The recent case of Zimowski and Ideal Homes Pty Ltd [2022] WASAT 90 considers factors which the State Administrative Tribunal (the Tribunal) may consider when determining the type of building order to be awarded in relation to complaints on building defects.
The recent case of Zimowski and Ideal Homes Pty Ltd [2022] WASAT 90 considers factors which the State Administrative Tribunal (the Tribunal) may consider when determining the type of building order to be awarded in relation to complaints on building defects.
While the Tribunal has ultimate discretion in deciding the remedy to be awarded under the Building Services (Complaint Resolution and Administration) Act 2011 (WA) (the Act), it is nonetheless still important for an applicant to voice a preference for a particular remedy. In this case, the Tribunal considered the owners’ lack of confidence in the builder and an irretrievable breakdown in the relationship between the parties as sufficient for the Tribunal to exercise its discretion under s 36(1) of the Act and award a monetary building remedy order in relation to the complaint items.
This case concerned a dispute before the Tribunal which arose in the construction of a residential dwelling at 11 Melanzana Chase, Lansdale (Property). The applicants were the owners of the Property (Owners) and the respondent was Ideal Homes Pty Ltd (Builder).
The issues for the Tribunal to determine were as follows:
In relation to the first and second issues, the Tribunal found that:
The focus of this article is on the third issue i.e. what is an appropriate building order to be awarded, in circumstances where the Builder had not carried out its works in a proper and proficient manner or was faulty or unsatisfactory.
The starting point for determining the type of building remedy order is set out in section 38(1) of the Act. This allows the Tribunal to grant a building remedy order against the respondent if the work they carried out was not in a manner which was proper and proficient or was faulty or unsatisfactory.[1] Typically, ordering the respondent to rectify the defective works is the most common remedy. However the Tribunal may also grant a building remedy order on monetary terms i.e. an order to pay.
Section 36(1) of the Act confers discretion on the Tribunal as to the form of the building order. The Tribunal can either require the work to be rectified or a sum of money to be paid to the aggrieved party. In this case, the Owners expressed a strong preference for a monetary order under section 36(1)(b) of the Act, claiming a loss of confidence in the Builder and that there was an irretrievable breakdown in the relationship between the parties.
While an owner has no right to elect a remedy, the Tribunal is entitled to take the preference of the owner into consideration.[2] The Tribunal has the ultimate discretion as to what order is made, however it does not have the power to compel the owner of a property to allow work to be carried out if there is evidence that access to the property would likely be denied.[3] The following is a list of non-exhaustive factors that may be relevant to the Tribunal exercising its discretion to award a monetary building remedy order:[4]
In this case, the Tribunal found that the relationship between the parties had inevitably broken down because of the following reasons:
In light of these factors, the Tribunal found that it was more appropriate to grant a monetary building remedy order under section 36(1)(b) of the Act i.e. an order to pay.
In our experience, it is common practice to give a builder an opportunity to remedy its own defective work. The reason for this is because an order to remedy compensates the owner while minimising the hardship to the builder who can usually carry out the work at a substantially less cost than the amount charged by a third-party contractor. However (and this case is a classic example) that in circumstances where there the complaints raise concerns about the proficiency and competency of the builder (which eventuate in an irretrievable breakdown in the relationship between the owner(s) and the builder) the Tribunal may find that a monetary order is more appropriate than ordering the builder to perform the remedial work.
It is also a timely reminder that in circumstances where the builder has offered to carry out remedial works within an agreed timeframe but has failed to do so, the owner may seek an order to pay from SAT. These principles also apply to the rectification of building defects in strata properties.
[1] Northcott and Realgold Corporation Pty Ltd (ACN 117 580 560) [2020] WASAT 72.
[2] Gemmill Homes Pty Ltd v Sanders [2018] WASC179.
[3] Gemmill Homes Pty Ltd v Sanders [2018] WASC179.
[4] Hippydayze Pty Ltd and Mener Group Pty Ltd [2019] WASAT 92 [126].