March 2018). More...
HIA: Apartment boom rolls on
Building Approval results were released today by the Australian Bureau of Statistics and report that new apartment approvals were up by 5.5 per cent during the three months to January 2018. Over the year to January 2018, new apartment approvals totalled 106,000 a very high level by historic standards (05 March 2018). More...
Why regional sourcing makes sense for building projects
When it comes to sourcing materials for a building project, thinking local can have huge benefits, including sustainability wins, greater transparency around compliance and enhanced financial flexibility (05 March 2018). More...
Check the cladding on your apartment building is fire safe
The NSW Government is working to address the fire safety risks associated with external wall cladding in high-rise buildings and has developed and started implementing a co-ordinated, whole of government policy response (09 March 2018). More...
NSW Housing Approvals falling
The Australian Bureau of Statistics latest data on Housing Approvals indicates that NSW approvals are dropping compared to Victoria (09 March 2018). More...
Girraween builder fined $135,000 after injury at Doonside building site
Universal Property Group Pty Ltd pleaded guilty to failing to ensure the health and safety of workers at the Doonside site after a young man fell through a void that was not properly covered, and lacked any signage to warn staff of the potential danger (07 March 2018). More...
HIA: Be prepared for blitz on falls
From 1 November 2017 SafeWork NSW inspectors will have the power to issue on the spot fines of up to $3,600 to corporations and $720 to individuals for breaches relating to falls from heights. Fines may be issued where risk to workers is imminent or serious, or if the workplace is considered to be a repeat offender (02 March 2018). More...
NSW Green Star brand caught up in waste scandal
NSW construction waste sent to Queensland for recycling is instead ending up dumped in landfill, a Fairfax investigation this week has revealed, raising fears that the practice could compromise the legitimacy of NSW Green Star ratings (01 March 2018). More...
Banned builder Matthew Geoffrey Rixon jailed
Rixon, 33, pleaded guilty to contempt of court for breaching NSW Supreme Court orders made in April 2013 that permanently banned him from working in the home building industry. In September 2013 Rixon was charged for breaching those orders and a year later was given a suspended sentence of 18 months jail (01 March 2018). More...
Housing affordability: re-imagining the Australian dream
John Daley, Brendan Coates, Trent Wiltshire; Grattan Institute: 04 March 2018
Building an extra 50,000 homes a year for a decade could leave Australian house prices 5 to 20 per cent lower than they would be otherwise, and stem rising public anxiety about housing affordability, according to this Grattan Institute report. More...
ACI Construction Briefs
A fortnightly communication highlighting key updates related to Australia's construction industry:
ACI Construction Brief: Australia is marching to a different beat (05 March 2018)
Australian Bureau of Statistics
05/03/2018 Building Approvals, Australia, Jan 2018
Practice and courts
ABCB: Discussion paper open for comment
The Australian Building Codes Board (ABCB) ABCB is currently seeking your feedback in relation to the NCC and short-term accommodation in apartment buildings (07 March 2018). More...
ABCB: NCC 2016 Volume One Amendment 1
The Amendment preview and Evidence of Suitability handbook are now available. Accompanying the preview is a summary of changes, the Consolidated Performance Requirements preview and a new Evidence of Suitability Handbook. NCC 2016 Volume One Amendment 1 is scheduled for adoption by all States and Territories from 12 March 2018.
ABCB: NCC 2019 Public Comment Draft is now available
The consultation period for proposed changes for NCC 2019 is now open and the ABCB is seeking your feedback. Full details of the changes are provided in the NCC 2019 Public Comment Draft.
Feedback should be submitted using the NCC response sheet and uploaded to the online form located on the ABCB website. Submissions close 13 April 2018. For energy efficiency of commercial buildings, the public comment period closes COB, 20 April 2018. More...
Registration is now open for the 2018 NCC Information Seminars
In February and March 2018, a representative from the ABCB will be coming to a capital city near you. Don't miss out on your opportunity to hear about the following BCA initiatives: NCC 2016 Volume One amendment addressing fire safety; NCC 2019 public comment draft; The improved CodeMark scheme; and The practical development and assessment of Performance Solutions. More...
Economics References Committee Inquiries
Non-conforming building products
Status: Submissions Closed Date Referred: 11 October 2016, Reporting Date: 30 April 2018.
New South Wales
NSW BPB: webinar recording now available
The Building Professionals Board’s recent consultation webinar is now available to view (01 March 2018). More...
NSW BPB: February newsletter
'Cert Alert' is your regular update on work by the Board, legislative change, events, training and consultation opportunities (27 February 2018). More...
NSW BPB: New EP&A Act to commence 1 March 2018
Recent changes to the Environmental Planning and Assessment Act 1979 will commence on Thursday 1 March 2018 (28 February 2018). More...
Implementation update – changes to Environmental Planning and Assessment Amendment Act 1979
Many of the amendments to the Environmental Planning and Assessment Act 1979 made by the Environmental Planning and Assessment Amendment Act 2017 are proposed to commence on 1 March 2018. More...
Part 5 – Infrastructure delivery
There is a requirement for notification of proposed activities to ensure future plans for an infrastructure corridor will not be affected.
Part 6 – Building and subdivision
The new Act strengthens building regulation and certification procedures to ensure quality and safety.
Part 7 – Infrastructure contributions
The infrastructure contributions system has been improved to promote the efficient sharing of costs and benefits in infrastructure development (March 2018).
Komadina trading as We Paint Pools v Kelleher  NSWCATAP 56
COSTS: Whether special circumstances. Civil and Administrative Tribunal Act 2013 (NSW).
Civil and Administrative Tribunal Rules 2014 (NSW).
NSW Commissioner for Fair Trading v Rixon (No. 4)  NSWSC 1
CONTEMPT OF COURT – sentencing – breach of consent orders preventing conduct with respect to residential building work – plea of guilty to knowingly breaching orders in five respects – contempt committed during period of suspended prison sentence imposed for a similar breach of the same orders – aggravating factors - no demonstration of remorse – high likelihood of reoffending – significance of both specific and general deterrence – no penalty other than fulltime imprisonment appropriate.
Champion Homes Pty Ltd v Guirgis  NSWCATAP 54
PRACTICE AND PROCEDURE – Interlocutory decision - leave to appeal - relevance of cl 12 of Sch 4 of the Civil and Administrative Tribunal Act 2013 - need to show substantial miscarriage of justice - applicable principles to grant of leave. SUMMONS - application to set aside - applicable principles - need to identify issues in dispute - apparent relevance - “throw light on” issues in dispute - unduly onerous - oppressive.
COSTS - general discretion - partial success in application.
The substantive proceedings in which the Decision was made relate to disputes concerning a contract for residential building works between the builder and the respondent (homeowner).
Athas v Baxter  NSWCATAP 62 (12 March 2018) (A. Coleman SC, Senior Member, D. Goldstein, Senior Member)
Existence of special circumstances to justify a costs order. Civil and Administrative Tribunal Act 2013 (NSW).
Owners Corporation SP 80609 v Paragon Construction (NSW) Pty Limited  NSWSC 266 (02 March 2018) (McDougall J)
CIVIL PROCEDURE – application by builder and developer for leave to bring cross claim against principal certifying authority – whether cross claim maintainable at law – whether principal certifying authority owes duty of care to first plaintiff – whether any liabilities which exist are coordinate – where prior questions of law unable to be quickly and easily resolved – where no prejudice to the principal certifying authority exists aside from costs and inconvenience – leave granted.
CIVIL PROCEDURE – offer of compromise accepted between first plaintiff and third defendant – whether judgment should be entered now in accordance with UCPR 20.27 – where issue of potential prejudice or estoppel may arise if judgment is entered – no prejudice in delaying entry of judgment until trial – judgment not entered.
The Owners of Strata Plan 84879 v Ex Parte JMA Developments Pty Ltd & Anor  NSWDC 424 (07 August 2017) (Neilson DCJ)
CONTRACTS – BUILDING AND CONSTRUCTION CONTRACT – APPLICATION OF STATUTORY PROVISIONS – first defendant (a builder) constructed four townhouses for second defendant (a developer) – property subsequently came into possession of plaintiff (owners’ corporation) which became “successor in title” to developer and the developer became statutorily liable for any breach by the builder. Claim proceeded ex parte.
Chuang v New Legend Global Developments Pty Ltd  NSWCATCD 101 (20 November 2017) (P French, General Member)
HOME BUILDING – claim by a homebuilder for compensation from a builder for costs of rectifying incomplete and defective home building works; claim by a homebuilder for refund of project management fees paid to a builder in circumstances where the building works were incomplete and defective – claim that the builder engaged in misleading and deceptive conduct – homebuilder’s entitlement to compensation established on the evidence – homebuilder’s entitlement to a refund of project management fees not established on the evidence - homebuilder’s entitlement to relief from payment of project management fee established on the evidence.
PRACTICE & PROCEDURE – application for leave to be represented – where the applicant does not speak English – where the quantum of the claim exceeds $80,000.00 – where there is a degree of legal complexity in the proceedings – where leave has been granted to both parties to be represented in the proceedings in the interlocutory stages – leave granted.
COSTS – homebuilder’s claim for costs of production of an expert report – homebuilder’s claim for costs of the proceedings on an indemnity basis – principles to be applied – costs awarded on the ordinary basis.
Home Building Act 1989 (NSW) (No. 147 of 1989)
Proposed amendment by State Debt Recovery Bill 2017.
Strata Schemes Management Act 2015 (NSW) (No. 50 of 2015)
Proposed amendment by Property, Stock and Business Agents Amendment (Property Industry Reform) Bill 2017.
Christine Jones, Partner - Construction & Infrastructure (Dispute Resolution)
T: +61 2 8083 0477
Stefanie Dunnicliff, Senior Associate
T: +61 2 8083 0464
Divya Chaddha, Associate
T: +61 2 8083 0457
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 publication is accurate at the date it is received or that it will continue to be accurate in the future. We are not responsible for the information of any source to which a link is provided or reference is made and exclude all liability in connection with use of these sources.