No licence? No worries
In Precise Builders (NSW) Pty Ltd v Jones & Krel  NSWCATAP 112 the New South Wales Civil and Administrative Tribunal (the Tribunal) Appeal Panel held that a lack of licence was no barrier to the preferred outcome under s.48MA of the Home Building Act 1989 (the Act), upholding a work order over a money order in circumstances where a builder was not properly licensed, but could procure a properly licensed contractor to do the work.
S.48MA of the Act
By way of reminder, s 48MA of the Act provides:
A court or tribunal determining a building claim involving an allegation of defective residential building work or specialist work by a party to the proceedings (the responsible party) is to have regard to the principle that rectification of the defective work by the responsible party is the preferred outcome. (emphasis added)
The Owners commenced action in the Tribunal seeking a money order in respect of rectification of defective building works.
The defect had become apparent by way of cracking of the brick parapet wall above the garage, the underlying cause of which was a defect in the steel beam above the garage door supporting the parapet.
Notwithstanding the fact that the Builder did not design or manufacture the steel beam, the Tribunal made a work order under s.48MA of the Act for the Builder "or properly licenced contractors on behalf of the [Builder]" to return to the site and undertake detailed rectification and associated works.
The Builder appealed and sought to have the work order set aside and replaced with a money order in the amount of $18,845.84, being the cost of rectifying the defective works as determined by a quantity surveyor. The Builder argued that the Tribunal's orders were not fair and equitable and the decision was against the weight of the evidence. The Builder submitted that:
- all parties had preferred a damages award rather than a work order
- the work order would perpetuate a hostile relationship between the parties
- the Builder did not have a licence to perform the remedial works, nor could it provide home warranty insurance for such works
- the Builder was not at fault as the defects arose due to the engineer's specifications; and
- payment of damages would allow the rectification works to be completed by licensed and insured builders who specialise in remedial works.
The Owners opposed the application for leave to appeal and opposed the substantive appeal on the basis that were no grounds to depart from the statutory presumption in favour of a work order in s 48MA of the Act.
The Appeal Panel found that the Tribunal below was correct in making a work order as the order did not require the Builder to perform remedial works that it was not licenced to complete. Rather, it expressly contemplated the possibility that the Builder would engage with one or more licenced contractors in order for the remedial works to be done. For the Builder to contract with a licensed third party would be sufficient compliance with the work order and the Owners would still have the benefits of the statutory warranties and protections provided under the Act, as non-contracting owners.
Given the Tribunal's work order contemplated that the work would be carried out by a contractor, the Appeal Panel found it was the ideal outcome. As such, the appeal was dismissed.
What does this mean?
This decision closes down one of the few avenues which had been thought to be available to argue against the preferred outcome under s.48MA of the Act. More and more, owners must be mindful that a work order is to be expected in a defects claim for residential building work.
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