Issue Date:  -  Monday, 15 January 2001

Consumer wins battle with builder over GST

A WA consumer will not have to pay $6401 in GST after the Building Disputes Committee found his home builder was wrong to impose the additional charges.

The BDC found Commodore Homes (WA) Pty Ltd was not entitled to pass on the GST cost to customer Paul Glenn Standley under a contract term.

The standard contract term claimed that if further costs were imposed on the builder as a result of new laws, taxes or duties, the contractor would be entitled to increase the price of the job. The contract did not include a specific GST clause.

However, the BDC found that because the contract was signed after the GST legislation was assented to on 8 July, 1999 the cost of the GST on the building work was not a further cost imposed on the builder after the contract price had been agreed to.

Commissioner for Fair Trading Patrick Walker said that while the decision was only binding on Mr Standley's $84,947 home-building contract, the finding would be of interest to other people.

They included those who entered home-building contracts after 8 July 1999 or where the builder made certain representations on the likely impact of GST on a project.

“This type of contract term is common to many contracts which means other home-building consumers may have a similar case to argue,” Mr Walker said.

“This is particularly the case for contracts that do not contain a special GST clause,” he said.

The BDC also considered representations made by a staff member of the builder at a meeting before work commenced, at which the owner was told GST costs would be minimal because the house would be substantially finished by 1 July, 2000.

It found that, based on this information, the consumer made some choices that were more expensive than he would have done if he had known GST costs would be more than minimal.

As a result, the BDC found Commodore Homes (WA) Pty Ltd could not claim an amount of GST from the consumer contrary to its representations, even if it were entitled under the contract to recover GST.

People with complaints of a similar nature should contact the Building Disputes Committee for advice.