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5.6 Building

16 Aug 2016 - 16:18 | Version 26 |

Contributed by VictoriaTummer and current to 1 May 2016

Legislative scheme

In the NT, building work is regulated primarily by the following Acts:
  • Architects Act 1963 (NT)
  • Building Act 1993 (NT)
  • Construction Contracts (Security of Payments) Act 2004 (NT)
  • Electrical Workers and Contractors Act 1978 (NT)
  • Encroachment of Buildings Act 1982 (NT)
  • Planning Act 1999 (NT)
  • Plumbers and Drainers Licensing Act 1983 (NT)
  • Construction Industry Long Service Leave and Benefits Act 2005 (NT)

The common law of contract, the Consumer Affairs and Fair Trading Act 1990 (NT) and the Competition and Consumer Act 2010 (Cth) also apply (see Contracts and Consumer Protection ).

All building work must comply with the Building Act 1993 (NT), Building Regulations 1993 (NT), and the National Construction Code (NCC), which is comprised of the Building Code of Australia and the Plumbing Code of Australia. The NCC establishes standards for materials and work, site requirements, construction methods, excavation, earthwork and other building matters. The NCC sets out recognised Australian standards for buildings and takes into account the NT's climate and exposure to cyclones.

Reform

Significant changes to the Building Act 1993 (NT)and the legislative framework regulating residential building work commenced operation in 2013. The aim of these reforms was to provide additional consumer protections and increase confidence in the NT building industry by:
  • strengthening the financial and asset requirements for builders to obtain and maintain registration;
  • setting prescribed progress payment stages to reduce instances where progress payments made to builders far exceed the value of work actually completed;
  • providing for statutory consumer guarantees;
  • removing the Home Building Certification Fund and replacing it with compulsory residential building cover that can be accessed by consumers for incomplete or non-compliant work where the builder has died, disappeared, become bankrupt or insolvent, or where the builder's registration has ceased in certain circumstances; and
  • providing for a statutory dispute resolution process where protection under the residential building cover scheme has not been triggered.

The construction industry is an important and challenging industry to regulate and reform. The various stakeholders involved can often have very different interests in policy outcomes and consumers can face significant financial losses if their builder fails. Although these reforms went some way in addressing some of those issues in the building industry, there have been concerns about the increased paperwork, duplicated processes and associated costs with the new system. The NT Government has recently commissioned a report to review and make recommendations on the current regulatory framework, known as the Cureton Review. This is currently under consideration, which may follow with even further reform, particularly relating to the residential building cover scheme.

The building process

There are various ways to go about building or renovating a house. The first step of the process is to prepare drawings of the proposed work and obtain a building permit for the work from a building certifier. In the process of building or renovating, a person may work with a variety of trades people and professionals, including an engineer, draughtsperson or architect, a building certifier, builders, plumbers and government officials. Many people go about proceeding with the building job differently. Some of the options include:
  • hiring a builder who hires all the subcontractors, including the architect/draftsperson
  • hiring an architect who finds the builder and supervises the building work
  • hiring the subcontractors directly, including the architect or draftsperson (basically building the house yourself).

If the owner of land wants to manage the building or renovation of a house on the land themselves, then the owner needs to obtain an Owner-Builder (OB) certificate which allows them to build on one property within six years. OB application forms are available from the Registrar of the Building Practitioners Board or can be downloaded from the Building Practitioner's Board website at http://www.bpb.nt.gov.au/forms.shtml. OBs must read the OB Manual before making an application as there are significant risks and responsibilities in being an OB. Anyone considering becoming an OB should be confident they have the time and skills required, and even consider obtaining professional advice. OBs are required to comply with most of the obligations of a building practitioner, including the requirement to obtain residential building cover prior to construction works starting. This cover will also protect any subsequent owners from structural defects for a period of six years.OBs cannot be companies or trusts and cannot apply for another OB certificate for another property for a period of six years.

Registration

Residential builders undertaking prescribed building works must be registered as one of the following five types of building practitioners:
  • building certifier;
  • certifying architect;
  • certifying plumber;
  • certifying engineer; or
  • building contractor (restricted or unrestricted).

A building contractor (restricted) can only carry out building work for single dwellings, townhouses and residential units of not more than two storeys. A building contractor (unrestricted) can do all single dwellings, townhouses and residential units of any height.

Prescribed building works must be performed by either a registered building contractor or a certified Owner-Builder. Prescribed building works include works over the cost of $12,000 to build any of the following:
  • new single houses and new residential units in residential buildings to any height;
  • verandahs, garages and carports built as part of new single dwellings and residential units;
  • extensions such as living areas, bedrooms and enclosed attached garages to existing single houses and residential units; or
  • retaining walls associated with the actual structure of a single house or residential unit.

Where only renovations or alterations to existing buildings are required, like re-roofing and refurbishing bathrooms, or the entire building works are less than $12,000, there is no requirement for a builder to be registered nor is there a requirement for residential building cover. Similarly, builders undertaking work for commercial or industrial buildings do not need to be registered building contractors.

Applications for registration for building practitioners can be downloaded from the Building Practitioners Board website at http://www.bpb.nt.gov.au/forms.shtml. The Building Practitioners Board must register an applicant if it is satisfied that the applicant:
  • is a fit and proper person;
  • has the relevant qualifications and experience;
  • has net financial assets of at least $50,000, which must be maintained for the whole period of registration; and
  • for building contractors and certifying plumbers, holds a professional indemnity insurance policy.

Points to remember
  • A person who intends to engage a builder or contractor should check that they are registered. The Register of Building Practitioners is available at http://www.ntlis.nt.gov.au/building-practitioners where you can check the registration status of any particular practitioner or locate registered practitioners within a particular area.
  • Owner-Builders do not need to register but do need to obtain an Owner-Builder certificate for any building work on the land which they own. The OB may also be required to undertake a course.

Location and the role of local government

Due to the remoteness of some locations in the NT, most of the provisions of the Building Act 1993 (NT) do not apply outside of declared building control areas. Generally, the Building Act 1993 (NT) does not apply to industry-owned mining towns, Aboriginal communities and pastoral properties, although it is still recommended that you engage registered building practitioners who will agree to carry out the works in accordance with the National Construction Code.

Within the declared building control areas where the Building Act 1993 (NT) applies, there is now a two tier system. Except for attached duplexes and units, building works in locations in Tier 2 (which includes Katherine, Tennant Creek and other areas) do not have mandatory inspection requirements and do not need to obtain occupancy permits. This is due to the difficulties associated with engaging registered building certifiers outside of the Darwin and Alice Springs areas.

Local government plays a limited role in building work, involving itself only in town planning matters (see Planning and development). Building matters are largely regulated by a system of private certification.

Building certifiers

A system of private certification is in place in the NT, although building certifiers must be registered with the Building Practitioners Board. Under this system registered private building certifiers are responsible for issuing building permits and occupancy permits. This means that a builder or contractor will need to engage the services of a building certifier in private industry to get the required building permit before construction commences. Upon completion, an occupancy permit will need to be issued by a building certifier before the building can be occupied.

The public Register of Building Practitioners also includes a list of registered building certifiers and can be accessed at http://www.ntlis.nt.gov.au/building-practitioners/ or by contacting the Building Practitioners Board on telephone number (08) 8936 4082.

Building permits

Before a person can construct, alter, relocate or demolish a building or part of a building, the owner of the building or the person hired by the owner to manage the building works, must obtain a building permit from a registered building certifier. A permit is required for all types of structural work, including minor house renovations and plumbing or drainage services whether or not connected to a building. Permits are not required for chain mesh fencing, fences less than one metre high and free-standing pergola structures with an area of less than 30 square metres.

When making an application for a building permit, a person should provide the building certifier with the following documentation and information:
  • a site plan;
  • any relevant planning approvals or consents;
  • details of the proposed development including drawings;
  • plans, elevations and sections of the proposed building, including all necessary structural details;
  • a copy of the fidelity fund certificate or residential building insurance policy from the building contractor if the work is prescribed building work; and
  • any other information requested by the certifier.

The plans are generally prepared by an architect or a draftsperson, or the builder may organise to have them prepared. All structural plans must be certified by a practising structural engineer. Any plumbing work must also be certified by a registered certifying plumber. A building certifier will not issue a permit until plans have been certified. The building certifier may also require other details, depending on the nature of the building.

The Building Regulations 1993 (NT) provide for mandatory inspection stages at which the builder must notify the certifier upon completion of each of those stages of the works. Building cannot continue to the next stage until the certifier has inspected the works and authorised the builder to proceed. The inspection stages are:
  • pre-pour - prior to pouring footings or ground floor slab;
  • frame - before covering the building's framework;
  • block wall - before pouring reinforced masonry or block walls;
  • fire separation - before covering walls, floors and ceilings to confirm compliance with the fire resistance levels in the Building Code;
  • wet area - before covering waterproofing in wet areas; and
  • final inspection - prior to the issuance of the occupancy permit.

Occupancy certification

When the building work has been satisfactorily completed, the owner must acquire occupancy certification before the building can be occupied. Recent amendments to the Building Act 1993 (NT) have introduced additional certification categories, resulting in the following three tiers:
  1. Occupancy Permit - issued by a building certifier where the building work has been carried out in accordance with the building permit and is fully compliant with the Regulations;
  2. Certificate of Substantial Compliance - may be issued by a building certifier where the building works have occurred under a valid building permit, meets relevant technical standards, but does not fully comply with the Regulations. Acceptable non-compliances might include variations to approved plans, missing documentation or inspections; and
  3. Certificate of Existence - only applicable to buildings completed before 1 May 2016 which may have been unapproved, achieved less than substantial compliance or did not meet the relevant technical standards. The Director of Building Control may issue a Certificate of Existence upon a building certifier's recommendation that the building complies with a reasonable level of safety, health and amenity suitable for occupation.

Insurance

As a result of the 2013 reforms, the Master Builders Association operates a fidelity fund which provides residential building cover to owners where a trigger event has occurred. Trigger events include the builder's death or disappearance, insolvency or bankruptcy, or loss of registration.

Unlike the previous Home Warranty Insurance scheme, the current residential building cover includes cover for both non-completion and non-compliance. Non-completion coverage means that an owner will be covered under this scheme to engage a new builder to complete the works, where a trigger event occurs prior to the completion of construction. Coverage for non-compliance means that the owner will be covered for defects that become apparent within the consumer guarantee period, provided a trigger event has occurred. Benefits provided through the fidelity fund are capped at 20% of the contract price up to a maximum of $200,000.

Although the residential building cover scheme only applies where a trigger event has occurred, the legislation also provides for avenues to address owner dissatisfaction where the builder is still solvent and registered. Where an owner alleges a contravention of a statutory consumer guarantee (see section Consumer guarantee disputes) or disputes the standard of workmanship, the dispute may be able to be referred to the Commissioner of Residential Building Disputes. If an owner considers the builder has committed an offence under the Building Act 1993 (NT)or associated Regulations, has been negligent or incompetent, or is otherwise guilty of professional misconduct, the owner can make a written complaint to the Director of Building Control. More information on this can be found in the section titled Disputes.

Display homes

Display homes can be a great tool. A person who is thinking about building can gather ideas, see the latest materials and fashion, and perhaps even find a builder that builds the kind of home they want. However, display homes can also be misleading. Much of what a person sees in a display home - tiles, kitchen appliances, floorboards, lighting - is often excluded from the standard building contract for that particular model. Often a standard contract will allow a person to choose from a 'builder's range' of tiles, paint colours, kitchen laminates and so on. If a selection outside this range is wanted, a customer is usually charged extra. The person who selects the model based on what they saw in a display home might find themselves either disappointed with the final product or considerably out of pocket, because they will have to pay for all the extras excluded from the contract.

Building contracts

A written contract is now required where a building contractor (restricted or unrestricted) is hired to carry out prescribed building work. While the terms of building contracts are generally negotiable, the Building Act 1993 (NT) and associated Regulations specify certain things which must be included in the contract. It would be a good idea to seek legal advice in this respect.

If the building work is less than $12,000 or the building contractor is the owner builder, a written contract is not required. In respect of small jobs, some builders will prefer to provide a quotation. Once a quotation is agreed to, either verbally or in writing, a contract exists. The absence of a written contract simply means that its terms and conditions are to be implied from general principles of contract law and construction practice (see Contracts and consumer protection ) and now, by the Security of Payment (SOP) legislation (see When a builder has not paid subcontractors below). Such contracts can produce difficulties as builders, who are more familiar with general industry practices, generally have the upper hand in dealings with inexperienced home owners. For this reason, the terms of any contract should be requested in writing. Some written building quotes have terms and conditions contained on the reverse side of the document where they are can easily be overlooked.

A person who agrees to a quotation without first reading its conditions is still deemed to have accepted its terms and conditions and is legally bound by it. The time spent understanding specific conditions and specifications before accepting a quotation is time well spent.

Types of building contracts

The Building Regulations 1993 (NT) now require all residential building contracts to specify a total contract price. As such, building contracts which provide for the builder to recover their actual costs plus a margin (a cost-plus contract) are now prohibited. However, the total contracted price can still vary due to variations in plans, provisional sums or prime cost items. These are items that may be difficult to accurately estimate when the contract is first entered into, as they are provisional on a decision that cannot be made until construction is under way and by then the cost of items are likely to have changed. For example, where tiles are to be used in the construction of a house, the owners usually do not decide on the exact tile to be used until well into construction. Owners should carefully read their building contracts to ensure they understand how the total contract price can be affected.

A contract may also contain clauses that allow the principal or builder to terminate it if its terms are not met. For instance, a contract could contain a clause permitting the builder to terminate if the principal defaults on paying the builder within a specified time. Alternatively, a contract could contain a clause permitting the owner to terminate if the builder fails to progress with work at a satisfactory rate. Before signing a contract, it is wise to review termination clauses carefully.

Termination clauses generally include notice requirements. For example, a Notice of Default may need to be served on the party who is in default, giving them a specified period such as 14 days to remedy it. If the first notice is ignored, a second one may need to be served before the contract can be terminated. If a party is in default and the innocent party follows the termination procedure set out in the contract, the defaulting party will be liable for damages and an action may also be taken under common law or according to the Competition and Consumer Act 2010 (Cth) or the Consumer Affairs and Fair Trading Act 1990 (NT) (see Contracts and consumer protection ).

Many building contracts are based on standard form contracts, such as those contracts available through Master Builders Association NT or the Housing Industry Association. For those owners seeking to secure finance, it is worth noting that many lending bodies prefer a standard form contract.

Relevant Acts

Like any contract for goods and services, a building contract is subject to the terms of the Competition and Consumer Act 2010 (Cth) and the Consumer Affairs and Fair Trading Act 1990 (NT). Consumer protection provisions and remedies for breach of contract may be available under either piece of legislation (see Contracts and consumer protection). Remedies may also be available under common law. A person who suspects their builder may have breached their contract should obtain legal advice as soon as possible.

The Security of Payment (SOP) legislation now applies to both residential and commercial construction contracts. The SOP legislation was introduced to ensure that contractors carrying out building or construction work get paid in a timely manner. For a more detailed overview of the SOP legislation, see When a builder has not paid subcontractors.

The rules regulating the relationship between the parties to a contract are, with a few exceptions, contained within the document itself. Therefore, signing a building contract ought not to be undertaken lightly. The document should be fully read and throroughly understood to avoid future misunderstandings. The builder, architect or other consultant undertaking the work will usually draft the contract or provide their standard terms and conditions. It is important to keep in mind that the builder, architect or consultant will generally seek to include terms and conditions that are favourable to themselves.

Points to remember

* Always use a written contract, but before agreeing to it, read all of its terms. It is generally best to use or amend a standard form contract (such as one available from Master Builders Northern Territory or Australian Standards for a small fee) rather than to use a contract supplied by the builder. If there is any confusion, get legal advice. Where only a quotation is provided, be sure to work out the terms of the contract before engaging a builder or giving the go-ahead for work to start.

* If any confusion arises at any time regarding a dispute or the terms of contract, it is best to seek legal advice before the matter becomes a problem. If the practitioner has breached the Building Act 1993 (NT), has carried out work in a negligent or incompetent way or is guilty of professional misconduct, a complaint can be made to the Building Advisory Services, which may refer the complaint on to the Building Practitioners Board for disciplinary action, which can include financial penalties and suspension of registration.

Consumer guarantees

The Building Act 1993 (NT) now provides for a number of consumer guarantees which must be included in every building contract for prescribed building works (see above at Registration). Any contract provision which attempts to remove or restrict the consumer guarantees is invalid. The guarantees can be relied on by any current owner of the property, provided it is still within the consumer guarantee effective period. For structural defects, this period continues for six years after construction is complete. For non-structural defects, it is a period of one year after construction. The statutory consumer guarantees include:
  • the building work will be carried out in a proper workmanlike manner in accordance with the plans and specifications specified in the building permit and building contract;
  • all materials will be good and suitable for their purpose;
  • all materials will be new unless the contract specifies otherwise;
  • the work will be carried out in accordance with the Act, Regulations and other Territory laws;
  • the work will be carried out with reasonable care and skill; and
  • the work will be completed by the date specified in the contract or, where no date is specified, within a reasonable period.

Common problems
My builder has not shown up on site for two weeks! What can I do?

The action that can be taken depends on the terms of the contract and whether the completion date has passed. If the contract does not have a term requiring the builder to undertake the work diligently and without break, and the completion date has not passed, it may be that the builder is not in breach and there may be little that can be done. It is uncommon for builders to abandon building jobs. If the completion date has come and gone, the person should contact the builder and find out what is happening. If the matter cannot be resolved informally, the contract should provide for a process for resolving disputes. Owners should keep in mind that completion of the works by the specified date is now a consumer guarantee under the Building Act 1993 (NT) and may be able to be dealt with as a Consumer Guarantee Dispute in certain circumstances. If a trigger event has occurred, then the owner may apply to the Fidelity Fund to recover some funds for the non-completion.
I moved in three months ago and already several of the doors will not close properly and a crack has appeared in the wall in the bedroom. What can I do?

The issue of doors that do not close properly is probably more serious than wall cracks, because it indicates movement in the building. The person should contact their builder quickly and seek to have the problem rectified. The owner should check the building contract and confirm whether it is still within the relevant consumer guarantee effective period. If it is and the builder refuses to rectify the defects, the owner should first contact NT Consumer Affairs to seek assistance in resolving the dispute. If this is not successful, the matter may be referred to the Commissioner for Residential Building Disputes by lodging an application and paying the required fee.
I went to a well-known home builder to build my home and now they tell me that I'm going to have to pay for any extras, like a dishwasher, or the floorboards. Will I have to pay?

You should look at the Schedule of Finishes or specifications that form part of the building contract as these should make it clear what is included and what are extras that are not included in the building's scope of works. The owner is liable to pay for any extra items that are not included in the contract. It is unusual for electrical items, such as dishwashers, to be included in specifications.
My builder presented me with a range of tiles to choose from, but I do not like any of them. He says that I have to pay extra if I want a different tile - is this true?

For items such as tiles and exposed timber, it is important to look at the prime cost clauses in the contract. These often specify the type or value of the tiles included as part of the contract. In the case of tiles, it is normal for the prime cost to be limited to a certain amount per metre. A person having their home built should be able to choose any tile as long as it does not exceed this amount. However, if the desired tile is more expensive, say $20 more per metre than the prime cost stipulated, the person will have to pay the $20 per metre difference as an adjustment to the contract price.
I've heard somewhere that new homes have to have smoke detectors and must meet certain energy efficiency requirements - is this true?

Under the NCC it is compulsory to install hardwired smoke detectors in new homes. The NCC also sets out some minimum requirements for the purpose of improving the energy efficiency of the building. The Northern Territory is divided into two climate zones with the main purpose of the energy efficiency measures being to reduce cooling costs, through using appropriate materials, glazing and sealing, as well as optimising air flow throughout the building.
I think my builder is in financial trouble because some of the sub-contractors have been complaining to me about not getting paid. What should I do?

While rumours should not be ignored a person has to be very careful not to breach their contract with a builder by not paying them but paying their subcontractors directly. However, the person should be wary of making any payments, including progress payments, until work has been completed. You should remind your builder of the effect of the SOP legislation (see When a builder has not paid subcontractors )

Dealing with builders

Choosing a builder

With the introduction of registration of all residential builders, finding a qualified builder has become easier. A person intending to engage a builder for a project, house construction, or even a small job, such as erection of a shed or remodelling a kitchen, should go to the Register of Building Practitioners on the Building Practitioners Board website or contact telephone number (08) 8936 4082 for a list of registered builders. In addition to asking for their registration certificate, a person could ask to see references from previous clients or examples of prior work, and talk to people in the building industry about who they recommend for work. The choice of builder, architect and trades people should be made with caution and written contracts always used.

When to pay for work?

The maximum deposit that a builder can ask for is 5% of the total contracted price. The Building Regulations 1993 (NT) now also provide a standard progress payment schedule, which sets out timeframes for payments as the work progresses, as follows:
  1. a deposit of no more than 5%;
  2. no more than 10% on completion of the base stage;
  3. no more than 20% on completion of the frame stage;
  4. no more than 25% on completion of the enclosed stage;
  5. no more than 30% on completion of the fixing stage;
  6. no more than 7% on reaching practical completion; and
  7. at least 3% after the Occupancy Permit has been issued to the owner.

The standard progress payment schedule can be varied if the parties agree to a different schedule in the contract, however the final payment can never be less than 3% of the total contracted price. Owners should never pay for work before it has been completed.

When a builder has not paid subcontractors

A builder will usually contract other tradespeople with the skills required to perform particular parts of the work, such as plumbers, tilers and glaziers. The Security of Payment (SOP) legislation was introduced to protect contractors, subcontractors and suppliers in the building and construction industry from poor payment practices and to ensure that all these parties receive timely payment for the performance of construction work, or the supply of goods and services. Under the SOP legislation:
  • payment provisions which have been used in contracts in the past are no longer enforceable, such as the 'pay if paid' or 'pay when paid' clauses which allowed a contractor to withhold payment to the subcontractor until the contractor had been paid by the principal
  • a clause which allows payment to contractors to occur more than 50 days after it is claimed by the contractor is no longer enforceable and must be read as requiring payment within 28 days after it is claimed
  • where a construction contract does not have a written term dealing with matters in relation to payment, terms are implied into the contract to cover those matters. These include entitlement of the contractor to be paid and to claim progress payments, and the process for making and responding to progress claims.

Most importantly, the SOP legislation implements a rapid and informal adjudication process for determining payment disputes under construction contracts (see Payment disputes). It would be a good idea to seek legal advice in relation to the application of the SOP legislation if an issue arises.

Disputes

When a building contract is entered into, the parties have committed to completing certain obligations in accordance with the terms set out in the contract. Disputes arise when one party alleges that another party to the contract has failed in its performance of one or more of their contractual obligations. The most common disputes relate to work quality, variations to the original plans, and delays in completing the work. Payment disputes are dealt with under the adjudication processes set out in the SOP legislation (see Payment Disputes).

Unsatisfactory work

An owner may be dissatisfied with the work of a builder because they allege that one or more of the statutory consumer guarantees has been breached or they consider the work is not in accordance with what was agreed in the contract - see Consumer guarantees.

Where the dispute has arisen and the contract is still on-foot, the parties should communicate with each other to attempt to resolve the dispute amicably. The building contract should also set out dispute resolution procedures for the parties to follow. It is a good idea to keep records of all communications and put complaints in writing to the builder. This may become helpful evidence if the dispute remains unresolved and escalates to a more formal dispute resolution process.

When a builder goes under

There have been examples in the NT of building companies collapsing mid-way through building projects, which often caused huge losses to consumers. The 2013 amendments attempted to address this, and now a consumer can apply to the Master Builders Fidelity Fund for a contribution where the building works have been left incomplete or non-compliant. Such contribution is capped at 20% of the contract price, up to a maximum of $200,000. See Insurance.

Complaints alleging professional misconduct or breaches of the Building Act 1993 (NT)

Written complaints can be made to the Director of Building Control if there is an allegation of professional misconduct, unsafe or non-compliant work, or offences under the Building Act 1993 (NT) or associated Regulations. The complaint may then be referred on to the Building Practitioners Board to conduct an inquiry where complainants may be required to provide formal evidence.

This is a disciplinary process and not an avenue for dispute resolution between owners and builders. The Building Practitioners Board may impose financial penalties or suspend registration, but is not able to order the builder to pay compensation, or rectify defective or non-complete work.

Dispute resolution processes

Most building contracts contain clauses that provide mechanisms for dispute resolution such as arbitration. Arbitration, as it relates to building contracts, involves appointing an independent person to determine a dispute (see Alternative dispute resolution ). Like a termination clause, an arbitration clause may provide for a series of notices which must first be served on the other party. If the dispute is not resolved as a result of these notices, the matter is referred to arbitration and an arbitrator appointed.

Mediation or conciliation

Mediation and conciliation services are available for free through the Commissioner for Residential Building Disputes (Commissioner). Either party in a residential building dispute can refer the matter for mediation through lodging the approved application form, which is available at the Consumer Affairs website. If the application is accepted, the other party will need to agree to participate in the mediation.

Mediation and conciliation can be very useful in quickly and cheaply resolving disputes, as both parties are involved in negotiating an acceptable agreement, which then becomes binding and enforceable.

Technical inspections

Where an owner alleges that the work carried out by a building contractor is defective, either party may apply to the Commissioner to appoint a qualified person to inspect the work. Such applications must be made within the consumer guarantee effective period relevant to the allegedly defective work, being one year for non-structural work and six years for structural work following the completion of the construction period.

A technical inspection application may be helpful to resolve a dispute where the owner and builder disagree about the quality of the workmanship in the allegedly defective work. However matters which are more technical in nature, such as engineering, design, or testing of materials used, will likely be beyond the scope of these inspections and may require more expert advice.

Consumer guarantee disputes

The Commissioner may hear an application from an owner about an alleged contravention of a statutory consumer guarantee. However, the Commissioner can only consider applications regarding consumer guarantee disputes where no contractual relationship exists between the owner and the builder. This will be the case where, for example, all obligations under the contract have been completed, or there has been a dispute between the parties which has broken down the relationship irretrievably.

Applications must be made within the consumer guarantee effective period relevant to the allegedly defective work. Where the claim relates to incomplete work, the application must be made within 90 days of the date the builder ceased to work. Applications must include payment of the prescribed fee and be made in the approved form, which is available at the NT Consumer Affairs website.

If the application is accepted and the matter proceeds to a hearing, the Commissioner can decide whether or not the builder has contravened the consumer guarantees alleged in the application. If the Commissioner thinks the application involves a complex question of fact or law, the application may be referred to the Northern Territory Civil and Administrative Tribunal (NTCAT). The Commissioner can order the builder to complete the work, rectify defective work, or pay compensation up to the amount of $100,000. However, the decision will need to be referred to NTCAT if the compensation assessed exceeds that amount. NTCAT can also hear applications for the review of decisions made by the Commissioner.

Payment disputes

Consistent with legislation in other states, the Construction Contracts (Security of Payments) Act 2004 (NT) adopts a process of rapid adjudication as the means of providing a short, interim resolution of payment disputes, and to ensure the timely payment of contractors. The legislation is designed to assist a contractor's cash flow and ability to prosecute underlying payment disputes to final resolution by the courts or other contractual dispute resolution processes. The provisions of the Act still apply to the owners under residential building disputes, even where they allege that the builder has performed defective work.

A payment dispute may be a dispute over an amount claimed by a builder which has not be paid by the due date, or has been rejected or disputed, or when security or retention is not released as required under the contract.

The adjudication process is designed to operate alongside the dispute resolution process provided for in the contract. This means that if a party is dissatisfied with an adjudication determination, they may take the dispute to court, or utilise any other resolution process available under the contract, for instance, arbitration as discussed above. The Act specifically provides that payments made as a result of an adjudication determination are payments on account only. This means, that even after an adjudicator has determined that a payment is due, it is open to a party to pursue court proceedings or arbitration in relation to the same subject matter, and for the court to make orders for the repayment of amounts paid pursuant to adjudication under the Act.

The parties can agree on a particular individual as adjudicator at any time (including nominating that person in the contract). Alternatively, parties can agree on the industry body who will appoint the adjudicator to hear any payment disputes which arise. If the contract is silent, when a payment dispute arises, the party seeking adjudication can request an industry body to appoint an adjudicator.

In line with the aim of the legislation to have payment disputes determined as rapidly and inexpensively as possible, the Act provides that the adjudicator acts informally and is not bound by the rules of evidence. The adjudicator also has other powers including the power to arrange for testing, inspect the works, engage experts and award interest on amounts determined to be payable.

Each party bears their own costs for the adjudication, but the adjudicator also has discretion under the Act to order a party to pay costs if that party has been frivolous or vexatious in its conduct of the adjudication. The parties also equally bear the costs of the adjudicator for work done even where the adjudicator is disqualified or dismisses the application (see below). Parties should be aware that they may be required by the appointed adjudicator or prescribed appointer to provide a deposit, or reasonable security, for the costs or anticipated costs of the adjudication.

A person who wishes to invoke the adjudication process does so by notifying the other party and the adjudicator in writing within 90 days from the payment dispute arising. The other party to the contract then has 10 working days to respond. The written application and response must generally include details of the contract, any payment claim giving rise to the payment dispute, and set out all the information, documentation and submissions relied upon by each party.

The adjudicator then has 10 working days to make a decision, but can ask the Construction Contracts Registrar to extend that time. Within that time, the adjudicator must either:
  • decide whether a party is liable to make a payment or to return the security or retention; or
  • dismiss the application without determining it.

If the adjudicator finds the party is liable, the party must pay the adjudicated amount within a prescribed period. If this is not done, the determination can be enforced as a judgment debt, statutory interest accrues, and the contract work can be suspended upon giving prescribed notice. The decision of the adjudicator is final unless and until the dispute is resolved by a court, arbitrator or other dispute resolution process.

If the adjudicator decides to dismiss the application without determining it, for example, because they consider it to be too complex, that decision is reviewable by a Local Court. In either case, the adjudicator must give reasons for their decision.

If a payment dispute arises, and the adjudication process is adopted, each party must act quickly, as there is no provision in the SOP legislation to extend the strict time limits.

Architects

Architects are engaged to design and supervise the construction of buildings, both commercial and residential. Architects offer a range of services, from design and planning, right through to the role of coordinator of all parties involved in the building process, including builders, engineers, surveyors and other subcontractors.

Before hiring an architect a person should discuss the project, services and likely fees with the architect and compare them to others. Ask the architect to show examples of projects they have done for other clients.

The Australian Institute of Architects (AIA) is the professional body for architects in Australia and maintains a list of members as well as providing a guide to finding an architect on their website (see Contact points). The NT chapter of the AIA is based in Darwin and can provide information and assistance to people seeking the services of an architect in the Territory.

The Architects Act 1963 (NT) creates a system of registration for architects, architectural companies and architectural partnerships in the NT. Architects may be removed from the register for fraud, criminal conviction, habitual drunkenness and addiction to narcotics, the giving or taking of 'kickbacks' (bribes) or allowing another person to practise in their name. An unregistered architect is not allowed to call themselves an architect. The Architects Act 1963 (NT) does not cover naval, landscape or golf course architects or architectural draftsmen. A person can make a complaint under the Act in relation to the conduct or operations of a registered architect. A complaint must:
  • be in writing in an approved form
  • set out the grounds on which the complaint is made and the facts relied on by the person to constitute the grounds
  • be signed by the person making it
  • be lodged with the Northern Territory Architects Board.

Determinations by the Board may include dismissing the complaint for frivolity, that no further action is required, reprimanding or fining the registered architect and imposing conditions on, or suspending or cancelling the architect's registration.

The Architects Act 1963 (NT) allows for review of the Board's determination by a Minister and further appeal to the Local Court.

Other building issues

Plumbing

The Plumbers and Drainers Licensing Act 1983 (NT) creates a register of plumbers and drainers who are issued with a licence or registration card by the Plumbers and Drainers Licensing Board. Consumers should request to see a current licence or registration card, demonstrating that the tradesperson holds the relevant qualifications. It is an offence to carry out plumbing or draining without a licence, or plumbing or draining work as a journeyman without a registration card. A journeyman is a tradesperson in the trade or plumbing or draining or both, who works under the direction of an advanced tradesperson and may direct or supervise apprentices or unqualified workers.

Plumbing involves installing, altering, removing or repairing fixtures, fittings and pipes designed to receive and carry sewage or water, and the ventilation of those fixtures, fittings and pipes, and which includes the installing, altering, repairing, maintaining, removing or connecting of a hot or cold water service to land.

Draining involves excavating, installing, altering, removing or repairing subsurface fittings or pipes designed to receive the discharge from soil or water pipes and carry that discharge to a common sewer, drain or septic tank. Apart from this sort of work, an owner-occupier (not a tenant) can do their own repairs. For example, they can install irrigation up to the point of connection with the NT water supply system. The actual connection to the mains water supply must be carried out by a plumber and any underground plumbing work must remain uncovered until the requisite approval to connect is provided.

A certifying plumber must be engaged to prepare the relevant drawings. If no other building work is involved in the project, the certifying plumber must submit the relevant drawings to the Building Advisory Services for auditing and filing in the departmental files. If other building works are involved in the project the self-certifying plumber must submit the plumbing design to the building certifier who is doing full certification work.

Electrical work

The Electrical Workers and Contractors Act 1979 (NT) creates a system for granting licences and permits. It is an offence to undertake electrical work without the requisite licence or permit for the work. However, electrical work done on motor vehicles or electrical circuits or installations, where the voltage does not exceed 32 volts AC or 115 volts DC, and a few other limited areas, is excluded from this prohibition.

Encroachment of buildings

The Encroachment of Building Act 1982 (NT) provides for situations where buildings are constructed in such a way that they encroach upon neighbouring land. Encroachment occurs when a building or part of it extends onto neighbouring land, either overhanging or under the ground. The encroaching owner may apply to have the property encroached upon transferred or leased to them or the adjacent owner can apply to have the encroachment stopped, to reclaim the lost land or seek compensation.

The court has wide powers to deal with these kinds of disputes. In some instances, the court may order an encroaching owner to pay to the adjacent owner compensation equal to potentially more than three times the unimproved capital value of the land encroached upon. Alternatively, the court may order the adjacent owner to lease or transfer the land in dispute to the encroaching owner. Generally, however, the court will order the encroaching structure to be removed.

Building restrictions

Before preparing to build, a person needs to ensure that their plans adhere to any requirements placed on the land, such as zoning, easements, covenants or other restrictions attached to the land. For example, some housing estates have their own guidelines in relation to how far apart houses should be from each other, how many storeys high they can be and so on. The Planning Act 1999 (NT) provides for the planning and control of the use and development of land in the NT, and sets out matters that a consent authority needs to take into account before approving a development application. A person preparing to build or renovate a house or building should make contact with Lands and Planning Services to find about any particular issues that may apply to their plans (see Contact points).

Setbacks

Anyone constructing a new home is required to set the home back from the road and property boundaries. Setbacks are provided for in the NT Planning Scheme. The amount of setback required varies between zones, but for one and two storey residential buildings in urban areas, the minimum setbacks are 6 metres for homes facing primary streets, 2.5 metres for homes facing secondary streets and 1.5 metres for rear and side boundaries. Residential buildings in rural zones require setbacks of at least 10 metres. A person who wants to reduce the amount of setback - that is, build closer to the road or other boundaries - can apply for a waiver.

Contact points

This body is established under the Building Act 1993 (NT) with responsibility for builder registrations, owner-builder applications, developing codes of practice and monitoring builders' professional conduct, including taking disciplinary action where necessary.

Tel: 08 8936 4082
Email: bpb@nt.gov.au
Website: www.bpb.nt.gov.au

Northern Territory Consumer Affairs
Consumer Affairs can provide information about consumer protections provided by law when purchasing goods and services, as well as residential tenancy and building disputes.

Tel: 08 8999 1999 or 1800 019 319
Email: consumer@nt.gov.au
Website: http://www.consumeraffairs.nt.gov.au/Pages/default.aspx

Building Advisory Services (BAS)
This body provides information on the standards required under the Building Act 1993 (NT) and associated Regulations. BAS keep records of all building documents, including plans, permits and certificates, as well as providing a range of FAQs and Fact Sheets which may assist in further understanding the building process.

Darwin
Tel: 08 8999 6435
Email: basfiles.dlp@nt.gov.au

Katherine
Tel: 08 8973 8926
Email: bas.lpe@nt.gov.au

Alice Springs / Tennant Creek
Tel: 08 8951 9218
Email: bas.lpe@nt.gov.au
Website: www.lands.nt.gov.au/building

Director of Building Control
The Director can receive complaints about building practitioners, where there are allegations of professional misconduct, unsafe or non-compliant work, or offences under the Building Act 1993 (NT) and associated Regulations.

Tel:08 8999 8935
Email: bas.lpe@nt.gov.au

Lands and Planning Services
This function of the NT Department of Lands, Planning and the Environment can assist with providing information about the land proposed to be built upon, the NT Planning Scheme and planning restrictions in place, as well as the development assessment process.

Darwin
Tel: 08 8999 8963

Katherine
Tel: 08 8973 8926

Alice Springs / Tennant Creek
Tel: 08 8951 9200
Email: planning.dlpe@nt.gov.au
Website: www.lands.nt.gov.au

Master Builders Association Northern Territory
Master Builders is an industry association for developers, builders and contractors and offers various standard form contracts. Master Builders also provides information regarding insurance, training and dispute resolution.

Tel: 08 8922 9666
Email: info@mbant.com.au
Website: http://www.mbant.com.au/

Master Builders Fidelity Fund
Master Builders operates the Fidelity Fund providing Residential Building Cover under the requirements of the Building Act 1993 (NT). The contacts below can provide information and assistance to both owners and builders.

Tel: 08 8922 9680
Email: info@fidelityfundnt.com.au
Website: http://www.fidelityfundnt.com.au/

Australian Institute of Architects (AIA)
The AIA maintains a list of registered architects and can assist in finding the right architect for your job.

Tel: 08 8936 1820
Email: nt@architecture.com.au
Website: http://www.architecture.com.au/

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