CARLIN and SOUTHERN BUILT HOMES PTY LTD
[2025] WASAT 100
•18 SEPTEMBER 2025
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
ACT: BUILDING SERVICES (COMPLAINT RESOLUTION AND ADMINISTRATION) ACT 2011 (WA)
CITATION: CARLIN and SOUTHERN BUILT HOMES PTY LTD [2025] WASAT 100
MEMBER: MR E CADE, MEMBER
HEARD: 26 MAY 2025
DELIVERED : 18 SEPTEMBER 2025
FILE NO/S: CC 473 of 2024
BETWEEN: PATRICK JOSEPH MARTIN CARLIN
First Applicant
ELLEN RUTH CARLIN
Second Applicant
AND
SOUTHERN BUILT HOMES PTY LTD
Respondent
Catchwords:
Home Building Works Contract - Dispute under the contract between owner and builder - Arbitration clause - Application for stay of proceeding - Whether one party to a Home Building Works Contract can require arbitration of a dispute under the contract - Proper approach to construction of an arbitration agreement - Proper approach to construction of s 28 of Home Building Contracts Act 1991 (WA)
Legislation:
Building Services (Complaint Resolution and Administration) Act 2011 (WA)
Commercial Arbitration Act 1985 (WA)
Commercial Arbitration Act 2012 (WA), s 7(1), s 7(2), s 8(1), s 43(1)(b)
Home Building Contracts Act 1991 (WA), s 3, s 17(a)(i), s 28(1)
Home Building Contracts Regulations 1992 (WA), reg 2A
State Administrative Tribunal Act 2004 (WA), s 47(1)(a)
Result:
The preliminary issue is answered by the Tribunal determining:
(1)(a) - Is clause 18(a) of the Contract between the parties an arbitration agreement for the purposes of s 7(1) of the Commercial Arbitration Act 2012 (WA)?
Answer: Yes
(1)(b) - If the answer to question (a) is yes:
- Is the proceeding before the Tribunal 'a matter which is the subject of an arbitration agreement' for the purposes of s 8(1) of the Commercial Arbitration Act 2012 (WA)?
Answer: No
- Is clause 18(a) of the Contract null and void, inoperative or incapable of being performed for the purposes of s 8(1) of the Commercial Arbitration Act 2012 (WA) because it allows the parties to contract out of their statutory rights under the Building Services (Complaint Resolution and Administration) Act 2011 (WA) or for any other reason?
Answer: As the answer to (b)(i) is 'No', the Tribunal is not required to answer this question. However, had the answer to (b)(i) been 'Yes', then the answer to this question would then be 'Yes'.
(1)(c) - In all the circumstances, is the Tribunal required to refer the parties to arbitration pursuant to s 8(1) of the Commercial Arbitration Act 2012 (WA)?
Answer: No
Category: B
Representation:
Counsel:
| First Applicant | : | In Person |
| Second Applicant | : | In Person |
| Respondent | : | Mr W Vogt |
| Amicus Curiae | : | Mr S J Cobbett |
Solicitors:
| First Applicant | : | N/A |
| Second Applicant | : | N/A |
| Respondent | : | Vogt Legal |
| Amicus Curiae | : | State Solicitor's Office |
Case(s) referred to in decision(s):
C & J Clark Ltd v Inland Revenue Commissioners [1973] 2 All ER 513
Caltex Oil (Australia) Pty Ltd v Best [1990] HCA 53
Deshmukh and Distinctive Building Services Pty Ltd [2024] WASAT 15
Felmeri Builders and Developers Pty Ltd v Tonway Pty Ltd [2023] SASC 54
Henderson and Aintree Holdings Pty Ltd [2021] WASAT 113
Jones v Metropolitan Meat Industry Board (1925) 37 CLR 252
Kulowall Construction Pty Ltd v Chellem [2023] WASC 140
Mercedes Group Pty Ltd (Trading As Zorzi Builders) -v- Cooah Investments Pty Ltd (As Trustee For the Cooah Trust) [2025] WASC 361
Mohammadi v Bethune [2018] WASCA 98
Pipeline Services WA Pty Ltd v ATCO Gas Australia Pty Ltd [2014] WASC 10
Pipeline Services WA Pty Ltd v ATCO Gas Australia Pty Ltd [2014] WASC 10 (S)
Shakur and Aintree Holding Pty Ltd T/A Beaumonde Homes [2015] WASAT 12
The Shop, Distribution and Allied Employees' Association of Western Australia v Williams [2005] WASCA 155
Tianqi Lithium Kwinana Pty Ltd v MSP Engineering Pty Ltd [No 2] [2020] WASCA 201
Westport Insurance Corporation v Gordian Runoff Ltd [2011] HCA 37 (2011) 244 CLR 239
REASONS FOR DECISION OF THE TRIBUNAL:
Introduction
For convenience, the Tribunal in this decision will refer to the applicants Patrick Joseph Martin Carlin and Ellen Ruth Carlin as the owners, to the respondent Southern Built Homes Pty Ltd as the builder and to the amicus curiae as the amicus.
At an early stage in this proceeding the builder questioned whether the Tribunal is possessed of jurisdiction to determine this proceeding, which relates to a single Home Building Work Contract complaint (HBWC complaint) referred by the Building Commissioner to the Tribunal. The builder requested the Tribunal determine, as a preliminary issue, whether it was possessed of jurisdiction.
On 12 February Senior Member Le Miere ordered the following questions are to be determined by the Tribunal as a preliminary issue:
(1)(a)Is clause 18(a) of the Contract between the parties (Contract) an arbitration agreement for the purposes of s 7(1) of the Commercial Arbitration Act 2012 (WA)?
(1)(b)If the answer to question (a) is yes:
(i)Is the proceeding before the Tribunal 'a matter which is the subject of an arbitration agreement' for the purposes of s 8(1) of the Commercial Arbitration Act 2012 (WA)?
(ii)Is cl 18(a) of the Contract null and void, inoperative or incapable of being performed for the purposes of s 8(1) of the Commercial Arbitration Act 2012 (WA) because it allows the parties to contract out of their statutory rights under the Building Services (Complaint Resolution and Administration) Act 2011 (WA) or for any other reason?
(c)In all the circumstances, is the Tribunal required to refer the parties to arbitration pursuant to s 8(1) of the Commercial Arbitration Act 2012 (WA)?
Ultimately, the answer to the preliminary issue is a matter of the proper construction of clause 18(a) of the contract (clause 18(a)) and s 28 of the Home Building Contracts Act 1991 (WA) (HBC Act).
Clause 18 is in the following terms:
18.Disputes
(a)If any dispute, disagreement or difference arises between the Owner and the Builder at any time relating to this Contract then subject to the rights of either party (or their successors) to apply to the Building Commissioner or State Administrative Tribunal or any other relevant Statutory Authority, either party shall give to the other notice of such dispute, disagreement or difference and at the expiration of FIVE (5) working days thereafter and in the absence of any settlement the same shall be referred to:
(i)a single mediator appointed by mutual consent; or
(ii)a single arbitrator appointed by mutual consent; or
(iii)in the event that neither (i) nor (ii) are satisfied within FIVE (5) working days, or mediation is not successful, a single arbitrator shall be appointed by the President or his or her nominee of Housing Industry Association Limited (Western Australian Region) provided that such arbitrator shall be a graded arbitrator approved by the institute of Arbitrators Western Australian Chapter.
(b)The conduct of the Arbitrator shall be in accordance with and subject to the provisions of the Commercial Arbitration Act 1985 and the decision of the single arbitrator appointed shall be final. The rights and obligations of the parties under this Contract shall be modified only to the extent made necessary by such arbitration.[1]
(c)This Contract and the parties' rights and obligations under this Contract shall in all respects be governed by the laws of the State of Western Australia and the parties hereto irrevocably submit themselves to the exclusive jurisdiction of the Courts of the said State.
[1] Nothing turns on the reference in clause 18(b) to the Commercial Arbitration Act 1985 (WA) rather than to the Commercial Arbitration Act 2012 (WA): see s 43(1)(b) CA Act.
Section 28 of the HBC Act is in the following terms:
28.Contracting out prohibited
(1)An agreement or arrangement that purports to exclude or restrict the operation of any provision of this Act or to modify any such provision to the disadvantage of an owner is to that extent void.
(2)A purported waiver of a right conferred by or under this Act is void.
(3)A person must not enter into any agreement or arrangement with intent either directly or indirectly to defeat, evade or prevent the operation of this Act.
Penalty: $10 000.
Principles of construction of an arbitration clause within a contract
The principles that apply to the construction of contracts are well settled.
In Electricity Generation and Retail Corporation t/as Synergy v EIT Kwinana Partner Pty Ltd the Court of Appeal stated these principles at [230], which in summary are:
(1)The construction of a contract involves a determination of the meaning of the words of the contract by reference to its text, context and purpose;
(2)Ascertaining the meaning of terms in an instrument requires a determination of what a reasonable person would have understood those terms to mean; and
(3)The general principle applicable to the construction of commercial contracts is that they should be given a businesslike interpretation.
In addition, some special principles apply to the construction of a contractual arbitration agreement.
In Pipeline Services WA Pty Ltd v ATCO Gas Australia Pty Ltd,[2] his Honour Martin CJ said:
44Nevertheless, in construing the language used by the parties in relation to an arbitration agreement, reference can and should be made to the authorities in Australia and in other comparable jurisdictions which establish that generally courts should adopt a broad, liberal and flexible approach to the construction of such agreements and should favour a construction which provides a single forum for the adjudication of all disputes arising from or in connection with that agreement.
(Citations omitted)
[2] Pipeline Services WA Pty Ltd v ATCO Gas Australia Pty Ltd [2014] WASC 10.
His Honour also observed in Pipeline Services WA Pty Ltd v ATCO Gas Australia Pty Ltd:[3]
19Second, at least since the enactment of the 2012 Act, the object and purpose evinced by the legislation of this State relating to commercial arbitration accords with that evinced in the legislation of the Commonwealth relating to commercial arbitration (International Arbitration Act), and requires the courts to support and enforce arbitration agreements …
[3] Pipeline Services WA Pty Ltd v ATCO Gas Australia Pty Ltd [2014] WASC 10 (S) [19].
Principles of construction of a statute
The principles that apply to the construction of statutes are also well settled.
In Mohammadi v Bethune the Court of Appeal stated these principles at [31] to [36] which in summary are:[4]
(1)Statutory construction requires attention to the text, context and purpose of the Act. So as to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute;
(2)The objective discernment of the statutory purpose is integral to contextual construction;
(3)Discernment of statutory purpose is particularly significant in cases, commonly encountered, where the constructional choice presented is from a range of potential meanings;
(4)The material provisions of the Act must be understood, if possible, as parts of a coherent whole; and
(5)Statutory texts enacted by the same legislature are to be construed, so far as possible, to operate in harmony and not in conflict.
[4] Mohammadi v Bethune [2018] WASCA 98 [31] - [36].
Background
The following facts and issues are not in dispute in this hearing of the preliminary issue:
(1)On 22 June 2021, the parties entered into a binding Home Building Work Contract in the form of a standard Housing Industry Association (HIA) 'WA HBCA Lump Sum Building Contract (Form 16K - June 2019)' (the contract), for the construction of a single storey residence at a Lot at Quinninup, (the Lot). The contract price (exclusive of variations) is $382,641.05.
(2)As a consequence of the contract price being under $500,000 the contract is a 'home building work contract': s 3 of the HBC Act and reg 2A of the Home Building Contracts Regulations 1992 (WA).
(3)On 19 May 2022, the builder issued 'variation 8' to the owners (VO8). VO8 claimed a price increase of $19,000. Shortly after receiving VO8 the owners signed the variation and then transferred $19,000 to the builder.
(4)On 30 August 2022, the home reached practical completion and the owners have been residing at the home since about that date.
(5)On 17 June 2024, the owners lodged a Home Building Work Contract complaint (HBWC complaint) with the Building Commissioner. This HBWC complaint comprised one item of complaint alleging the builder is in breach of the contract under clause 12(b)(ii) of the contract and that the owners signed VO8 'under duress'. The remedy sought by the owners is an order requiring the builder repay them $19,000.
(6)Clause 12(b) of the contract is in the following terms:[5]
[5] Clause 12(b) of the contract reflects s 8 of the HBC Act.
The Builder shall be entitled to vary all or any of the Works or Contract Documents made necessary by:
(i)any written direction lawfully given by a building surveyor or other person acting under a written law; or
(ii)circumstances that could not reasonably have been foreseen by the Builder at the time when this Contract was entered into if the Builder gives to the Owner, within the time specified in Clause 12(c), a statement setting out the reason for, and the cost to be incurred on account of, the variation and a copy of any direction referred to in Clause 12(b)(i) PROVIDED THAT Clause 12(b)(ii) shall not enable the Builder to make any variation by reason only of an increase in the costs of labour (including related overhead expenses) or materials or both, to be incurred by the Builder.
(7)On 15 July 2024, the builder through its solicitors, wrote to the Building Commissioner contending the complaint is outside of the jurisdiction of the Building Commission due to the builder's election to refer this dispute to arbitration under clause 18(a). The builder's solicitor requested the Building Commission make an order staying the complaint proceeding and referring the parties to arbitration.
(8)On 18 July 2024 the Building Commissioner referred the complaint to this Tribunal for determination, as it considered it had no power to refer a complaint to arbitration.
(9)On 2 September 2024 the builder through its solicitors lodged an 'Application for Determination of Preliminary Issue' with the Tribunal. The preliminary issue is stated in this application as:
(a)whether the Complaint should be stayed and referred to Arbitration pursuant to s 8 of the Commercial Arbitration Act 2012 (CA Act); or,
(b)dismissed pursuant to s 47(1)(a) or s 47(1)(b) of the State Administrative Tribunal Act 2004 (WA), on the basis that the proceeding is misconceived or lacking in substance, or being used for an improper purpose, alternatively, the Tribunal has no jurisdiction to hear and determine the Complaint.
(10)On 12 February 2025, as observed above, Senior Member Le Miere made an order this Tribunal is to determine a certain preliminary issue.
(11)On 11 April 2025 the Attorney General for Western Australia was given leave to appear in this proceeding as an amicus curiae.
On 26 May 2025, the hearing of the preliminary issue was held.
At the hearing of the preliminary issue the Tribunal heard oral submissions from the builder, the owners and the amicus. In addition, the Tribunal has before it:
(1)The builder's bundle of documents lodged on 4 March 2025.
(2)The builder's Statement of Issues, Facts and Contentions lodged on 4 March 2025.
(3)The owners' bundle of documents lodged on 17 March 2025.
(4)The owners' Statement of Issues, Facts and Contentions lodged on17 March 2025.
(5)The amicus' Submissions lodged on 2 May 2025.
(6)The builder's Further Submissions on Preliminary Issue lodged on 6 June 2025.
(7)The amicus' Further Submissions lodged on 13 June 2025.
(8)The owners' Responsive Submissions lodged on 13 June 2025.
Without intending any disrespect to the owners, who are not represented, it is clear that their written submissions are directed to the merits of the complaint item the Building Commissioner referred to the Tribunal, rather than to the preliminary issue that was heard by the Tribunal on 26 May 2025. Accordingly, save for noting the owners reject the builder's position on the preliminary issue and wish to have the Tribunal determine their complaint, the Tribunal will not again refer to the owners' submissions in these reasons.
On 18 June 2025, after receiving the parties' further submissions, the Tribunal reserved its decision.
The builder's arguments on the preliminary issue
The builder, in summary, contends that on proper construction:
(1)Clause 18(a) of the contract provides that either party may, under this clause, give the other notice of 'any dispute, disagreement or difference between' them relating to the contract, even if the dispute may also be able to be a HBWC complaint;
(2)In the absence of settlement, the notifying party may then contractually oblige the parties to arbitrate their dispute;
(3)Once the notifying party has given notice under clause 18(a) the other party is unable to exercise their statutory right to make or to maintain a HBWC complaint that in substance might properly also be a dispute under the contract; and
(4)If the other party has previously made or does later make a HBWC complaint to the Building Commissioner which the Building Commissioner has or does then refer to the Tribunal, the Tribunal is, under s 8(1) of the CA Act, required to stay or to dismiss the referred HBWC complaint.
The builder says that this is the proper construction of clause 18(a) because:
(1)The substance of the HBWC complaint in this proceeding might properly be either the subject of a HBWC complaint within the meaning of the HBC Act as well as the substance of a 'dispute, disagreement or difference arise[n] between the Owner and the Builder … relating to this Contract' (collectively a dispute under the contract);
(2)This Tribunal is a 'court' for the purposes of s 8(1) of the CA Act;
(3)A party seeking to refer a dispute under the contract to arbitration in accordance with s 8(1) of the CA Act must establish the existence of an 'arbitration agreement';
(4)An 'arbitration agreement' is defined in s 7(1) of the CA Act to mean 'an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not', which under s 7(2) may take the form of a separate written agreement, or, alternatively, a clause in a contract;
(5)Clause 18(a) is an 'arbitration agreement' because it is a clause in a contract by which the parties contractually agree to refer any dispute under the contract to either a single arbitrator appointed by the consent of the parties, or, failing which, an arbitrator appointed by the relevant nominating authority.
(6)The arbitration agreement applies to any dispute under the contract as, on proper construction, the meaning of the words subject to in clause 18(a) is synonymous with the word notwithstanding;
(7)Clause 18(a) does not offend against the prohibition in s 28(1) of the HBC Act on 'contracting out' of the provisions of the HBC Act; and
(8)Section 8(1) of the CA Act requires the Tribunal to give effect to this arbitration agreement by referring the parties' dispute as to VO8 to arbitration and then staying this proceeding.
The builder says this construction of clause 18(a) accords with the construction of (a near identical) clause considered in Shakur and Aintree Holding Pty Ltd T/A Beaumonde Homes [2015] WASAT 12 and Henderson and Aintree Holdings Pty Ltd [2021] WASAT 113, which it says this Tribunal should follow. The clause considered in those cases was a clause identical to clause 18(a) except that it substituted the word notwithstanding for the words subject to.
For these reasons the builder submits the Tribunal should answer the preliminary issue in the following way:
(1)(a)Yes.
(1)(b)(i)Yes.
(1)(b)(ii)No.
(c)Yes.
The builder consequently seeks orders from the Tribunal that this proceeding is referred to arbitration under s 8(1) of the CA Act and that the proceeding is then stayed.
The amicus' arguments on the preliminary issue
With respect to the builder's contentions, the amicus says:
(1)It agrees with the builder that the substance of the HBWC complaint in this proceeding might properly also be a dispute under the contract;
(2)It agrees with the builder this Tribunal is a 'court' for the purposes of s 8(1) of the CA Act;
(3)It agrees with the builder that a party seeking to refer a dispute to arbitration in accordance with s 8(1) of the CA Act must first establish the existence of an 'arbitration agreement';
(4)It agrees with the builder that an 'arbitration agreement' is defined in s 7(1) of the CA Act;
(5)While it does agree with the builder that clause 18(a) is an 'arbitration agreement', it disagrees with the builder that it is an arbitration agreement by which the parties contractually agree to refer any dispute under the contract to arbitration. Rather, the amicus says this arbitration agreement is an agreement by the parties to refer some but not all of their disputes under the contract to arbitration. The amicus says that on proper construction clause 18(a) has no application to a dispute under the contract which in substance might also be a HBWC complaint, as is the case in this proceeding. This is because clause 18(a) is expressed to be subject to the rights of either party (or their successors) to apply to the Building Commissioner or State Administrative Tribunal or any other relevant Statutory Authority. The effect of these words is, it says, that clause 18(a) only applies to disputes which, for the purposes of this proceeding, is a contractual dispute which could not also be the subject of a HBWC complaint. Consequently, as the substance of this proceeding might be either a HBWC complaint or a dispute under the contract, clause 18(a) is not an arbitration agreement under s 8(1) of the CA Act for the purposes of this proceeding;
(6)It says if, contrary to its submissions above, the Tribunal finds that clause 18(a) is an arbitration agreement with respect to the substance of a dispute which might be either a HBWC complaint or a dispute under the contract, then the clause would under s 28(1) of the HBC Act purport to exclude or restrict the operation of s 17 to the disadvantage of the owners or would under s 28(2) be a purported waiver of a right conferred by or under the HBC Act. In doing either of these things, clause 18(a) would offend against the prohibition in s 28(1) and s 28(2) of the HBC Act on 'contracting out' of these provisions and to the extent it did this it would be void; and
(7)While it agrees with the builder that s 8(1) of the CA Act requires the Tribunal to give effect to an arbitration agreement by referring the parties' dispute to arbitration and then staying the proceeding, it says that as clause 18(a) has no application to the HBWC complaint which is the subject of this proceeding, it is not a dispute which falls within an arbitration agreement for the purposes of s 8(1) of the CA Act.
For these reasons the builder submits the Tribunal should answer the preliminary issue in the following way:
(1)(a)Yes.
(1)(b)(i)No.
(1)(b)(ii)As the answer to (b)(i) is 'No', the Tribunal is not required to answer this question. However, had the answer to (b)(i) been 'Yes', then the answer to this question would be 'Yes'.
(1)(c)No.
The effect of the amicus' contentions is that it says the Tribunal does possess jurisdiction to determine the applicants' HBWC complaint.
Consideration
It is not in dispute and the Tribunal finds:
(1)The owners HBWC complaint is also in substance a claim under the contract that the respondent is in breach of clause 12(b)(ii) of the contract;
(2)The Tribunal is a 'court' for the purposes of s 8(1) of the CA Act: see Shakur [5] to [18]and Henderson [28] to [29];
(3)A party seeking to refer a dispute to arbitration in accordance with s 8(1) of the CA Act must first establish the existence of an 'arbitration agreement': s 8(1) of the CA Act; and
(4)An 'arbitration agreement' is defined in s 7(1) of the CA Act.
In the Tribunal's view, the proper construction of clause 18(a) turns on the meaning of the words subject to within the clause.
The builder contends it is 'possible', when reading the words subject to in a 'broad, liberal and flexible' way, to find they bear the same meaning as the word notwithstanding.
The builder says that to give these words this meaning has the consequence that the right to make a HBWC complaint is 'in addition to' the right under the arbitration agreement to seek a referral of the substance of a dispute to an arbitration.
While the builder accepts it is possible to also read these words as excluding from the arbitration agreement disputes under the contract which may be a HBWC complaint, it says that its construction is the proper construction as it yields 'greater consistency with the principles of construction', including, those specific principles which relate to the interpretation of arbitration clauses.
The builder does not refer the Tribunal to any dictionary definition or authority in support of its contention the words subject to and notwithstanding have similar or identical meanings.
The amicus begins its argument by, correctly, observing that s 7(1) of the CA Act permits an arbitration agreement to apply to either all disputes between the parties or only to certain disputes between them.
The amicus then contends clause 18(a) is an arbitration agreement that does not apply to all disputes between the parties, but one which applies only to certain disputes.
Expressed in another way, the amicus says clause 18(a) is an arbitration agreement to refer all disputes under the contract to arbitration except, due to the words subject to, a dispute which in substance may also be the subject of a party's statutory right to 'apply to the Building Commissioner or State Administrative Tribunal or any other relevant Statutory Authority'. The amicus says the substance of the HBWC complaint in this proceeding is made by the owners pursuant to their statutory right under s 17 of the HBC Act to make a complaint to the Building Commissioner.
The amicus contends the words in clause 18(a) before the words subject to (being words which refer to the right of a party to require a dispute under the contract be referred to arbitration) are the subservient provision in the clause, and the words after are the dominant provision (the right to apply to the Building Commissioner, the State Administrative Tribunal or any other relevant Statutory Authority), with the effect that the subservient provision operates only to the extent it is not inconsistent with the dominant provision.
The amicus refers to C & J Clark Ltd v Inland Revenue Commissioners [1973] 2 All ER 513, 520 cited in The Shop, Distribution and Allied Employees' Association of Western Australia v Williams [2005] WASCA 155, [15], in support of this contention. Megarry J, in C & J Clark Ltd, when considering the meaning of a section of taxation legislation that began with the words 'Subject to the provisions of this section …', stated at [911]:
In my judgment, the phrase 'subject to' is a simple provision which merely subjects the provisions of the subject subsections to the provisions of the master subsections. Where there is no clash, the phrase does nothing: if there is collision, the phrase shows what is to prevail[.]
To apply the meaning given by C & J Clark Ltd to these words has the effect, the amicus says, that clause 18(a), provides that where the substance of a dispute may be either a dispute under the contract or a HBWC complaint, the right of a party to make a HBWC complaint is to prevail over the right of the other party to refer a dispute under the contract to arbitration.
The Tribunal will now apply the principles of contractual construction set out by the Court of Appeal in Electricity Generation.
Firstly, the Tribunal has had regard to the text, context and purpose of the contract, starting with the possible meanings that the words subject to can objectively bear.
The Tribunal observes the words subject to can have different meanings dependent on the context of the expression in which the words are placed. The Macquarie Dictionary Online provides five examples of the meaning of the words subject to:
subject to,
a.open or exposed to: *of all the hundred-odd ethnic groups in Australia, only we and the British are subject to criticism; our elites in the universities and the media pour it upon us unceasingly, while exempting all the others as if they were disabled children. - LES MURRAY, 1999.
b.dependent or conditional upon: *Jabiru is also part of Kakadu National Park and so its 'development' is subject to a Town Plan and to the park's Plan of Management. - M.A. HILL AND A.J. PRESS, 1994.
c.under the domination of: subject to colonial rule.
d.Rare under the necessity of undergoing something: subject to death.
e.inclined towards having: subject to headaches.
The meaning contended by the builder falls within none of these meanings.
The meaning contended by the amicus falls within the second of these meanings, being 'dependent or conditional upon'. This also accords with the judicially approved construction of the words subject to in Jones v Metropolitan Meat Industry Board (1925) 37 CLR 252, where Isaacs J said:
The words "subject to this Act" mean, in my opinion, if not inconsistent with or repugnant to any provision of the Act. (Emphasis added)
The Macquarie Dictionary Online defines notwithstanding through three examples, but with a single meaning:
Preposition 1. without being withstood or prevented by; in spite of.
– adverb 2. nevertheless; yet (used after the statement it modifies).
– conjunction 3. in spite of the fact that; although.
Second, the Tribunal has considered the commercial purpose of clause 18(a) and in doing so it has had regard to the principles set out by his Honour Martin CJ in Pipeline Services WA Pty Ltd, which is to the effect that this Tribunal should adopt a broad, liberal and flexible approach to the construction of the clause.
However, even on a 'broad, liberal and flexible' approach to the meaning of the words subject to in the context of clause 18(a) as an arbitration agreement with respect to some disputes, these words cannot bear the meaning that the builder contends. This because the literal meaning of the word notwithstanding are not just different, but they are opposite to, the literal meaning of the words subject to.
The proper meaning of the words subject to in clause 18(a) can be illustrated by the decisions of this Tribunal, which the builder urges the Tribunal to follow, in Shakur and Henderson. Both of these decisions were concerned with the construction of clause 16, which is an arbitration agreement within a standard HIA home building contract with a contract price above $500,000.
This HIA home building contract is 'expressed in the descriptive title to apply where 'the provisions of the Home Building Contracts Act 1991 (WA) do not apply'.[6] This is because a home building contract with a contract price being above $500,000 is not 'home building work contract' for the purposes of the HBC Act: s 3 of the HBC Act and reg 2A.
[6] Henderson at [9].
Clause 16(a) of the contract considered in Shakur and Henderson is identical with clause 18(a) except that the word notwithstanding is replaced the words subject to.
The meaning of the word notwithstanding as meaning in spite of or regardless of is explained in Henderson as follows:
23The Tribunal in this proceeding concludes that, as clause 16 expressly provides that 'notwithstanding' the parties having the recognised statutory right to proceed before the Commissioner and the Tribunal, the issue of a notice of a dispute by either party about the subject matter referred to in clause 16 enlivens the obligation imposed by clause 16 to resolve that dispute by an arbitration process. The reference to the statutory right of resolution is to acknowledge that the parties agree to the arbitral process about a very wide subject matter with full knowledge and regardless of their statutory right to proceed before the Commissioner and Tribunal. (Emphasis added)
Therefore, Shakur and Henderson are clearly distinguishable and do not support the builder's contention that the words subject to have the same meaning as the word notwithstanding.
The effect of this is the Tribunal finds on proper construction that clause 18(a) is an arbitration agreement which has application to any dispute under the contract except, relevantly, to those disputes under the contract which may also be the subject of a parties statutory right under s 17 of the HBC Act to make a HBWC complaint to the Building Commissioner. That is, in the language of the Court of Appeal in Tianqi, clause 18(a) 'operates to preserve rights to curial relief notwithstanding the width of the disputes otherwise referable to arbitration'. As a consequence, the parties have not 'submitted to arbitration with the meaning of s 7(1) of the Arbitration Act the matters to which they have reserved their rights of recourse to the court'.
The Tribunal therefore finds it does possess jurisdiction to determine the applicants' HBWC complaint and it is not required to refer the substance of their HBWC complaint to arbitration as a dispute under the contract pursuant to s 8(1) of the CA Act.
However, in case the Tribunal is wrong and clause 18(a) is an arbitration agreement which has application to any dispute under the contract including a dispute which in substance might be the subject of a HBWC complaint to the Building Commissioner, the Tribunal will now consider whether the clause is null and void, inoperative or incapable of being performed because it allows the parties to contract out of their statutory rights under the BSCRA Act.
The builder advances two positions with respect to this issue.
The builder's primary position is that clause 18(a) does not prevent a party from exercising its statutory rights to apply to the Building Commissioner, the State Administrative Tribunal or any other relevant Statutory Authority, whether this be under the HBC Act or the BSCRA Act. This is because, the builder says clause 18(a) permits a party to make a complaint to the Building Commissioner even if the substance of it is also referred to arbitration as a dispute under the contract.
The Tribunal understands the logical conclusion of this argument to be that the builder is contending that even though a party is permitted to exercise a statutory right such as to make a HBWC complaint to the Building Commissioner which is then properly referred to this Tribunal, the Tribunal is not then permitted to determine the complaint but must stay it and refer the substance of the dispute to arbitration.
The Tribunal considers this submission is directly contrary to statements made by the Court of Appeal in Tianqi Lithium Kwinana Pty Ltd v MSP Engineering Pty Ltd [No 2] [2020] WASCA 201 at [76] that s 8 of the CA Act applies to a matter that an agreement requires is only to be submitted to arbitration, and at [96], that a right to initiate a proceeding in a court contemplates that the dispute will be resolved by the court.[7]
[7] See also Blue J in Felmeri Builders and Developers Pty Ltd v Tonway Pty Ltd [2023] SASC 54, [154] and [174].
The Tribunal for these reasons does not accept the builder's primary position on this question.
The builder's secondary position is that, even if the Tribunal is satisfied that clause 18(a) does prevent the parties from exercising a statutory right, it does not follow that clause 18(a) is to that extent null and void, inoperable or unenforceable. The builder contends that this is because it says a party on whom a statutory right is conferred may waive or renounce that right unless it would be contrary to the statute to do so. The builder says the relevant statutory rights the Tribunal should consider are the rights conferred by the CA Act, and this Act does not contain any provision that would prevent a party from waiving or renouncing a right under that Act.
The builder then says that while s 28(2) of the HBC Act on its face appears to contain a provision that would prevent a party from waiving or renouncing a right conferred by the HBC Act, this section is circumscribed by s 29(1) of the HBC Act, which is in the following terms:
29.Other laws not affected
(1)The provisions of this Act are in addition to and do not derogate from the provisions of any other written law.
(2)This Act does not limit or derogate from any civil remedy at law or in equity.
The builder says the result of s 29(1) HBC Act is, firstly, that s 28(2) of the HBC Act should not be constructed in a way which would undermine the effect of s 8(1) of the CA Act. The builder says that to do this would 'elevate' s 28(2) of the HBC Act above s 8(1) of the CA Act.
This position fails to recognise that the right of a party to apply to the Building Commissioner, the State Administrative Tribunal and any other relevant Statutory Authority are rights which are conferred, at least to the extent it is necessary to consider in this proceeding, by the HBC Act and the BSCRA Act and not by the CA Act. It also fails to recognise that s 28(2) of the HBC Act is a provision that does prevent a party from waiving or renouncing a right under that Act.
Further, it also fails to recognise that waiver and renunciation of rights conferred by the CA Act are expressly permitted under s 1(5) of the CA Act, which is in the following terms:
1.Scope of application (cf. Model Law Art 1)
…
(5)This Act does not affect any other Act by virtue of which certain disputes may not be submitted to arbitration or may be submitted to arbitration only according to provisions other than those of this Act.
…
The amicus directed the Tribunal to Caltex Oil (Australia) Pty Ltd v Best [1990] HCA 53 where the plurality observed at 522 - 523:
5.… But contracting out of a statute is not limited to cases in which a party simply foregoes or waives a benefit directly conferred upon the party by the statute. Contracting out may take many forms. They will vary with the nature, subject-matter and object or purpose of the statute, as well as the means selected with a view to escaping from its provisions or its operation.
6.An express statutory prohibition against contracting out renders void or inoperative contractual provisions which are inconsistent with the statute. Inconsistency between contract and statute is not confined to literal conflicts or collisions between the contractual provisions and the statutory provisions. Inconsistency in this context arises whenever there is a conflict between a contractual provision or the operation of such a provision and the purpose or policy of the statute. So, if the operation of a contractual provision defeats or circumvents the statutory purpose or policy, then the provision is inconsistent in the relevant sense and falls within the injunction against contracting out.
…
8.The critical question then is whether the Act, on its true construction, manifests a purpose or policy which is at odds with the right which cl.17.4 purports to confer on Caltex …
As Senior Member Aitken observed in Deshmukh and Distinctive Building Services Pty Ltd [2024] WASAT 15, in Kulowall Construction Pty Ltd v Chellem [2023] WASC 140 [20] at [44] and [45], Tottle J agreed with the observation made by the Tribunal in Owners of Island apartments Strata Plan 5297 and Pindan Pty Ltd [2017] WASAT 25 that the BSCRA Act is at its core consumer legislation.
As Blue J also observed in Felmeri Builders and Developers Pty Ltd v Tonway Pty Ltd:
107The [South Australian] Building Act proceeds on the premise that there will be inequality in bargaining power as between building contractor and owner, such that the building contractor is able to dictate the terms of the building contract and, for example, require the adoption of standard terms. If there is inequality of bargaining power, the building contractor would be in a position to dictate terms of the contract relating to alternative dispute resolution favourable to the contractor …
The Tribunal therefore finds that when paying attention to the text, context and the consumer purpose of the HBC Act that s 28(2) should be construed as protecting the right of an owner to have recourse to the Tribunal for remedies under the Act.
The Tribunal therefore also finds s 28(2) of the HBC Act has the effect that if clause 18(a) purports to exclude or restrict a statutory right to make a HBWC complaint to the Building Commissioner or constituted a purported waiver of this right, then clause 18(a) would be void to the extent it purports to do so.
Finally, the Tribunal notes the builder's arguments with respect to s 28(1) of the HBC Act that referral of a dispute to arbitration is for all parties preferable to determination by this Tribunal. This argument though does not take into account the very different costs regime that applies to arbitration and that which applies to disputes determined by this Tribunal. For example, under s 33B of the CA Act costs are 'to be in the discretion of the arbitral tribunal' whereas under s 49 of the BSCRA Act 'it is well understood, costs do not "follow the event" in Tribunal proceedings and the broad discretion conferred on the Tribunal is to be properly exercised by taking into account relevant consideration': Deshmukh [39].[8] Neither does it take into account the need to pay the arbitrator's fee when a dispute is referred to arbitration.
[8] See also the 'the negative observations of Heydon J on the 'attractions of arbitration' …: see Westport Insurance Corporation v Gordian Runoff Ltd [2011] HCA 37 (2011) 244 CLR 239 [111]' as cited by Howard J in Mercedes Group Pty Ltd (Trading As Zorzi Builders) -v- Cooah Investments Pty Ltd (As Trustee For the Cooah Trust) [2025] WASC 361.
As Blue J observed in Felmeri:
95By contrast with [a] Court, arbitration has very different characteristics. An arbitrator need not be a legal practitioner and indeed does not need to have any qualifications, expertise or experience. There are no legislative constraints on fees charged by the arbitrator or legal costs that may be awarded by an arbitrator. There is no general right of appeal against an award by an arbitrator.
(Citations omitted)
The Tribunal therefore also finds that when paying attention to the text, context and the consumer purpose of the HBC Act that s 28(1) of the HBC Act has the effect that if that if clause 18(a) does exclude, restrict or modify a right to have recourse to the Tribunal for remedies under the Act that this is to the detriment of the owners and so clause 18(a) would be void to the extent it purports to do so.
For these reasons, the Tribunal will determine the preliminary issue as follows:
(1)(a)Answer: Yes.
(b)(i)Answer: No.
(b)(ii)As the answer to (b)(i) is 'No', the Tribunal is not required to answer this question. However, had the answer to (b)(i) been 'Yes', then the answer to this question would be 'Yes'.
(1)(c)Answer: No.
The proceeding is now to be listed for a directions hearing before Senior Member Le Miere at a date and time to be determined by the Tribunal.
Orders
The Tribunal orders:
1.The preliminary issue is answered by the Tribunal deciding:
(1)(a)Is clause 18(a) of the Contract between the parties (Contract) an arbitration agreement for the purposes of s 7(1) of the Commercial Arbitration Act 2012 (WA)?
Answer:Yes.
(1)(b)If the answer to question (a) is yes:
(i)is the proceeding before the Tribunal 'a matter which is the subject of an arbitration agreement' for the purposes of s 8(1) of the Commercial Arbitration Act 2012 (WA)?
Answer: No.
(ii)is clause 18(a) of the Contract null and void, inoperative or incapable of being performed for the purposes of s 8(1) of the Commercial Arbitration Act 2012 (WA) because it allows the parties to contract out of their statutory rights under the Building Services (Complaint Resolution and Administration) Act 2011 (WA) or for any other reason?
Answer:As the answer to (b)(i) is 'No', the Tribunal is not required to answer this question. However, had the answer to (b)(i) been 'Yes', then the answer to this question would then be 'Yes'.
(1)(c)In all the circumstances, is the Tribunal required to refer the parties to arbitration pursuant to s 8(1) of the Commercial Arbitration Act 2012 (WA)?
Answer:No.
2.The proceeding is to be listed for a directions hearing before Senior Member Le Miere at a date and time to be determined by the Tribunal.
I certify that the preceding paragraph(s) comprise the reasons for decision of the State Administrative Tribunal.
MR E Cade, MEMBER
18 SEPTEMBER 2025
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