The general principles that apply to your industry also applies to all other businesses around Australia. It applies to consumers, businesses, products and services.

When you supply any goods or services, the Act implies that you are providing a consumer guarantee in relation to those goods or services that you are providing.

Some of the elements covered under this consumer guarantee is that:

  • The product or service will be provided with due care and skill
  • The product or service will be fit for purpose
  • It will achieve the result that is expected or supposed to

There is no requirement or the language in the legislation does not even suggest that the word “services” must be confined to services that are provided pursuant to a contract or that correspond precisely to the terms of a contract between the supplier and the consumer (Scenic Tours Pty Ltd v Moore [2018] NSW CA238).

 

Changes to contract prices

In the post COVID years, the main issue facing trades people and suppliers essentially has been the increase in price of the raw materials and the labour. Those who have had a fixed price contract have essentially been unable to recoup the increase in any price to be supplied or a product or service to be supplied from the consumer. This has essentially been the case for people who did not have any rise and fall clauses to their contracts.

In a QLD case of Perera v Bold Properties (QLD) Pty Ltd [2023] QDC 99, the Court in this case held that a warning that is provided in the front of the contract also has to state if there are any clauses within the contract that affects the warning that allows the changes in the contract price.

 

Background
  • Mr & Mrs Perera entered into a new home contract with Bold Properties (QLD). Mr & Mrs Perera are homeowners.
  • The contract price is $645,370.00 – which is a fixed sum contract.
  • 2 months later the builder writes to the homeowners to advise that they would not be able to start by the anticipated start date and then went on to say that due to the increased costs of the building materials the price for the contract will go up by $51,342.00.
  • The owners did not agree with the extra amount and the builder did not commence building work.
  • The owners affirmed the contract and proceeded to make an application in Court to obtain a declaration that the special condition (special condition 7) that the builder is relying upon is actually void.
  • The contract that the owners the builder signed had special condition 7 which said:

“In the event that the commencement has not taken place by the anticipated start date, the builder reserves the right at the builder’s sole discretion to increase the contract price to the current basis price of the house type which is subject to the contract and identified in the contract tender, to the builder’s current base price for that house type.”

The builder’s explanation to the increase in contract price was on the basis that:

  1. Base price for the contract between the parties was $467,853.00.
  2. The current base price for the same house as in the contract would now be $550,536.00.
  3. The difference between the two is $82,683.00 however the builder was prepared to accept a lesser amount.
Unfair term

The Court (in a nutshell) said that:

  1. Special condition 7 provided the builder with the sole discretion to determine whether or not to increase price.
  2. Provided the builder with the ability to change its price without express criteria as to the basis it can do that.
  3. An increase was solely within the builder’s power and discretion.
  4. Clearly the price of the contract is fundamental to the contract. This would be a change in an essential term (the price).

Special condition 7 is therefore unenforceable.

 

Court of Appeal in NSW regarding ACL and defective windows

In the matter of Larsen v Tastec Pty Ltd [2023] NSW CA 39, where the background was as follows:

The owners claimed amongst other things the following against the builder:

  1. Damages and compensation under Sections 236 and 237 of the ACL.
  2. That the builder contravened Sections 18 and 29 of the ACL.
  3. Amongst other things, supplying and installing windows which were not appropriate or suitable for installation as external windows and that in any event they were not properly sealed to avoid weather penetration during rain events.

Leaking occurred during two significant rain events in early 2020.There was no evidence of any other leakage since those events.

Finding

The primary Judge accepted the builder’s expert evidence on the issue that found no signs of defect or water ingress which was supported by a Fact Sheet published by the Australian Glass and Windows Association on the east coast storms in February 2020. It essentially stated that the window design is a balance between performance and affordability, and it is not feasible to produce windows that can withstand the most extreme weather events.

On appeal the owners argued that it was against the BCA which states that the water entry was not permitted.

The Court upheld that the BCA parts of the contract are satisfied for glazing and windows in external walls if the windows are designed and constructed in accordance with the Australian Standards AS2047. The protection from water entry that complies with those clauses it is intended to provide is not absolute.

 

Written by Atul Singh

Scroll to Top
Scroll to Top