GHETIA and BEYOND BUILDERS PTY LTD

[2024] WASAT 17

JURISDICTION     :   STATE ADMINISTRATIVE TRIBUNAL

ACT: BUILDING SERVICES (COMPLAINT RESOLUTION AND ADMINISTRATION) ACT 2011 (WA)

CITATION:   GHETIA and BEYOND BUILDERS PTY LTD [2024] WASAT 17

MEMBER:   MR E CADE, MEMBER

HEARD:   5 FEBRUARY 2024

DELIVERED          :   20 MARCH 2024

FILE NO/S:   CC 756 of 2023

BETWEEN:   MILANKUMAR JAYANTILAL GHETIA

Applicant

AND

BEYOND BUILDERS PTY LTD

Respondent

Catchwords:

Home building work contract complaint - Home building work remedy order - Whether stage progress payment is not payable by owner and should be repaid by builder - Whether price variation claimed by builder should be disallowed - Whether requiring builder to reach practical completion is an order which requires specified work to be performed - Damages for delay in completion of home - Discretion

Legislation:

Building Services (Complaint Resolution and Administration) Act 2011 (WA), s 5, s 5(1), s 5(2), s 6(3)(b), s 7(1)(a), s 11(1)(c), s 12, s 17, s 38, s 41, s 41(2), s 41(2)(a)(ii), s 41(2)(a)(iv), s 41(2)(c), s 41(2)(d)(i), s 43, s 43(1), s 43(2)(a)
Building Services (Complaint Resolution and Administration) Regulations 2011 (WA), reg 6, reg 6(2)
Home Building Contracts Act 1991 (WA), s 7, s 7(3), s 8, s 8(1)(b), s 8(3), s 8(3)(b), s 8(4), s 10, s 10(1)(b), s 10(3), s 13, s 17, s 17(a), s 17(a)(i), s 27, Pt 2
State Administrative Tribunal Act 2004 (WA), s 32(6)(c), s 55

Result:

Application allowed in part

Category:    B

Representation:

Counsel:

Applicant	:	In Person
Respondent	:	In Person

Solicitors:

Applicant	:	N/A
Respondent	:	N/A

Case(s) referred to in decision(s):

Alison Louise Lobbe atf Lobbe Newman Trust and Kelpie Endeavours Pty Ltd atf Testa Rossa Family Trust and Quality Builders Pty Ltd [2014] WASAT 110

Byham and Afra Constructions Pty Ltd [2014] WASAT 38

Chalakuzhy and Olsen [2017] WASAT 104

Deshmukh and Distinctive Building Services Pty Ltd [2024] WASAT 15

Gemmill Homes Pty Ltd v Sanders [2018] WASC 179

Jetpoint Nominees Pty Ltd and Lee [2021] WASAT 10

Lampman and Afra Constructions Pty Ltd [2014] WASAT 27

Waldron and Afra Construction Pty Ltd [2013] WASAT 207

Yao-Jing Li v Minister for Immigration & Multicultural Affairs (1997) 74 FCR 275

REASONS FOR DECISION OF THE TRIBUNAL:

Introduction

1. These proceedings concern a home building work contract (HBWC) complaint made by the applicant to the Building Commissioner pursuant to s 5(2) of the Building Services (Complaint Resolution and Administration) Act 2011 (WA) (BS(CRA) Act). 

2. The applicant is the owner of the home the subject of the complaint (owner).  The respondent is the builder of the home (builder). 

3. The owner's complaint is that he entered a fixed price HBWC on 15 December 2020 pursuant to which the builder was to construct a new home for the owner, but that after completing part of the roof cover stage the builder suspended work in February 2023 and will not resume work unless the owner agrees to increase the price. 

4. The owner requests the Tribunal make orders (which the Tribunal understood as a request that the Tribunal make HBWC remedy orders pursuant to s 43 of the BS(CRA) Act) that:[1]

   (a)requires the builder to immediately resume building the home and bring it to practical completion within 5 months;[2]

   (b)requires the builder to repay the roof cover stage progress payment[3] on the basis this was not a genuine progress payment;[4]

   (c)requires the builder to pay compensation to the owner for the financial loss[5] caused by the builder's delay in achieving practical completion of the home; and

   (d)disallows a variation claimed by the builder to[6] increase the contract price by $72,000.

   [1] The owner in his complaint to the Building Commission also sought an order compensating him for 'mental and social difficulties' due to the builder's delay in completing the home.  However, he abandoned this claim during his opening submission. 

   [2] The Tribunal has assumed the order is sought pursuant to s 41(2)(a)(ii) or s 41(2)(a)(iv) of the BS(CRA) Act.

   [3] The owner in his opening submissions also claimed interest on this payment on the basis it was wrongly paid to builder, but he abandoned the claim in his closing submissions. 

   [4] The Tribunal has assumed the orders is sought pursuant to s 41(2)(c) of the BS(CRA) Act.

   [5] The Tribunal has assumed the orders is sought pursuant to s 41(2)(d)(i) of the BS(CRA) Act.

   [6] The Tribunal has assumed the orders is sought pursuant to s 7 and s 8 of the HBC and s 41(2)(c) of the BS(CRA) Act.

5. The builder denies that the owner is entitled to any of these orders.

6. The proceeding was listed for final hearing at the Tribunal on 5 February 2024.  The owner elected to give evidence at the final hearing but did not call any witnesses, and the builder neither gave evidence nor called any witnesses.

7. For the reasons which the Tribunal will now give, the orders of the Tribunal in this proceeding are:

   Pursuant to a home building work contract the parties entered on 15 December 2020 the Tribunal, under s 43 of the Building Services (Complaint Resolution and Administration) Act 2011 (WA):

   1.Declares the roof cover stage progress payment is not payable by the applicant and orders that by no later than 19 April 2024 the respondent must pay to the applicant the amount of $31,200.

   2.Order that by no later than 19 April 2024 the respondent must pay compensation to the applicant in the amount of $24,983.

   3.Declares the price increase of $72,000 claimed by the respondent on 17 April 2023 is not payable by the applicant.

   4.The application is otherwise dismissed.

Procedural history

1. These proceedings originated with a notice of complaint containing six complaint items given by the owner to the builder on 17 April 2023.[7] 

   [7] Pursuant to reg 6(2) of the Building Services (Complaint Resolution and Administration) Regulations2011 (WA) (BS(CRA) Regulations) a complainant must, 14 days before making a complaint to the Building Commissioner under s 5(1) or s 5(2) of the BS(CRA) Act, give to a respondent written notice of the proposed complaint together with a reasonable description of the remedy sought by the complainant and the evidence on which the complainant proposes to rely.

2. On 29 May 2023 a delegate of the Building Commissioner referred five of the six complaint items[8] to the Tribunal pursuant to s 11(1)(c) of the BS(CRA) Act for it to deal with pursuant to s 43 of the BS(CRA) Act.[9] 

   [8] The referred items were items 1, 2, 4, 5 and 6.  The delegate of the Building Commission rejected item 3.

   [9] Pursuant to s 12 of the BS(CRA) Act, the Building Commissioner on referring a complaint to this Tribunal does not become a party to the proceeding (unless joined to the proceeding), and the complainant to the Building Commission becomes the applicant in the proceedings before the Tribunal.

3. The five building complaint items referred to the Tribunal are set out in Annexure A.  Alongside each complaint item is the order sought by the owner in his opening submission, as well as the builder's response to the complaint item and to the orders sought.

The proceedings in the Tribunal

1. Prior to the final hearing, the owner, in accordance with orders made by the Tribunal on 23 November 2023, lodged with the Tribunal and gave to the builder his written statement of orders sought and the book of documents on which he intended to rely at the hearing.  In turn the builder lodged with the Tribunal and gave to the owner its written response to the owner's statement and the book of the documents on which it intended to rely at the hearing. 

2. In accordance with its usual practice the Tribunal compiled these documents into a paginated hearing book (HB) which it made available to the parties prior to the final hearing. 

3. At the commencement of the final hearing on 5 February 2024[10] the Tribunal:

   (a)informed the parties that the presiding member was to preside at three final hearings in February 2024, each of which involved an application for HBWC remedy orders against this builder.  The parties were also informed that each hearing would be treated as a separate hearing, and it gave each party an opportunity to make submissions on this issue.  Neither party elected to do so; and

   (b)explained to the parties their right to make opening and closing submissions, to call and give evidence and to examine, cross­examine and re-examine witnesses.[11]

   [10] In addition the Tribunal informed the owner that he bore the burden of proof in these proceedings, in reliance upon Jetpoint Nominees Pty Ltd and Lee [2021] WASAT 10 at [69]: 'Even in proceedings within the Tribunal's original jurisdiction where, like the plaintiff in civil court proceedings, the applicant bears the onus or legal burden of proving their case on a balance of probabilities, and the hearing consequently has an adversarial character, such as building dispute proceedings, as in the original proceeding …'. However, following the final hearing the Tribunal became aware of the observations of AJ Smith (as she then was) in Gemmill Homes Pty Ltd v Sanders[2018] WASC 179 at [123] citing Yao-Jing Li v Minister for Immigration & Multicultural Affairs (1997) 74 FCR 275, 288: 'In administrative proceedings, unless an onus is expressly created by statute or arises by inference from the statute, a party to proceedings does not legally bear an onus of proof of a particular material fact'. The Tribunal was not required to resolve this issue in this proceeding as except for matters relating to the statutory onus in s 10(3) of the HBC Act, nothing in these proceedings turned on whether a party did or did not bear an onus or a legal burden to prove its case or to prove a material fact.

   [11] SAT Act, s 32(6)(c).

4. Pursuant to s 55 of the State Administrative Tribunal Act 2004 (WA) (SAT Act) the Tribunal ordered the removal of pp 164 – 167 and the redaction of paragraphs 19 and 20 at pp 122 and 124 of the HB, as the owner objected to them as they referred to matters discussed at a mediation conference held at this Tribunal.  A redacted version of the HB which did not contain the parties' written statements, or the orders of the Tribunal was, with the consent of the parties, then admitted into evidence as Exhibit 1.

5. In his opening submission the owner tendered a number of emails exchanged between himself and QBE insurance, a Building Inspection Report dated 28 November 2023 and extracts from the owner's Bankwest statement dated 14 December 2023.  The builder, after inspecting each of these documents, consented to them being admitted into evidence on behalf of the owner.  These documents then became Exhibits 2, 3 and 4 respectively.  The documents in Exhibits 1, 2, 3 and 4 then became evidence in the proceeding. 

6. The owner submits that as neither party has terminated the HBWC it remains on foot and the builder is still required to complete the building works for the agreed price of $240,000, subject to a variation agreed by the parties on 20 February 2023 in relation to a schedule of allowances dated 4 January 2023.  

7. The builder accepted that the HBWC required it to complete the building works by 2 June 2022, and that it has performed no work since 6 February 2023.  The builder submitted that it is willing to resume the building works and to bring them to completion within 10 months, but that due to the unprecedented increase in the cost of labour and materials since 15 December 2020 it cannot do so unless it is permitted to vary the scope of the works or to increase the contract price.

Statutory framework

1. The legislation relevant to this proceeding are sections 7, 8, 10, 17 and 27 of the Home Building Contracts Act 1991 (WA) (HBC Act), sections 5, 41 and 43 of the BS(CRA) Act and reg 6 of the Building Services (Complaint Resolution and Administration) Regulations 2011 (WA) (BS(CRA) Regulations). 

2. The proceedings are within the original jurisdiction of the State Administrative Tribunal (Tribunal) pursuant to the HBC Act and the BS(CRA) Act.

The BS(CRA) Act

1. In these proceedings the Tribunal's power to make a HBWC remedy order pursuant to s 43 of BS(CRA) Act is dependent on certain preconditions being met. These are that:

   (a)a complaint by the owner that a price variation claimed by the builder is not valid must be made within 10 working days after the notice of the variation was given to the owner;[12]

   (b)each complaint by the owner that the builder is in breach of the contract must not be a breach in respect of which a building remedy order may be made,[13] and also must not be made more than 3 years after the cause of action arose;[14] and

   (c)each HBWC remedy order must relate to a complaint item that has been referred to the Tribunal.[15] 

   [12] HBC Act, s 8(3)(b) and s 8(1)(b).

   [13] HBC Act, s 17(a)(i).

   [14] BS(CRA) Act, s 6(3)(b).

   [15] BS(CRA) Act, s 43(1).

2. The Tribunal will now consider each of these pre-conditions in turn.

The complaint by the owner pursuant s 8(3) of the HBC Act must be made within 10 working days after the notice of variation was given to the owner

1. Section 8(3) of the HBC Act prohibits an owner from making a complaint about a price increase made by a builder pursuant to s 8(1)(b) of the HBC Act unless the owner makes his complaint within 10 working days after notice by the builder of the claimed price increase.

2. The builder notified the owner of its claim for a price increase on 17 April 2023. The owner notified the builder that he rejected the price increase later that same day. The Tribunal therefore finds that the owner did make his complaint within the time required by s 8(3) of the HBC Act.

The complaints by the owner are not as to breaches in respect of which a building remedy order may be made, and must not be made more than 3 years after the cause of action arose

1. Pursuant to s 17(a)(i) of the HBC Act the owner can make a complaint pursuant to s 5(2) of the BS(CRA) Act only if he alleges a breach of contract which is not a breach in respect of which a building remedy order may be made.[16]  A building remedy order may be made in respect of a complaint that building work is not carried out properly or proficiently or that it was faulty or unsatisfactory. 

   [16] Pursuant to s 38 of the BS(CRA) Act a building remedy order may be made in respect of a complaint that a regulated building service 'has not been carried out in a proper and proficient manner or is faulty or unsatisfactory'. In general terms, this is a complaint that a building service has been performed to an unacceptable standard.

2. In his building complaint the owner did not complain that the builder's work was not carried out properly or proficiently or that it was faulty or unsatisfactory. 

3. The owner's cause of action in respect of his complaint that the builder is in breach of the HBWC because it did not complete the home within 365 days after commencing the building works arose, at the earliest, on the date by which the home was to reach practical completion pursuant to the HBWC, which was 2 June 2022.  His cause of action in respect of his complaint about the price increase claimed by the builder arose on the date he gave notice to the builder that he rejected the price increase, which was 17 April 2023.  His cause of action in respect of his claim for repayment of the roof cover stage progress payment arose on the date on which he made the payment to the builder, which was on 6 September 2022.

4. The owner made his complaint to the Building Commissioner about these causes of action on 1 May 2023, with the result that each complaint was made within the 3-year period required by s 6(3)(b) of the BS(CRA) Act.

5. The Tribunal therefore finds that none of the owner's complaints are complaints about which a building remedy order could be made, but rather that they are complaints about which a HBWC remedy order might be made. The Tribunal therefore finds that the complaints were made within the time required by s 6(3)(b) of the BS(CRA) Act.

Each HBWC remedy order must relate to a complaint item that has been referred to the Tribunal

1. The Tribunal has considered whether each HBWC remedy order sought by the owner relates to a complaint item that has been referred by the Building Commission to the Tribunal.

2. The proposed HBWC remedy order that the builder complete the home building works is within complaint items 1, 5 and 6.  The proposed order that the builder pay the owner compensation for his financial losses is within complaint item 2.   The proposed order that the builder repay the roof cover stage payment is within complaint item 4.  The proposed order disallowing the price increase of $72,000 claimed by the builder is within complaint item 6. 

3. The Tribunal is therefore satisfied that each order sought by the owner relates to a complaint item referred by the delegate of the Building Commissioner to the Tribunal. 

The discretion to make a HBWC remedy order under s 43(1) of the BS(CRA) Act

1. Section 43(1) of the BS(CRA) Act provides:

   (1)If the Building Commissioner refers a HBWC complaint to the State Administrative Tribunal, the Tribunal may —

   (a)if satisfied that the order is justified, make a HBWC remedy order; or

   (b)otherwise, decline to make the order.

2. Senior Member Aitken of the Tribunal has recently considered the proper construction of the discretion conferred by s 43(1) of the BS(CRA) Act in Deshmukh and Distinctive Building Services Pty Ltd [2024] WASAT 15 (Deshmukh).  The Senior Member in that decision said:

   59In my view the considerations concerning whether a HBWC remedy order is justified to resolve a HBWC complaint that a respondent has breached a home building work contract are:

   (1)Is there a valid home building work contract between the applicant and the respondent to the proceeding?

   (2)What are the relevant terms of the contract?

   (3)Has the respondent breached the relevant terms of the contract?

   (4)Has the applicant suffered loss, damage, or detriment which can be addressed by a HBWC remedy order?

   60In my view, if the Tribunal is satisfied that there is a valid home building work contract between the applicant and the respondent, and that the respondent has breached a relevant term of the contract which can be addressed by way of a HBWC remedy order then the Tribunal is required to make a HBWC remedy order. It then has a discretion regarding the HBWC remedy order it will make under the provisions of s 41(2) of the BSCRA Act.

3. The Tribunal agrees with the Senior Member that this is the proper construction of s 43(1) of the BS(CRA) Act.

The Home Building Works Contract (HBWC)

1. It is not in dispute and the Tribunal finds that the HBWC contained the following details and terms:

   (a)clause 2:  The parties to the HBWC are Milankumar Jayantilal Ghetia (owner) and Beyond Builders Pty Ltd (builder);

   (b)clause 2:  The registered building practitioner is Atalla Abbas, who is also a director of the builder;

   (c)clause 2.2 timing:  The commencement date for works is either 10 business days after either loan approval or a building permit is obtained, whichever is the later and the finish date is 365 days after the works have commenced.

   (d)clause 3 read with the plans and specifications addenda:  The contract price is $240,000 (including painting, fixtures and fittings) which is based on the 'm2 rate [of $1,000 per square metre] multiplied by total covered area (floor areas, garage, alfresco, portico, balcony etc) and any covered space';

   (e)plans and specifications addenda:  Double storey dwellings are to be priced at 10% above the rate of $1,000 per square metre;[17]

   [17] The plans and specifications addenda provide that a double storey dwelling is to cost an additional 10% but the contract price is costed on the basis of a single storey dwelling.  It appears that the builder has therefore underpriced the cost of this two-storey home by 10% or $24,000.

   (f)clause 4:  Progress payments fall due as each of the following stages of works are done:

Payments stage	% of contract price	Amount $
1.      Deposit	6.5%	$15,600
2.      Ground slab	15%	$36,000
3.      Ground floor plate height	14%	$33,600
4.      Suspended slab	10%	$24,000
5.      Upper floor plate height	8.5%	$20,400
6.      Roof cover	13%	$31,200
7.      Lock-up	12%	$28,800
8.      Fixing (Fit-out)	11%	$26,400
9.      Practical completion	10%	$24,000

1. Some notable features of this HBWC are that:

   (a)clause 11 does not permit the builder to increase the price except by way of a variation to the scope of building works;

   (b)it does not make time of the essence;

   (c)it does not provide for liquidated damages due to delay;

   (d)it does not contain any provision as to the termination of the contract; and

   (e)it does not provide an estimated amount for prime cost items and a means by which those items can be priced during the building process.

2. Based on the common documents in Exhibit 1 the Tribunal is satisfied the following additional matters are not in dispute in this proceeding. The Tribunal therefore finds that:

   (a)the building permit was issued on 19 May 2021;

   (b)the building works were to commence by 2 June 2021, being 10 business days after the issuing of a building permit on 19 May 2021 and they did in fact commence on 2 June 2021;

   (c)'days' in HBWC means calendar days and not working days, and as the building works commenced on 2 June 2021 the builder was to achieve practical completion by no later than 2 June 2022;

   (d)the builder demanded the owner make payment for the roof cover progress payment by email sent to the owner on 4 September 2022;

   (e)the roof cover progress payment of $31,200 was paid by the owner to the builder on 6 September 2022;

   (f)the builder by email sent to the owner on 4 January 2023 gave the owner the option to complete the works by either entering into a cost-plus contract or limiting the cost of fitting out works in accordance with a schedule of works;

   (g)the top storey roof cover works were completed by 6 February 2023, but since that date the builder has performed no further works on the site;

   (h)a notice of price increase was given by the builder by email to the owner at 2.06 pm on 17 April 2023, and was rejected by the owner by an email he sent to the builder at 4.46 pm on 17 April 2023;

   (i)the building permit expired on 19 May 2023; and

   (j)the builder has never given the owner a notice of likely delay nor a notice of extension of time;

3. The Tribunal also finds that the home did not achieve practical completion by 2 June 2022, and nor has it ever achieved practical completion.  For this reason, the Tribunal finds the builder is in breach of clause 2.2 of the HBWC.

Issues in dispute/issues to be decided

1. The following issues are in dispute in this proceeding:

   (a)whether the owner's payment of $31,200 to the builder for the roof cover stage was a genuine progress payment within the meaning of s 10(1)(b) of the HBC Act and, if not, whether the Tribunal should make a HBWC remedy order requiring the builder to repay that money;

   (b)whether the builder's claim for a price increase pursuant to s 8(1)(b) of the HBC Act is a valid claim and, if so, whether the HBWC price is increased by $72,000;

   (c)whether the builder is required to complete building the home pursuant to the HBWC, and, if so, whether the Tribunal has the power to require the builder to resume building the home; and

   (d)whether the owner has suffered a financial loss due to the builder's breach in not achieving practical completion by 2 June 2022 and, if so, whether the Tribunal should make a HBWC remedy order that the builder pay compensation to the owner for this loss.

2. The Tribunal will now deal with each of the issues in dispute in turn.

1. Whether the owner's payment of $31,200 to the builder for the roof cover stage was a genuine progress payment and, if not, whether the Tribunal should make a HBWC remedy order requiring the builder to repay that money

1. Section 10(3) of the HBC Act provides that a payment that is demanded in accordance with a schedule of progress payments set out in a HBWC is 'taken to be a genuine progress payment for the purposes of subsection (1)(b)(i) until the contrary is shown'.

2. Pursuant to s 41(2)(c) of the BS(CRA) Act the Tribunal may by order declare 'that a specified amount is not payable to a person under the contract and, if already paid, … order that the builder or owner repay that amount'.

3. Pursuant to clause 4.1 of the HBWC the builder is entitled to demand payment for a stage of work that it has done.  Clause 4.1 of the HBWC states:

   At the relevant stages defined in the Act,[18] the Builder may demand and recover or retain amounts by way of progress payments for the Work done that are not a greater percentage of the Contract Price than permitted in the Act.

   [18] Act is defined in the HBWC as 'the Building Act 2011 of Western Australia'.

4. The Tribunal is satisfied the word done in the clause is synonymous with completed or finished.[19]

   [19] Macquarie Dictionary Online:  verb 1.  past participle of do –adjective 2.  executed; completed; finished; settled.

5. The builder's email to the owner on 4 September 2022 demanding the roof cover progress payment clearly shows that as at that date only some of the roofing materials had been supplied and that none of the roofing work had yet been performed.  The builder in the email said:

   ….

   As you are already aware of that the material prices and labour fees are keep going up in an escalated rate.

   On the other hand, due to the ongoing shortage of materials, all the suppliers are now asking for upfront payments before they get materials delivered and installed.

   We have already paid for the full amount of roof timber, and now the colorbond supplier is asking for an upfront payment for the roof colrobond (sic) sheets, gutters and downpipes.

   Under such circumstances, cashflow management is becoming a real challenge.

   In order for us to maintain the cashflow and work progress, we will need the Roof Cover payment to be made so we can pay for the roofing materials as we have already paid for the timber (timber is part of the Roof Cover stage).

   Please see attached our Roof Cover stage, we would appreciate if you can get it processed for payment as soon as possible.

   We appreciate your understanding and cooperation in this regards.

6. The Tribunal therefore finds that at the time when the builder demanded the roof cover stage payment the demand was not for a genuine progress payment.

1. The owner paid the roof cover progress payment to the builder on 6 September 2022.  The owner also claims that at the time of the final hearing the roof at this time remains incomplete and that the builder should now repay him the amount of $31,200. 

2. The issue whether the roof cover progress payment 'is not payable … under the contract' is therefore to be decided by determining whether at this time the roof cover work is or is not complete. 

3. On 15 April 2023 the owner sent to the builder an email which included the following lines:

   …

   I am requesting you to acknowledge our original agreed fixed price contract and complete the remaining work from the roof stage in the next two months.

   I am looking forward to starting work at my property.

4. The photographs the owner included in his book of documents,[20] which the owner says were taken on 29 April 2023, shows there was roof cover over the top storey but that there was then no roof cover over that area of the ground floor which extended past the top storey. 

   [20] Exhibit 1, pp 112 – 120.

5. The owner also relies on the report of his building expert, Mr Syed Ali, to show that the roof is not complete.  Mr Ali describes his qualifications as including 'Engineer Australia Membership' and being a licensed Building Practitioner and Builder.  Mr Ali inspected the home on 28 November 2023.

6. Mr Ali stated in his report, with respect to bedroom 2 of the home, 'Roof was not installed at the time of inspection'.  This statement was alongside a photograph of the sky which was visible from inside bedroom 2. 

7. The builder in its closing submissions accepted that the roof was only partially installed and that it did not cover the ground floor area of the home.  The builder claimed, however, that while its demand to the owner for this progress stage payment was not at the time in accordance with the HBWC, that the builder should not now be ordered to repay the progress payment.  The builder claimed this was because the owner, in agreeing to make the payment, also agreed to vary the HBWC so as to permit the builder to demand the payment. 

8. The Tribunal is satisfied that pursuant to s 10(3) of the HBC Act, as the contrary has been shown, that it must find that the payment for roof cover work is not a genuine progress payment. The Tribunal therefore finds that the roof cover progress payment is not now payable by the owner, and that it was paid by the owner on 6 September 2022.

9. The builder in its closing submissions submitted that the Tribunal should not require it to repay the progress payment as this would impact its 'cash flow' with the consequence that it might then be unable to complete the building works. 

10. In the Tribunal's view, for the reasons set out in Deshmukh, the discretion that is conferred by s 43(1) of the BS(CRA) Act is as to the particular HBWC remedy order that it will make under the provisions of s 41(2) of the BS(CRA) Act, and not whether it will make such an order.

11. The Tribunal therefore finds that it cannot, when considering whether to make a HBWC remedy order, consider the impact that the making of the order will have on the builder's financial position.

12. The Tribunal is therefore satisfied that a HBWC remedy order is justified with respect to this progress payment. Pursuant to s 43 of the BS(CRA) Act it therefore must make an order with respect to this complaint item. The order the Tribunal will make is that pursuant to s 41(2)(c) of the BS(CRA) Act the builder is to repay to the owner the amount of $31,200.

1. Whether the builder's claim for a price increase pursuant to s 8(1)(b) of the HBC Act is a valid claim, and if so, whether the HBWC price is increased by $72,000

1. Clause 11 of the HBWC deals with variations.  It states:

   11Variations

   This clause identifies the process for varying this contract.

   11.1The Builder and the Building Owner acknowledges that the Work may be varied at the request of the Builder or Building Owner on the terms in the Act and in this clause.

   11.2Unless agreed in writing between the Builder and the Building Owner, any adjustments to the Contract Price because of an approved Variation will be taken into account at the time of the next progress payment.

   11.3The Building Owner can terminate the contract by notice to the Builder stating that the Building Owner is unable to meet the cost of the Variation because:

   a)the Variation is due to a matter that could not reasonable have been expected to be needed for the Work to be completed; or

   b)the Variation is due to a requirement of an approving authority or any other statutory authority, which was no known at the date of the contract.

2. This clause permits the builder to vary the price only when the scope of the building works is varied. The only means by which the builder can claim an increase in the contract price when the scope of works is not varied is either by agreement between the parties pursuant to s 7 of the HBC Act or pursuant to s 8(1)(b) of the HBC Act on the basis of a circumstance that has arisen 'that could not reasonably have been foreseen by the builder at the time when the contract was entered into'.

3. It is agreed by the parties the builder gave notice of a price increase by email sent to the owner at 2.06 pm on 17 April 2023.  It is useful to set out this email in full, which is as follows:

   Hi Milan,

   As you and all the people of WA aware of, the construction industry has been plagued with a spate of price increases caused by a perfect storm of supply chain disruptions, skilled labour shortages and skyrocketing costs of materials and logistics.

   We hereby sending you this Price Increase Notice for the construction of your house at #47 Jarama Entrance, Brabham.

   As a minimal, the average rate of the overall price increase for materials and labour is ranging around 25% to 35%.

   We are requesting a rate of 30% for the average overall price increase as per the below calculations:

   -Contract Value: $240,000

   -Price Increase: 30% x $240,000 = $72,000.

   The above amount can be paid either in one off payment or in progress instalments.

   Should you have any questions please do not hesitate to contact us[.]

4. The parties agree that the owner rejected this notice of price increase by an email he sent to the builder at 4.46 pm on 17 April 2023. Consequently, as the owner did not agree to the variation pursuant to s 7 of the HBC Act the HBWC price can only be validly increased if the builder's claim satisfied the requirements set out in s 8(1)(b) of the HBC Act. There are three such requirements.

5. The first requirement is that s 8(1)(b) of the HBC Act applies only in circumstances 'that could not reasonably have been foreseen by the builder at the time when the contract was entered into'.

6. In this proceeding the Tribunal understand the builder's claim of 'a perfect storm of supply chain disruptions, skilled labour shortages and skyrocketing costs of materials and logistics' to be a reference to the impact of the COVID-19 Pandemic, which emerged in January 2020.  However, the only evidence by the builder on this issue are the emails it sent on 4 September 2022 to say '[a]s you are already aware of that the material prices and labour fees are keep going up in an escalated rate' and its email dated 17 April 2023 which is set out above.

7. Given the absence of any evidence on this issue, the Tribunal is unable to make a finding as to whether any such circumstances did in fact impact the materials supply chain or the availability of labour in September 2022 and April 2023.  It is therefore also unable to make a finding that the circumstances were not reasonably foreseen by the builder at the time it entered the HBWC on 15 December 2020. 

8. The second requirement is that a notice given pursuant to s 8(1)(b) of the HBC Act must be given within 10 working days after the builder 'became aware, or should reasonably have become aware, of the circumstances' which gave rise to the notice.

9. The builder emailed the owner on 4 September 2022 to say '[a]s you are already aware of that the material prices and labour fees are keep going up in an escalated rate'.  The Tribunal therefore finds the builder did know there were significant increases in the price of materials for far longer than 10 days before it made its claim for the price increase on 17 April 2023.

10. The third requirement is that s 8(4) of the HBC Act does not permit a builder to vary the HBWC pursuant to subsection 8(1)(b) by reason only of an increase of costs of labour and materials. The builder's emails of 4 September 2022 and 17 April 2023 make clear that the builder claimed the price increase only because of the increase in the cost of materials and labour.

11. As the builder's notice does not meet either of the two requirements in s 8(1)(b) of the HBC Act and is contrary to s 8(4) of the HBC Act, its notice of a price increase on 17 April 2023 is not a valid variation of the HBWC and must be disallowed.

12. The Tribunal is therefore satisfied that a HBWC remedy order is justified with respect to the price increase claimed by the builder, and so pursuant to s 43 of the BS(CRA) Act the Tribunal must make an order with respect to this complaint item. The order the Tribunal will make is that pursuant to s 41(2)(c) of the BS(CRA) Act the Tribunal declares that the sum of $72,000 claimed by the builder is not payable by the owner to the builder under the HBWC.

1. Whether the builder is required to complete building the home pursuant to the HBWC, and if so, whether the Tribunal has the power to require the builder to resume building the home

1. The owner requests the Tribunal order the builder to immediately resume the building works and to attend to the works diligently so as to bring the home to practical completion within five months of commencing the works.

2. The Tribunal's power to make a HBWC remedy order is set out in s 41 of the BS(CRA) Act. This section does not confer on the Tribunal a power to order a builder to perform building works in accordance with a HBWC, rather it confers on the Tribunal the power to make a HBWC remedy order:

   (a)pursuant to s 41(2)(a)(ii) of the BS(CRA) Act 'requiring any specified work to be done' in the performance of the HBWC; and

   (b)pursuant to s 41(2)(a)(iv) of the BS(CRA) Act 'requiring any specified work to be done to remedy a breach of the' HBWC a provision in Pt 2 of the HBC Act.

3. The Tribunal has previously considered whether it has a power to make an order in the terms sought by the owner in Chalakuzhy and Olsen [2017] WASAT 104. The Tribunal at [37] – [40] said:

   37Section 41(2)(a)(ii) of the BS(CRA) Act empowers the Building Commissioner to make an order requiring any 'specified work' to be done in performance of the relevant contract. The wording used in the provision of course needs to be given its natural and ordinary meaning. In this regard assistance is again given by the Macquarie Dictionary Online (2017) as to the definition of 'specify':

   1.to mention or name specifically or definitely; state in detail.

   2.to give a specific character to[.]

   38In the Tribunal's view where an order which requires work to be performed, which if not complied with can lead to disciplinary action and/or an applicant seeking to exercise their rights pursuant to s 51 of the BS(CRA) Act, it is important that it is clear in the terms of the order what is being required of the respondent. This is consistent with the ordinary and natural meaning of the word 'specified'.

   39To specify work to be performed, such work must be set out in a clearly identified and unambiguous manner.  It is not specifying work to be done to issue an order which is ambiguous, broad or vague in its terms.

   40Order 1 of HBWC remedy order 1 of 2017, however, simply provides '[t]he respondent is to bring the building service at 18 Leaside Way, Spearwood to practical completion …'.  It is often the case that parties have differing views regarding what is required for a contract to reach practical completion.  In the Tribunal's view this is not an order capable of being made under the legislation. this is because, in the Tribunal's view, it does not specify the work which is required to be performed in order to allow an assessment to be made by the parties, the Building Commissioner and the Tribunal as to whether the order has in fact been complied with once the date requiring compliance has passed.

4. The Tribunal agrees that '[t]o specify work to be performed, such work must be set out in a clearly identified and unambiguous manner'.

5. In the Tribunal's view there should also be evidence the specified work is required pursuant to the HBWC, and that there should be evidence which will allow the Tribunal to estimate the value of each of the specified work it orders a builder to perform.[21]

   [21] This is because pursuant to s 43(2)(a) of the BS(CRA) Act the Tribunal is not able to order works to be performed where the total value exceeds $500,000.

6. The Tribunal also adds that there should be evidence as to the reasonable time it would take a builder to complete the specified work, so as to ensure that any order made was certain and enforceable.

7. The Tribunal is therefore satisfied it can make a HBWC remedy order that a builder performs specified work to be done in performance of the HBWC or to remedy a breach of the HBWC, subject to the following requirements:

   (a)that the specified work is set out in a clearly identified and unambiguous manner;

   (b)there is evidence that the specified work is required pursuant to the HBWC;

   (c)there is evidence as to the reasonable time it would take the builder to complete the specified work; and

   (d)there is evidence as to the value of each specified work. 

1. It would be preferable in contentious matters such as this if there was evidence from an independent expert as to each of these matters, but here there is no such evidence. 

2. The Tribunal is therefore not satisfied that a HBWC remedy order is justified with respect to the breach by the builder in not bringing the home to practical completion by 2 June 2022 pursuant to clause 2.2 of the HBWC. Pursuant to s 43 of the BS(CRA) Act the Tribunal consequently is unable to make an order pursuant to either s 41(2)(a)(ii) or (iv) of the BS(CRA) Act with respect to this complaint item.

1. Whether the owner has suffered a financial loss due to the builder's breach in not achieving practical completion by 2 June 2022 and, if so, whether the Tribunal should make a HBWC remedy order that the builder pay compensation to the owner for this loss

1. Pursuant to s 41(2)(d)(i) of the BS(CRA) Act the Tribunal may order the builder 'pay specified compensation for loss or damage' caused by any breach of the contract or of a provision of Part 2 of the HBC Act.

2. The Tribunal notes that the HBWC does not limit the compensation the owner may claim for delay by setting a rate for liquidated damages.  Therefore, if the owner is entitled to claim compensation for his losses due to a breach by the builder he is not limited by any rate of liquidated damages, and he is able to claim his actual losses.

3. The owner in his opening submissions claimed he has suffered financial losses due to the builder's delay in bringing the home to practical completion.  The owner in his evidence said his losses are:

   (a)the cost of rental accommodation for him and his family because he is unable to reside in the home;

   (b)the cost of holding the building site which consists of council rates and the water service charge; and

   (c)his home loan interest expenses.

4. The owner submitted that these expenses are losses that he should be compensated for by the builder, as he would not have incurred them but for the builder's breach of the HBWC.[22] 

   [22] Lampman and Afra Constructions Pty Ltd [2014] WASAT 27; Alison Louise Lobbe atf Lobbe Newman Trust and Kelpie Endeavours Pty Ltd atf Testa Rossa Family Trust and Quality Builders Pty Ltd [2014] WASAT 110; Byham and Afra Constructions Pty Ltd [2014] WASAT 38 (Quality Builders Pty Ltd) and Waldron and Afra Construction Pty Ltd [2013] WASAT 207.

5. The first issue the Tribunal must determine is whether the owner's financial losses are sufficiently connected to the builder's breach of the HBWC due to its delay in building the home.  The test of remoteness for financial loss due to breach of contract is set out in the decision of the Tribunal in Quality Builders Pty Ltd at [70]:

   70As set out by Justice Le Miere in Total Waste Management Pty Ltd v The City of Kalgoorlie­Boulder [2010] WASC 234 (2 September 2010), at [31]:

   …

   Loss or damage will not be recoverable if it is too remote, the tests of remoteness being those stated in what are described as the two limbs of Hadley v Baxendale (1854) 156 ER 145, 354.

   For present purposes those tests can be expressed in the statement of principle formulated by Lord Reid in Koufos v C Czarnikow Ltd (The Heron II) [1969] 1 AC 350, 385 and which has been adopted in this country: see GEC Marconi Systems [938]; Baltic Shipping Co v Dillon [1993] HCA 4; (1993) 176 CLR 344, 368

   The crucial question is whether, on the information available to the defendant when the contract was made, he should, or the reasonable man in his position would, have realised that such loss was sufficiently likely to result from the breach of contract to make it proper to hold that the loss flowed naturally from the breach or that loss of that kind should have been within his contemplation.

6. The owner gave evidence that he intended to reside in the home with his family once it was built.  He said that while he waited for the home to be built that he and his family lived in the cheapest reasonable accommodation he could find, and that due to the builder's delay in completing the home they have had to remain in that rented accommodation.  

7. The owner said that in June 2022 his weekly rent was $440 and that this increased to $600 per week in November 2022.  He said that from 9 June 2022 until the date of the final hearing he has spent $24,983 on rent, $2,523 on council rates and $1,282.57 on water charges for the site.  The owner calculated his interest expense as $32,316.36.  He requests an order from the Tribunal that the builder pay him these amounts which total $61,104.93.

8. The builder did not dispute that the owner intended to use the home as his residence once it was completed, and that during the period of the delay that the owner incurred the claimed rental expenses.  The builder also did not dispute that the owner has incurred holding expenses in the nature of council rates and water charges during the period of delay.  The builder does, however, submit that the Tribunal has no power to require the builder compensate the owner for these expenses.  

9. Given the owner gave evidence that he had incurred these expenses, and the builder did not dispute the owner's evidence on these issues, the Tribunal is satisfied that the owner did in fact incur these expenses. 

10. The Tribunal is also satisfied that the owner should be compensated for his proven rental expense on the basis that this is a loss directly caused to him by the builder's breach of the HBWC. 

11. The owner also submitted that the builder should compensate him for his holding and interest expenses during the period of delay.  The Tribunal is not, however, satisfied that it is proper for it to make a compensation order for both the owner's holding and mortgage expenses as well as his rental expenses, and as it will make an order for the builder to compensate the owner for his rental expenses it will decline to order that the owner is compensated for his holding and mortgage expenses. 

12. This is because had the builder completed the house by the date required by the HBWC, the owner would not be paying rent but would be paying his holding and mortgage expenses.  As the owner is to be compensated for his rent expenses his holding and mortgage expenses are not a loss to him.

13. The Tribunal is therefore satisfied that a HBWC remedy order is justified with respect to the direct and proven financial loss suffered by the owner due to the builder's breach in not bringing the home to practical completion by 2 June 2022. The Tribunal will therefore order, pursuant to s 41(2)(d)(i) of the BS(CRA) Act, that the builder compensate the owner by paying to him the amount of $24,983 for his rent expenses.

14. The Tribunal will now make the following orders.

Orders

The Tribunal orders:

Pursuant to a home building work contract the parties entered on 15 December 2020 the Tribunal, under s 43 of the Building Services (Complaint Resolution and Administration) Act 2011 (WA):

1.Declares the roof cover stage progress payment is not payable by the applicant and orders that by no later than 19 April 2024 the respondent must pay to the applicant the amount of $31,200.

2.Order that by no later than 19 April 2024 the respondent must pay compensation to the applicant in the amount of $24,983.

4.Declares the price increase of $72,000 claimed by the respondent on 17 April 2023 is not payable by the applicant.

5.The application is otherwise dismissed.

I certify that the preceding paragraph(s) comprise the reasons for decision of the State Administrative Tribunal.

MR E Cade, MEMBER

21 MARCH 2024

Annexure A

Building Complaint Items referred to SAT	Orders sought by owner in its written statement[23]	Orders proposed by builder in its response statement[24]
Item 1:  Works not completed within 365 days as required by the HBWC, with the builder doing no works since 6 February 2023	Order 'for immediate complete completion of the house construction', with the works to be completed within 5 months.	Completion of home by builder to practical completion within 10 months, subject to agreement to limit cost to the builder of fittings and fixtures, but otherwise disagrees with the order sought
Item 2:  No notice of extension of time given by the builder	Order for future daily allowances (e.g. rent) until the builder completes' the works.[25]	Disagrees with the order sought
Item 4:  Advance progress payment made for roof works on 6 September 2022 but roof only partially installed on 6 February 2023	Order (1) that the owner is obliged to make no further progress payments until each stage of the works is complete and (2) 'immediate refund of the advance payment made for the roof stage … with accrued interest'.	Agrees that builder should complete the roof but disagrees that the builder should refund the roof cover stage progress payment
Item 5:  Home not completed within 365 days as required by the HBWC, with the builder doing no works since 6 February 2023	Order for (1) a definitive and non-negotiable deadline for the … completion' of works and (2) for the works to be completed as specified in the HBWC	Completion of home by builder to practical completion within 10 months, subject to agreement to limit cost to the builder of fittings and fixtures, but otherwise disagrees with the order sought
Item 6:  Rejection of notice of 30% price increase given by the builder on 17 April 2023, and instead acceptance on 20 February 2023 of a proposal by the builder to limit the cost of fitting out works in accordance with a schedule dated 4 January 2023	Order for (1) to disallow the price increase/s sought by the builder and (2) for the completion of works for the price set out in the HBWC, as varied by the schedule dated 4 January 2024.	Says that notice of price increase is a valid notice, but that the builder is willing to forego the price increase and complete the home within 10 months subject to agreement to limit cost to the builder of fittings and fixtures, but otherwise disagrees with the orders sought

[23] Exhibit 1, pp 20 – 22.

[24] Exhibit 1, pp 36 – 137.

[25] The owner in his written statement stated, 'I am willing to let go of past losses and focus on moving forward, provided there is an assurance for the expeditious completion of my house', however, in his closing submissions he requested compensation for his losses up to the date of the final hearing.