Building Work Contractors Act 1995 (SA) and the 'Simple Works Contract' developed by the Australian Institute of Architects and the Master Builders Australia – whether a builder is entitled to payment according to certificates issued for work done pursuant to such contracts, even though the home owner has legitimate claims for rectification work and for which the home owner could bring proceedings by way of defensive set-off and counter-claim.
The Building Work Contractors Act 1995 (SA) (Act)does not displace the common law remedies available under contracts for domestic building work. Whether a builder is entitled to payment according to certificates issued for work done even though the other party has rights of set-off or remediation will depend on the construction of the contract.
The contract was executed in late 2012 for the construction of a new residence and renovation of an old Church Hall. Architects were appointed by the owner (defendant) to administer the contract, inspect the contract works, issue progress payment certificates and certify practical completion. Practical completion occurred on 31 July 2014. Progress Payment Certificate 11 was issued by the Architect in accordance with the contract on 3 September 2014, in the sum of $58,875 and a further Progress Payment Certificate 12 was issued on 3 November 2014, in the sum of $99,484.79. Under the contract, any certificate given was required to be paid within seven calendar days.
The certificates were not paid by the defendant on the basis that certain works were not undertaken in a proper and workmanlike manner.
Cirocco Constructions (plaintiff) argued that as the certificate provisions in the contract were satisfied, the obligation to make the two payments arose, irrespective of the legitimacy of any remedial work claims.
Tilmouth J held that there is no basis upon which to conclude that the Act displaces common law remedies available under domestic building work contracts.
Whether a builder is entitled to payment according to certificates for work done even though the other party has rights of set-off or remediation was held to depend on the construction of the contract.
His Honour held that on the proper construction of the contract, there was no doubt that it provided for the plaintiff's right to enforce certified payments, undiminished by any rights of set-off and irrespective of an existing dispute about remedial work.
Judgment was entered in favour of the plaintiff in the sum of $99,484.79. The defendant still has a claim for rectification. Proceedings by way of defensive set-off and counter-claim can still be brought.