article

SHOW ME THE MONEY!

Richard Kouchoo

INTRODUCTION

1. The NSW Civil and Administrative Tribunal (Tribunal) has the power to make a money order or a work order in relation to building claims involving defective works.

2. A money order is an order that requires the payment of a sum of money to an aggrieved party for the costs to rectify defective works.

3. On the other hand, a work order is an order requiring a party to rectify its own defective works.

4. Pursuant to section 48MA of the Home Building Act 1989 (NSW) (HBA), the “preferred outcome” in building claims is that defects be rectified by the responsible party.

5. Accordingly, the Tribunal makes work orders more readily and regularly than it does money orders.

6. Despite the “preferred outcome”, the Tribunal can (and does) make a money order if it comes to the view that the preferred outcome in the resolution of a dispute is to make a money order instead of a work order. The Tribunal will make this decision based on evidence submitted by the parties.

7. The decision of Denmeade v Travers [2023] NSWCATCD 3 is an example of where the Tribunal made a money order instead of a work order.

CASE NOTE – DENMEADE V TRAVERS [2023] NSWCATCD 3

8. Denmeade v Travers [2023] NSWCATCD 3 involved an applicant landowner (Owner) seeking a money order against the respondent builder (Builder) for the payment of the costs of rectifying defective works by the Builder at the Owner’s property.

9. The Owner sought a money order instead of the Tribunal’s preferred work order, and provided the following evidence in that regard:

(a) The Owner had, without success, given the Builder:

(i) seven to eight opportunities to rectify the shower screens; and

(ii) four opportunities to rectify plaster works;

(b) The Builder had not acknowledged the defective sliding door installation and the incomplete back step;

(c) The Builder had not provided a certificate of practical completion nor certificates for waterproofing, glazing or plumbing, despite numerous requests;

(d) As a result, the Owner had lost faith in the Builder which meant that the Owner did not wish for the Builder to return to the property and rectify the defective works; and

(e) Moreover, the Builder caused the Owner to have an unacceptable level of anxiety and stress, which was confirmed by a medical certificate tendered by the Owner.

Correct assessment of damages

10. In relation to money orders, the Tribunal confirmed that the assessment of damages recoverable by an owner for the breach of a building contract due to the defective works was to be based on the cost to rectify the defective works.

11. This principle is subject to the qualification that the rectification work must be necessary to produce conformity and be the reasonable course to adopt.

Work order or money order?

12. In its judgment, the Tribunal recognised that the making of a work order was the preferred outcome in respect of matters which involved defective residential building works.

13. Furthermore, the Tribunal also recognised that personal animosity was not sufficient to displace the preference that a work order be made, as the test is objective and the flexibility of section 48O of the HBA allows, under a work order, for a builder to engage another party to carry out the required work on behalf of the builder.

14. However, the Tribunal held that a departure from the making of work orders was possible and noted that the following elements were relevant to the objective assessment of whether, in the alternative, a money order should be made:

(a) Relational breakdown;

(b) A builder’s conduct on unrelated projects;

(c) A builder’s capacity or skills to undertake rectification work;

(d) A builder’s ability to undertake rectification work based on qualifications (i.e. being appropriately licensed to carry out those works);

(e) A builder’s attitude to the standard of work done and willingness to return to site and complete rectification works; and

(f) The likelihood of further dispute arising between the parties, and whether a work order would be a timely or cost-effective resolution of any dispute.

15. Ultimately, the Tribunal accepted that the Owner’s evidence established an objective breakdown of the relationship between the Owner and Builder because of the Owner’s loss of confidence in the Builder.

16. Accordingly, the Tribunal made a money order instead of its preferred work order given that it held that the Owner had proven that, in all circumstances, the preferred outcome in that case was for a money order to be made.

KEY TAKEAWAYS

17. The key takeaways from the decision of Denmeade v Travers [2023] NSWCATCD 3 are as follows:

(a) The Tribunal prefers to make a work order over a money order in respect of matters which involve defective residential building works;

(b) However, the making of a work order is not mandatory;

(c) The Tribunal has the discretion to make a money order if it comes to the view that, in the circumstances, the primacy of a work order has been displaced by the making of a money order;

(d) The onus is on the applicant to tender objective evidence which would discharge that onus and enliven the Tribunal’s discretion to make a money order;

(e) The objective evidence needs to prove more than personal animosity between an owner and a builder (see paragraph 14 for more information regarding what the objective evidence may need to show);

(f) In relation to money orders, the assessment of the damages caused by defective works is to be based on the costs to rectify the defective works; and

(g) This principle as to damages set out in paragraph 15(f) above is applicable to most cases and will only be displaced in exceptional circumstances where it can be shown that ordering a party to carry out rectification works is not reasonable.

[ DOWNLOAD “SHOW ME THE MONEY!” ]

CONTACT US

If you would like more information on the above or need any assistance, please contact us on 02 8329 6500 or excellence@kreisson.com.au

This communication is sent by Kreisson Legal Pty Limited (ACN 113 986 824). This article contains general information only and is not a substitute for considered legal, accounting or business advice. It does not take into account your particular circumstances, objectives, appetite for risk or financial situation. We are not tax or BAS agents or specialist tax advisers. You should not rely on this article without seeking detailed advice from discipline experts. The contents are copyright and should not be reproduced, re-published, adapted or used without the author’s permission

 

Richard Kouchoo

Special Counsel | 02 8239 6500

About Richard

More Insights

Receive our Newsletter

Stay up to date.