KNOWLEDGE CENTRE

Making Insurance Claims for Incomplete Construction Work

If you’re building a house, you should be aware that the Queensland Building and Construction Commission (QBCC) may be able to provide assistance for any loss that is sustained in the event of defective or incomplete work through the Home Warranty Insurance Scheme.

The catch, however, is that you need to carefully follow the QBCC process and rules which can be very onerous at times, to ensure that your application is not excluded.

One of these conditions is that the relevant building contract must be properly terminated before a claim is made, otherwise it could result in the QBCC disallowing the claim. In a recent decision of Allen & Taylor v Queensland Building and Construction Commission [2020] QCAT 63 the importance of complying with the legislative pre-conditions were emphasised.

In that particular case, the question was whether the homeowners had properly terminated their residential building contract prior to making a claim under the Scheme, which is a condition precedent to being able to access the home warranty insurance. In this case, the builder entered into a contract with the homeowners in early 2016, but little progress was made at the time of termination. In November 2017, the homeowners served a Notice of Substantial Breach for a number of breaches, including failure to complete the standard of work required and terminated the contract.

The Tribunal decided that the contract was not properly terminated under clause 1.2 of the Scheme. This clause sets out that the QBBCC will only pay for losses sustained when the contract with the contractor has been properly terminated. While the homeowner’s contract gave them the right to terminate in the event of a breach by the contractor, the Tribunal held that there was no breach on the basis that:

  • the defects that the homeowners alleged would have been capable of remedy following the completion of the house; and
  • the contractor was both willing and capable of completing the project.

Given that the Tribunal felt that the builder was able to provide a response to the Notice to Show Cause, it was determined that the defects that the homeowners claimed were not substantial enough to justify their termination of the contract. As a result, it was held that they were not able to make a claim under the Scheme.

If you’re concerned about the progress or quality of your residential building project, it’s important that you act carefully if you want to ensure that you can make a claim under the QBCC Act.

 

If you think you may need to bring a claim, contact the team at Enterprise Legal to discuss your rights, obligations, and options to ensure that you aren’t barred from making a claim:

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Minimum Wages to Increase by 1.75% from 1 November 2020

Employers in the construction, clerical, food, manufacturing, telecommunications, storage and wholesale industries are among the many industries whose minimum Modern Award wages will be increasing on 1 November 2020.


Each year the Fair Work Commission reviews the minimum wages contained in all Modern Awards and this year it announced a 1.75% increase to minimum wages on 19 June 2020.

Whilst the wage increases usually apply from 1 July for all Modern Awards, this year the Fair Work Commission postponed a number of increases to industries hit hard by the COVID-19 pandemic. All Modern Awards were broken up to three groups, with Group 1 increases starting on 1 July 2020, Group 2 commencing on 1 November 2020 and lastly, Group 3 commencing on 1 February 2021.

The full list of awards that will be increasing on November 1 include:

Aluminium Industry Award

Animal Care and Veterinary Services Award

Aquaculture Industry Award

Architects Award

Asphalt Industry Award

Black Coal Mining Industry Award

Book Industry Award

Broadcasting, Recorded Entertainment and Cinemas Award

Building and Construction General On-site Award

Business Equipment Award

Car Parking Award

Cement, Lime and Quarrying Award

Clerks—Private Sector Award

Coal Export Terminals Award

Concrete Products Award

Contract Call Centres Award

Cotton Ginning Award

Dredging Industry Award

Educational Services (Post-Secondary Education) Award

Electrical, Electronic and Communications Contracting Award

Food, Beverage and Tobacco Manufacturing Award

Gardening and Landscaping Services Award

Graphic Arts, Printing and Publishing Award

Higher Education Industry-Academic Staff-Award

Higher Education Industry-General Staff-Award

Horticulture Award

Hydrocarbons Field Geologists Award

Hydrocarbons Industry (Upstream) Award

Joinery and Building Trades Award

Journalists Published Media Award

Labour Market Assistance Industry Award

Legal Services Award

Local Government Industry Award

Manufacturing and Associated Industries and Occupations Award

Marine Towage Award

Maritime Offshore Oil and Gas Award

Market and Social Research Award

Meat Industry Award

Mining Industry Award

Miscellaneous Award

Mobile Crane Hiring Award

Oil Refining and Manufacturing Award

Passenger Vehicle Transportation Award

Pastoral Award

Pest Control Industry Award

Pharmaceutical Industry Award

Plumbing and Fire Sprinklers Award

Port Authorities Award

Ports, Harbours and Enclosed Water Vessels Award

Poultry Processing Award

Premixed Concrete Award

Professional Diving Industry (Industrial) Award

Professional Employees Award

Rail Industry Award

Real Estate Industry Award

Road Transport (Long Distance Operations) Award

Road Transport and Distribution Award

Salt Industry Award

Seafood Processing Award

Seagoing Industry Award

Security Services Award

Silviculture Award

Stevedoring Industry Award

Storage Services and Wholesale Award

Sugar Industry Award

Supported Employment Services Award

Surveying Award

Telecommunications Services Award

Textile, Clothing, Footwear and Associated Industries Award

Timber Industry Award

Transport (Cash in Transit) Award

Waste Management Award

Wool Storage, Sampling and Testing Award

 

 

The third group of awards that will increase on 1 February 2021 include:

Air Pilots Award

Aircraft Cabin Crew Award

Airline Operations-Ground Staff Award

Airport Employees Award

Alpine Resorts Award

Amusement, Events and Recreation Award

Commercial Sales Award

Dry Cleaning and Laundry Industry Award

Fast Food Industry Award

Fitness Industry Award

General Retail Industry Award

Hair and Beauty Industry Award

Horse and Greyhound Training Award

Hospitality Industry (General) Award

Live Performance Award

Mannequins and Models Award

Marine Tourism and Charter Vessels Award

Nursery Award

Professional Diving Industry (Recreational) Award

Racing Clubs Events Award

Racing Industry Ground Maintenance Award

Registered and Licensed Clubs Award

Restaurant Industry Award

Sporting Organisations Award

Travelling Shows Award

Vehicle Repair, Services and Retail Award

Wine Industry Award

 

To learn more about the Fair Work Commission’s wage increase or to speak to one of our Workplace Relations specialists, contact Enterprise Legal today.

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Top 10 Things That Home Owners Ought to Consider When Entering into a Domestic Building Construction Contract

If you’re looking to enter into a domestic building contract for the construction of a new home or renovations to your existing home, there are many things you’ll need to think about, from the flooring to your paint choices. In addition to all of your aesthetic choices, there are plenty of things you specifically need to consider when it comes to your contract itself, as this will be the backbone of the entire construction project.

 

1. Initial Period

After you enter into a building contract, you will generally have a period of time where you are required to provide the builder with materials including proof of ownership, proof of loan approval and relevant building approvals.

If you need to obtain finance approval prior to being able to commit to the project, make sure the contract documents accurately reflect this to avoid a scenario where you are contractually bound to proceed with the contract, regardless of finance approval. Also make sure you clarify up-front who is responsible to obtain building approval, as often builders advise they will ‘assist’ but the ultimate responsible may lay with the home owner, which is not ideal.

 

2. Progress Payments

Progress payments are payments made to the builder at certain stages of the construction process, which should be clearly set out and identified in your contract. It is important to ensure you are aware of what is payable and at what time and that your contract does not impose any restrictions on progress payments. It is arguably more important that you make sure the work you are paying for has been carried out, in the manner required by the contract.

 

3. Pricing

Your building contract may be a ‘fixed-price’ or ‘cost-plus’ building contract. A fixed price contract is one where the total price is fixed, barring any variations, delays, or extenuating circumstances. The other form of building contract is ‘cost-plus’ where you may be given an estimated final price but the contractor will obtain the materials and services through the building process and pass the costs onto you, as well as charge their own time by the hour. This can become costly quite quickly, so it is always our recommendation that a fixed price contract be entered into, to minimise the risks of ‘blow outs’ to home owners.

 

4. Variations

When negotiating the construction contract, it is very important that the contract contains a clause that variations only be allowed where it is agreed to in writing by both parties, prior to the work the subject of the variation being carried out.

What can often happen is a simple site conversation where the home owner innocently changes a product or selection, thinking it will be the same cost, can end up resulting in a very costly exercise for the home owner. Where builders know that variations have to be subject to writing, they will make decisions more carefully and explain them to home owners’ in more depth, as ultimately the risks in those circumstances lies with the  builders.  

 

5. Defects Liability Period

The defects liability period is the period of time where the builder is required to return to repair any defects. This will usually start at the date of practical completion. It is important to check your contract to determine the length of any defect liability period before you enter into your contract to ensure that it is likely to be sufficient, builders will often try for a six month liability period where as twelve months is industry standard.

 

6. Prime Cost and Provisional Sum Items 

Prime cost items are fixtures and fittings that may be listed in the contract but not specifically identified and costed – usually because the exact type was not decided on at the time of signing – so the price is only an estimate. Ideally, you should avoid prime cost items as much as possible by deciding on as much as possible as early as you can. Provisional sum items are those that are listed in the contract for possible additional work where a builder is only able to make an estimate of the cost at the time. Items such as these should be avoided where possible as it can increase your overall costs.

Sometimes, however both prime cost and provisional sum items are unavoidable, and in these instances we recommend home owners negotiate a certain ‘capped amount’ with the builder, to ensure builder accountability in product estimation and selection.

 

7. Site Investigations

Before construction begins, it is important that your builder undertakes appropriate site investigations to determine the soil type, rocks that may need to be removed, and other things that could lead to unexpected price variations later on. Your contract should include warranties relating to any necessary site investigations, and it is very important that all these latent condition issues are covered off before hand, so as to avoid contract price blow out.

 

8. Date for Practical Completion

The date for practical completion is the date that the construction is scheduled to be completed, barring any unexpected delays. This date should not be left blank on your contract and it should be a realistic estimation of when the project is required to be completed.

 

9. Liquidated Damages

Something to consider when entering a contract is whether you want to include a liquidated damages clause. Liquidated damages are a set amount per day that the builder will pay you for every day past the date for practical completion that the work is not finished.

We always recommend that a liquidated damages amount be specified in the contract, because it will motivate the builder to complete the project on time. If there are no liquidated damages amount in the contract, the main remedies available to home owners for late delivery is a breach of contract claim, and most builders know this is a lengthy and expensive process so home owners are unlikely to go down this route.

 

10. The Builder Themselves

While it might seem obvious, it is important to ensure that your builder has the appropriate licences for the work they are contracted to do. You should also check whether their work is of a quality you are expecting and whether they have received formal orders from QBCC to rectify defective work. If there are a large number of these orders, you may want to steer clear of the relevant builder and engage a different builder instead. Always ask for references as well, and make sure you contact the references or do standard google review searches, to ensure previous good experiences with that specific builder.

 

To ensure you fully understand your contract and that there aren’t any hidden surprises, the team at Enterprise Legal can help. 

Make sure you contact us before you enter into the relevant construction contract, and we will gladly assist in the review and negotiation of same:

☎️ (07) 4646 2621

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Enterprise Legal Knowledge Centre Article - To ‘Make Good’ or Not... Commercial Lease Obligations

If you’re party to a commercial lease that is coming to an end, whether you’re a landlord or tenant, it’s important that you be aware of any ‘make good’ obligations that are part of the lease.

If your lease has a make good clause, it’s important that you understand your obligations, whether it is limited to leaving the premises in good repair, or reinstating to a specific condition, and whether you can avoid the obligation by paying a sum of money, which can provide both landlord and tenant with flexibility. If a lease specifies that the condition of the premises in question ought to be reinstated, or made good, it is probably the case that you will need to comply.

Even in these circumstances, you may not be liable for the total cost if there isn’t a reduction in value of the premises. This is because pursuant to common law, the landlord is only entitled to recover any consequential reduction in value from failing to undertake the reinstatement.

Additionally, in Queensland, section 112 (1) of the Property Law Act 1974 provides that, where a lease requires a premises to be left in good repair at the end of a lease, any recovery is limited to the reduction in value of the premises.

It is especially important to make note and take photos of the condition of the premises at the start of the lease in these circumstances so that all parties can be satisfied of the initial condition, whether a tenant is or isn’t required to make good, it remains important.

The number one tip and consideration is to carefully negotiate the relevant make good requirements at the time of negotiating the lease. Parties are often so excited and focussed on the commencement of the lease, that they omit to take into consideration what the ‘end’ will look like, or they categorise it as a future concern. But when the time comes, if you are required to make good pursuant to the lease, it could impose a number of unintentional onerous conditions on you.

If you’re unsure whether you need to comply with any ‘make good’ conditions that may be in your lease, or want assistance to negotiate reasonably terms at the time of construction of the lease, the team at Enterprise Legal can help you determine the best course of action for you. For the best outcome, call us early in the process:

 

☎️ (07) 4646 2621

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