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CAWA's submission on threshold and limit changes to the HBC Act

 

Consumers/home owners who have disputes with builders find it difficult to differentiate between contractual and workmanship disputes and to understand who has jurisdiction to hear their disputes. Under the current legislation a home owner would have workmanship issues dealt with at the BDT and an associated contractual claim (for contracts under $6000) heard in the Small Disputes Division of the Magistrates’ Court. (The BDT hears such cases, where the contractual and workmanship remedies have the potential to be at odds with one another.) Having the dispute heard in two separate forums is time consuming for all parties and an inefficient use of resources. It is desirable for both aspects of a building claim to be heard in one forum, the BDT. This situation could be remedied if there was no lower limit re contractual disputes, and simple matters could be heard by one member of the Tribunal sitting alone, while more complex issues, possibly those that also involve workmanship issues would be resolved by a three person Tribunal.

If the lower limit is to remain (this is not CAWA’s preferred option) it should be raised to $7,500 to correspond with the upper limit of the Small Disputes Division of the Magistrates’ Court. The monetary threshold should not be increased to $12,000 because contractual disputes between $7,500 - $12,000 would fall outside of both the BDT and the Small Disputes Division of the Magistrates’ Court. 

 

Yes. It is important that consumers/home owners have some avenue for redress of contractual disputes, no matter how small. The answer to this question is tied to the decision about whether a lower threshold should exist, and if so whether is will be tied to the upper limit of the Magistrates’ Court. If the latter scenario holds, the limit should be increased with corresponding increases to the Magistrates’ Court ie $10,000 on 1st January 2009. Any review of a threshold must not happen in isolation. There must be due consideration and concurrent adjustment of linked thresholds in this and other legislation.

7.3. The upper limit of the “general” provisions of the HBC Act

CAWA preferred option is that there be no upper limit under the HBC Act. All home owners are entitled to the same rights of redress, regardless of the cost of their home. CAWA believes that doing away with the upper threshold will mean that the BDT will hear more cases over $200,000, but that cases over $500,000 - $600,000 (figures which have been floated as the upper limit) are likely to be heard in another jurisdiction because the amount of money involved and the probability that the parties will have legal representation. This would do away with the need for costly reviews for the upper limit.  

CAWA understands that the upper limit was included in the HBC Act as a means of excluding commercial home building developments from the Act. It believes developers and commercial developments should not be covered under the Act and these developments can be excluded by the manner in which ‘owners’, ‘dwellings’ and ‘home building work’ are defined under the Act. CAWA is aware that some developers and commercial developments currently operate under the HBC Act and acknowledge that there may be some difficulty establishing ‘water tight’ definitions that exclude these ‘people’.

It is important that consumers/owners who buy into commercial developments through a developer, and therefore do not have direct contractual relationships with builders continue to have rights for the redress of workmanship issues under the BR Act.

If the upper threshold is to remain (this is not CAWA’s preferred option), CAWA would like to see the upper limit set at $600,000 with an automatic review in place that is linked to the most appropriate measure of the real rise in building cost.

 

7.4 The maximum deposit allowable under the HBC Act

No, as the amount of money increases so do the risks for the consumer. To date the figure of 6.5% has been generally accepted by builders and owners and we see no reason for the rate to change.
.

No. ‘Genuine costs’ for sourcing materials could easily be inflated by builders and owners will be coerced into the unnecessary pre purchase of materials increasing their risks should the builder ‘go out of business’.

10.2 The threshold for requiring HII

Question 23:
Yes. The most practical option is to maintain alignment of the threshold for requiring HII with the upper limit for unregistered building. To separate the two, increases the complexity of implementing the insurance policies and creates confusion for consumers and builders. We do not support increasing the upper limit for unregistered builders but maintain that the two should be aligned.
Aligning the minimum amount with the equivalent monetary threshold in other major states may be desirable but adopting the ‘one hat fits all’ mentality to cover WA is not appropriate. Aligning the minimum amount to the equivalent in major states would result in state building legislation that was more inflexible to change than the current legislation.

Question 24:
No

Yes, but the link between the threshold for unregistered builders, the HII minimum threshold and the desire to align with equivalent monetary thresholds in other states is a complex issue and each cannot be considered in isolation. Any review of the HII minimum threshold must be in conjunction with a review of the other linked thresholds.
Before any regular review is instigated it must be decided which is the higher priority – having the HII monetary threshold linked to the threshold for unregistered builders (the option supported by CAWA) or keeping the HII minimum threshold consistent with other states.

10.3 The limit payable under a HII policy for loss of deposit

Yes. The limit should remain linked to the maximum deposit provisions of the HBC Act and when the upper limit of the Act (currently $200,000) is adjusted the maximum amount payable for loss of deposit should reflect the change (being 6.5% of the upper limit).  To adopt the NSW/Victorian provisions (10% for < $20,000 and 5% for >$20,000) would be reducing the cover currently offered to consumers for contracts between $20,000 – $200,000.

Last modified: 20 April, 2007

 

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