Builder ordered to pay nearly $5k for faulty gazebo installation

A recent Disputes Tribunal decision has highlighted the risks and consequences of incomplete contracts and inadequate workmanship in residential construction – leading to a significant financial penalty 

In the case of MC & KC v V Ltd (the Builder), V Ltd was ordered to pay $4,795.50. Here is an overview of the case: 

MC and KC engaged BX, trading as B Construction, to supply and erect a QT-manufactured louvred gazebo as part of their new home build for an agreed price of $38,842.40. A $15,000 deposit was paid in March 2023.  

In June 2023, BX incorporated V Ltd, through which he now traded, which assumed responsibility for completing the project. 

Producer Statement dispute 

The initial agreement excluded the cost of a producer statement. BX told the clients it was not required because the gazebo was under 30m². However, since the gazebo was included in the consented house plans, he should have checked whether a producer statement (PS1) was needed. 

BX later invoiced $2,070 for the PS1 and stated the project would not proceed unless this was paid. MC and KC paid under protest, after BX said he would not complete the job unless MC and KC paid him $2,070 for the PS1. 

By November 2023, the gazebo was erected but faults were immediately apparent. The downpipe was missing, flashings were inadequately installed, and sealant had not adhered properly. After repeated requests for remediation went unanswered, MC and KC engaged the manufacturer, QT, to complete the work. 

Non-compliant contract and improper variation 

The Tribunal found the contract lacked the necessary elements required for a contract over $30,000, as set out in the Building Act (BA) and regulations.  

“If BX had been complying with the Building Act, he would have prepared for signature a written contract that, inter alia,* contained provisions regarding variations to the contract,” said Disputes Tribunal Referee Meyer. 

The Tribunal found that BX had not followed proper procedure to formalise a variation for the PS1. Because no signed variation document was prepared, V Ltd was not entitled to recover this cost. The Tribunal found BX should have identified the need for a PS1 from the consented plans used to prepare the quote. 

“In this case, the fair thing to have done would have been for BX to explain why the variation was required, invoice it and proceed with the work for which he had been contracted to carry out, and for which a deposit had been paid,” said Meyer.  

“The Building Act requires him to provide a PS1 if one is legally required – and it was here – so, once he had completed his work and provided the PS1, he could then have claimed the cost in the Tribunal. The ultimatum set out in his email of [13 November 2023] was not the way to deal with a variation as contemplated for residential building work as required in the Building Act.” 

QT’s inspection identified missing components, faulty flashings and incorrect pitch. The Tribunal accepted this report as credible, noting BX had not produced a competing assessment. The incorrect levels were deemed a substantial breach of both the Building Act and the Consumer Guarantees Act. The Tribunal held that the workmanship failed to meet the required standards of reasonable care and skill. 

Right to remedy not denied 

MC and KC made repeated efforts to have BX return to rectify the issues. The Tribunal found that BX had no intention of returning and had already indicated a breakdown in the relationship. In such cases, both the Building Act and Consumer Guarantees Act allow consumers to engage another provider to remedy the work at the original contractor’s cost. 

As a result, the Tribunal ordered V Ltd to refund the $2,070 PS1 charge and reimburse QT’s remedial work costs of $2,725.50, for a total of $4,795.50. 

 

Key lessons for builders 

Defend yourself 

Ensure you attend any Disputes Tribunal hearings and engage the services of a lawyer. 

Pricing must account for consent requirements 

Builders quoting on work that is included in consented plans must factor in compliance documentation such as PS1s from the outset. Builders are expected to review a copy of the plans and identify if a PS1 is required.  

Assuming exemptions without checking verification risks cost disputes and legal liability. 

Compliant contracts are essential 

Contracts for residential building work over $30,000 must include clearly documented variation processes. Informal agreements or ultimatums are not compliant and will likely be unenforceable.  

Good communication can save money 

Builders who disengage from clients or refuse to return may forfeit their right to remedy. That means clients may lawfully appoint another provider and seek reimbursement under both the Consumer Guarantees Act and the Building Act. Maintaining dialogue and responding within reasonable timeframes can preserve goodwill and reduce exposure. 

Failure in communication can lead to builders failing to address issues in a timely and competent way.  

 

* Inter alia is a Latin phrase meaning ‘among other things’. It is often used in legal contexts to highlight that the issue or example mentioned is just one of several under discussion.