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WA’s District Court has answered some important questions about the law governing building and construction in WA.

In Malatynksi v Ranclaud [2017] WADC 75, Judge Goetze:

(a)  upheld previous WA District Court decisions that a builder not registered under the (now repealed) Builders’ Registration Act 1939, could not recover any money at all for their building work, even if they were claiming restitution for the fair value of their work, rather than payment under any contract; but

(b)  refused to take this principle of non-recovery by an unregistered builder a step further by ordering that builder to refund to the owner of the building works the amounts already paid for those works.

We expect that Judge Goetze’s finding that unregistered builders cannot recover any payment at all, even on a restitutionary basis (at “fair value”) will lose its significance over time.  The reason is that, since 2011, section 7 of the Building Services (Registration) Act has removed any doubt as to what an unregistered builder can and cannot be paid and in fact, allows recovery of the base cost of labour and material supplies, which according to Judge Goetze, the old Builders’ Registration Act did not allow.

Of greater significance is Judge Goetze’s refusal to award restitution (which in this context, is basically a refund) to the owner of amounts already paid for labour and material supplies even though the owner was wrong about having a legal obligation to make those payments. This is significant because the law usually recognises a right to be refunded payments made under a mistaken belief that the payer was legally obliged to pay.

In this case, Judge Goetze considered that the mistake that underlay the payments did not make it so unjust for the builder to retain those payments that they should be refunded because, despite the builder’s unregistered status, the owner still got what they had bargained for in exchange for their money.

It is uncertain whether the same reasoning would still apply under section 7 of the Building Services (Registration) Act. This new legislation is much more precise and prescriptive as to what payments an unregistered builder can and cannot recover. Arguably, this more prescriptive legislation, whilst allowing builders to recover their out-of-pocket expenses, leaves less room for unregistered builders to justify retaining payments that owners mistakenly believed they had to pay. This is because it will, we expect, be harder to convince a court that the new legislation was intended to allow an unregistered builder to retain such payments, where it prescribes so precisely, what exactly that builder can and cannot be paid for. In other words, the new legislation may, we consider, be read to mean that an unregistered builder can only receive and retain the payments that it specifically prescribes and nothing else.

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*This information serves as a general guide and does not constitute legal advice. It is based on our research and experience at the time of publication. Please consult our knowledgeable Legal Team for any specific inquiries or advice relevant to your circumstances, as the content may not have been updated subsequently.