Is your domestic contract compliant with the Court's decision and the QBCC Act?
Updated: 5 days ago
Latest update 23/04/2024 | Last update 23/10/2023 | First published 23/10/2023 on TradeBox's website, 23/08/2023 on Aitchison Reid's client newsletter
This guidance article was provided to TradeBox Australia by Aitchison Reid Building and Construction Lawyers, and written by its director, Fionna.
It's not about you
Have you ever heard the saying, “99% of the time it’s not about you”? I remember the first time I heard the saying - it was such a relief. I could stop worrying about whether I had offended someone, and I could instead just focus on the situation at hand. Well, when it comes to domestic building, 99% of the time it’s not about you, the trade contractor. The rules that regulate domestic building are there to protect the homeowner, the consumer. I understand from a business perspective the rules relating to domestic building are more than challenging. However, if you want to carry out domestic building work and not be fined by QBCC, the best option is to follow the rules. As you will be aware Perera v Bold Properties (QLD) Pty Ltd[1] (Perera v Bold) involved a domestic building contract. The argument that was raised by the homeowner related to what needed to be stated on the front page of the contract schedule. What is included in a domestic building contract and where it is stated in the contract is also tightly regulated by Schedule 1B of the Queensland Building and Construction Commission Act 1991 (QBCC Act).
As special condition 7 could cause the contract price to be increased, there were additional rules.
In particular, section 14, Schedule 1B QBCC Act states:
“(6) If the contract price may be changed under a provision of the contract, the contract must also contain – (a) a warning to that effect; and (b) a brief explanation of the effect of the provision allowing change to the contract price. (7) The warning and explanation mentioned in subsection (6) must be in a prominent position on the first page of the contract schedule.”
Bold Properties (QLD) Pty Limited (Bold) had an HIA contract and the warning on the first page of the HIA contract schedule:
did not mention special condition 7; and
did not in fact include any explanations for any of the clauses in the contract, including special condition 7.
However, Bold had included in the special condition 11:
“The paragraph under the word “Warning” in Item 2 of Schedule 1 is amended to read “The contract price is subject to change. The clauses that allow for changes to the contract price are clauses 9, 10, 11, 13, 15, 16, 19, 20, 21, 23 the Special Conditions and the Tender Conditions attached to this contract.”
The Court held
Special condition 11 was not sufficient to comply with the requirements of section 14(7) Schedule 1B, QBCC Act, because:
the clauses and explanations needed to be on the front page and not buried in the document;
it did not refer to special condition 7 and instead referred to all of the special conditions; and
it did not include a brief explanation of the effect of special condition 7.
Special condition 7 was not mentioned on the front page as part of the warning and there was no explanation, therefore the special condition was contrary to the QBCC Act.
Under section 108D of the QBCC Act a domestic building contract is void to the extent that it is contrary to the Act. The special condition 7 was therefore void.
However, the Court went further and stated:
That section 14 was about consumer protection;
“As beneficial legislation, the provision should be construed beneficially and so as to give the fullest relief which the fair meaning of its language will allow.”[2]; and
The level of detail that it wanted to see in the brief explanations in the warning.
It should be noted that the relevant Master Builders Queensland contract and the QBCC contract at the time of the Perera v Bold decision had explanations on the front pages but these were not in accordance with the level of detail required by the District Court.
Therefore, providers of domestic building contracts in Queensland who have paid attention to this [Perera v Bold] decision have already or will be redrafting their contracts. By saying providers I mean industry associations, law practices and other service providers supplying domestic building contracts to subbies and tradies in Queensland.
Take aways
If you are using a domestic building contract that has not been updated after 12 June 2023, you most likely are using a non-compliant contract.
It is incredibly important that you get an updated contract.
A note about the updated QBCC contract:
QBCC has updated their domestic building contracts, however in my view the updates do not fully capture the extent of the changes required by the Perera v Bold case; and
Therefore, I recommend tradies and subbies seek legal advice before using the QBCC domestic building contract.
Just a note for those clients or people on my list, who have TradeBox terms:
The TradeBox domestic trade contracts provided brief explanations on the first page of the contract schedule (called the Project Details Document). The explanations were not exactly what the District Court stated it would like, so the most recent update of the domestic building terms has updated explanations to meet (and exceed) the court's expectation.
An area has also been added to the warning so that if the TradeBox customer wants to add a special condition there is a place to insert the new clause numbers and brief explanations on the front page of the schedule. However, you will see we have also provided substantial warnings in the guidance notes about making sure any change to the contract price is a fair term, and any other changes to the contract terms and conditions are fair terms too.
End notes
[1] [2023] QDC 99
[2] Khoury v Government Insurance Office (NSW) (1984) 165 CLR 622, 638; Antico v Heath Fielding Australia PtyLtd (1997) 188 CLR 652, 659-660, 675.
Please note
This article was written by Fionna C A Reid, director of law practice Aitchison Reid Building and Construction Lawyers (Aitchison Reid) for TradeBox Australia (TradeBox), so that TradeBox can share the article as guidance with tradies and subbies. Use of this article is subject to TradeBox’s terms and conditions of use stated here: https://www.tradebox.com.au/terms-and-conditions-our-ar-content
Aitchison Reid, like TradeBox, is based in Queensland.
This article has been drafted in reference to building and construction trade businesses in Queensland only.
TradeBox is not a law practice. This article is not legal advice and is for guidance purposes only. Seek advice on matters of interest arising from the commentary, information and guidance in this article.
Aitchison Reid’s content for this article was released to TradeBox in August 2023. Individual liability limited by a scheme approved under professional standards legislation.
