Client Involvement in the Building Works

November 9, 2013/

This was a paper that was presented at the HIA Home Show at Darling Harbour on 16 May 2013.

BACKGROUND
Peter Adams, the Managing Director of Adams & Partners lawyers has been associated with the HIA since 1983. Peter is currently a Panel solicitor for the HIA and recently was asked to give a talk at the HIA Home Show at Darling Harbour on the 16th May 2013 on Client Involvement in the building work. The following is a brief summary of what was spoken about and if you would like the full paper please do not hesitate to contact our office.

WHAT DO YOU DO WHERE YOUR CLIENT WANTS TO HELP IN THE BUILDING WORK/CONTRACT PROTECTIONS?

Suggested answer is No. If you relent in allowing your client to help in the Building work then hopefully you have utilised the appropriate edition of the Housing Industry Association (HIA) Building Contract. The HIA Contracts utilised by Builders for residential home building work are:

  1. HIA Fixed Price Contract (red cover);
  2. HIA Renovation Contract (green cover);
  3. HIA Cost Plus Contract (yellow cover).

Primarily your Tender/Quote should detail work included in the Contract and the work excluded from the Contract. If the Owners engage their own Subcontractors it is my opinion, you as the Builder, is still responsible for the supervision of those Sub-Contractors. This is fraught with danger. Examples include:-

  1. Unlicensed Contractors;
  2. Uninsured Contractors;
  3. The lack of Workers Compensation and other Insurances;
  4. Availability of those Contractors at a time required by the Builder;
  5. Defective work that can undermine the fabric of the improvements erected on site by the Builder;
  6. Bad building practices including failure to observe OH&S policy and failure to follow directions.

WORKING WITH OTHER TRADES-WHAT IS THE BUILDER’S RESPONSIBILITY?

You as the Builder is responsible to the Owner under the Contract for all building works carried out on the site pursuant to the terms of the Building Contract.

The Home Building Act 1999 requires you as a Builder to ensure that your Sub-Contractors are properly licensed to do the work.

It is important you have continuity of Sub Contractors. By dealing with Sub Contractors on a continual basis you get to know their quality of work and whether or not they are diligent in the performance of that work.

If possible find out the Sub Contractor’s financial circumstances.

  1. It is highly likely that the entity that you deal with has no assets or very little assets. There is nothing illegal from you requesting personal guarantees of Directors of entities when preparing a Contract between you and the Sub Contractor;
  2. Have a written Contract and a Contractor’s statement signed;
  3. Obtain a copy of the Insurance Policies/Certificate of Currency namely, Workers Compensation, Contractors Risk/Public Liability, and Professional Indemnity Insurance Certificate of Currency (Consultants only);
  4. Provide a Safe Work Method Statement;
  5. Request a Site Safety Diary be set up;
  6. Do a License check with the Office of Fair Trading.
  7. Get a copy of the Licence of the Sub Contractor.

You would have the right to sue the Sub-Contractor however the Owner will look to you for any rectification work eg defective brickwork.

The Home Warranty Insurance Policy would cover this work and accordingly you would be liable even if the Sub-Contractor went into Bankruptcy or was Wound Up.

WORKING FOR OWNER BUILDERS- LEGAL REQUIREMENTS INCLUDING CONTRACTS/LICENSING AND HOME WARRANTY INSURANCE. POSSIBLE RISKS, POSSIBLE TIPS AND HINTS

  1. Do not provide an estimate for any work outside your proposed/agreed work even for Bank finance purposes.
  2. Do not provide two (2) types of Contracts eg Fixed Price and Cost Plus;
  3. Ask for a copy of the Owner Builder Permit;
  4. Ask for ability to pay;
  5. Work and quote off the CC plans and sight a copy of the DA approval;
  6. Agree on a short payment period eg seven (7) days.

POSSIBLE RISKS:

  1. Poor supervision of the site;
  2. Failure to provide prompt instructions;
  3. Delays in the overall building project;
  4. Quality of other trades and lack of licensing etc;
  5. Poor Payment record.
Scroll to Top
Scroll to Top