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FACT SHEET
Residential Building Work Quality (Warranties and
Disputes) Bill 2012
Building disputes legislation is in force in most other Australian
States and Territories. The Tasmanian Bill is based on
legislation that has introduced alternative dispute resolution
processes that have proven to be successful in Queensland,
New South Wales and Western Australia.
The Residential Building Work Quality (Warranties and Disputes)
Bill 2012 replaces the Housing Indemnity Act 1992 and is
intended to work alongside the Building and Construction Industry
Security of Payment Act 2009 and Building Act 2000 to provide a
framework for building in Tasmania.
The introduction of this Bill is the culmination of a consultation
process that began with the release of a discussion paper in
2004. This was followed by a further consultation paper in
January 2008 that detailed a proposed statutory framework for
the resolution of building disputes in Tasmania. In January this
year, Workplace Standards Tasmania released a draft Bill along
with a Minor Assessment Statement for further consultation.
Consultation has continued with stakeholders throughout this
year to a point where most industry bodies are supportive of
the proposals contained in the legislation.
The exhaustive consultation process undertaken to develop
this legislation has revealed a number of gaps in consumer
protection for building and renovation work under current
laws.
Principally, consumers and contractors that find themselves in
dispute over the quality of workmanship or non-performance
under a contract are left to resolve disputes. These disputes
constantly escalate beyond a point where the matters can be
resolved without civil litigation.
Civil legal processes are notoriously expensive and beyond the
means of most people. The cost of rectifying poor
workmanship is born by owners if the contractor refuses to
return and the cost of pursuing civil redress is prohibitive.
Overall this does nothing to improve consumer confidence in
the building industry.
A significant issue that contributes to the cost of building is
contracting practices. Inexperienced owners building and
renovating can become victims of poor contracting practices.
There are two main issues with contracting processes. Firstly,
the type of contract and misunderstanding of the nature and
terms in the contract and secondly the conduct of the parties
administering a contract.
Queensland, New South Wales and Western Australia have
introduced legislation that deals with the contracting issues and
also offers alternative dispute resolution processes that have
proven to be effective in resolving more than 90% of disputes
before they reach a civil court or tribunal.
Free template contracts that are fairly structured to represent
the interests of both contractors and residential home owners
will be developed.
The benefits of the proposed legislation are expected to be:
fairer statutory warranties;
less confusion about the contracting processes;
fairer contracts and contract administration; and
a `one stop shop' alternative dispute resolution service for
both contractors and residential home owners.
There is overwhelming support for the introduction of the
legislation from most stakeholders including the majority of
Tasmanian building representative organisations. The one
exception is the Housing Industry Association (HIA). This
Association supports the legislation but does not support the
`one stop shop' approach.
The HIA has advised that they do not support a process that
will allow a Building Dispute Commissioner to provide an
alternative dispute resolution process which can end in parties
being directed to rectify substandard work. This is described in
the legislation as a `Rectification Order'.
A rectification order is a direction from the Building Dispute
Commissioner for the parties to take certain action to resolve
a dispute. For instance, the order could require a residential
home owner to pay money owing into a Trust Account and
require the building contractor to rectify defective work � at
the end of which the building practitioner would receive
payment from the Trust Account. Alternatively, in cases where
payment has already been made, the order may simply require
the building practitioner to return to the site and rectify
defective work.
A rectification order would be issued following an investigation
of the building work. A person subject to a rectification order
has the power to request a review of that order through the
Resource Management and Planning Appeals Tribunal (RMPAT)
before taking the action required by the order. RMPAT has the
ability to convene an expert panel to assess the merit of the
rectification order.
The importance of the rectification order cannot be
underestimated. Interstate regulators have advised that
without the power to issue a rectification order, the
conciliation process is significantly marginalised. People may be
less inclined to constructively engage in the conciliation process
if there is no power to direct a rectification order.
The HIA's suggested model is similar to the process currently
under review in Victoria where the rectification order is issued
by the Victorian Civil and Administrative Tribunal (VCAT).
Victoria is currently completing a review into its consumer
building framework. Amongst other things it is reported that
up to 30% of building practitioners do not engage in the
conciliation process. Contractors choose instead to challenge
the consumer to take action through VCAT. Workplace
Standards experiences an almost identical attitude under the
current framework.
Significantly, the submission lodged by the body issuing
rectification orders supports the notion of a `one stop shop'
approach where the same body undertakes conciliation and
issues a rectification order. VCAT suggests that there should
be a clear right of review of the rectification order to VCAT.
This is identical to the system proposed in this Bill. In
Tasmania's case the appeal would be to the RMPAT.
Given the shortcomings of the Victorian model, which is
favoured by the HIA, Tasmania is better served by an
alternative dispute resolution system that works in other
States.