Orders In A State Of Chaos:A Case Study On Appropriate Building Orders In The Context Of Building Defects

Summary

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.

Background

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:

1. Did the Builder carry out a regulated building service?
2. Has the Builder failed to carry out the building work in a proper or proficient manner, or, is the work faulty or unsatisfactory?
3. What is the appropriate building order?

In relation to the first and second issues, the Tribunal found that:

• the Builder did carry out a regulated building service and therefore it was open to SAT to make a building remedy order against the Builder under the Act; and
• the Builder had not carried out its works in a proper and proficient manner or was faulty or unsatisfactory.

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.

Building orders: an order to remedy or an order to pay?

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]

• whether there has been an irretrievable breakdown in the relationship between the parties;
• whether an owner has justifiably lost confidence in the workmanship and skill of the respondent;
• whether the builder has attempted to remedy the regulated building service unsuccessfully; and
• whether the builder has refused to perform remedial work when invited to do so.

In this case, the Tribunal found that the relationship between the parties had inevitably broken down because of the following reasons:

• the Builder had demonstrated a lack of care for the Owners’ home and belongings;
• the Owners had given evidence to the effect that they would sell the Property if the Builder performed the remedial work;
• the Owners previously refused the Builder access to the Property;
• an employee of the Builder had previously refused to undertake work on the Property;
• previous offers were made by the Builder to remedy the complaint items but the works were never carried out by the Builder;
• on one occasion, the Builder’s attendance at the Property was on the condition that the Owners remove a negative social media post about the Builder;
• the Owners did not allow any further repairs to be made by the Builder; and
• the Owners considered that a representative of the Builder had lied to them in relation to the appropriate standards pertaining to plaster thickness.

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.