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BUILDING SERVICES CORPORATION (KIT HOMES)
AMENDMENT BILL 1990
NEW SOUTH WALES
EXPLANATORY NOTE
(This Explanatory Note relates to this Bill as introduced into Parliament)
The object of this Bill is to amend the Building Services Corporation Act 1989 so
as to provide certain safeguards for purchasers of kit homes.
The amendments will:
(a) require suppliers of kit homes to be licensed; and
(b) limit the amount of the deposit a person may demand or receive before
delivering part of a kit home.
Amendments to the insurance provisions of the Principal Act will provide
comprehensive insurance cover to purchasers of kit homes which are priced at more
than $1,000 and are supplied by a licensed supplier.
The Bill also contains other amendments of a minor character.
Clause 1 specifies the short title of the proposed Act.
Clause 2 provides for the commencement of the proposed Act on a proclaimed
day or days.
Clause 3 is a formal provision that gives effect to the Schedule of amendments.
SCHEDULE 1- AMENDMENTS
Meaning of "kit home", "rectification order" and "supply"
Schedule 1 (1) (a) inserts definitions of these terms. "Kit home", as defined,
specifically excludes an unregistrable movable dwelling and such other dwellings,
structures or improvements as the regulations may prescribe. "Supply" is limited to
supply for consideration (otherwise than for purposes of resale).
Building Services Corporation (Kit Homes) Amendment 1990
Structures and improvements to which the Principal Act applies
Schedule 1 (1) (b) amends section 3 to make it clear that the provisions of the
Principal Act that mention dwellings apply to any "additional" structure (such as, a
garage or carport) declared by the regulations to form part of a dwelling for the
purposes of the Act, even if there does not exist a dwelling to which that structure
might be regarded as being additional.
Maximum deposits in relation to residential building work
At present, section 8 limits the maximum payment on account that a person may
demand or receive before the commencement of residential building work to 5% of
the contract price where that price exceeds $20,000, and 10% of the contract price
where that price is $20,000 or less.
Schedule 1 (2) substitutes that section so as to provide for a different maximum
percentage in respect of a particular kind of work, if the regulations prescribe a
different percentage.
Regulation of supply of kit homes
Schedule 1 (3) inserts a new Part 2A. Its provisions are to the following effect:
Proposed section 16A prohibits a person from contracting to supply, or supplying,
a kit home otherwise than as or on behalf of a party which is the holder of an
appropriate licence issued by the Building Services Corporation.
Proposed section 16B prohibits a party which is not the holder of a licence from
representing that it is prepared to supply a kit home. The section also prohibits a
person from representing that a party is prepared to supply a kit home if the person
knows that that party is not the holder of a licence.
Proposed section 16C provides that contracts relating to the supply of kit homes
(and variations of such contracts) are not enforceable unless they are in writing, have
been signed by or on behalf of the parties to them and sufficiently describe the kit
homes concerned.
Proposed section 16D obliges the holder of a licence who enters into a contract
to supply a kit home to do so under the name shown on the licence and to specify
the licence number in the contract. No other name may be shown in the contract as
the name of the contractor or in such a way that it may reasonably be mistaken for
that or the contractor. (A licence holder with a registered business name, however,
may also refer to that business name in the contract.)
Proposed section 16E limits the amount of the deposit a supplier may accept
before part of a kit home is supplied, in the same way as section 8 of the Principal
Act limits such deposits in relation to residential building work. However, as with
the proposed substitution of section 8, the regulations may prescribe different
percentages in respect of particular kinds of kit homes.
Proposed section 16F deals with exhibition homes and the supply of kit homes
designed to enable the construction of dwellings similar to those exhibited. It
requires that a copy of the relevant plans and specifications be prominently displayed
at an exhibition home. If any proposed contracts to supply the appropriate kit home
are to be in a standard form, a copy of that form of contract must also be displayed.
The contract is, in any case, to be taken to provide that the kit home will conform
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Proposed section 16G is concerned with contravention of certain sections of the
Act relating to contracts. It provides that a party that enters into a contract in
contravention of section 16A (which deals with unlicensed contracts or supply), or
that is unable to enforce a contract because it does not comply with section 16C
(which requires the contract to be in writing etc.), is not entitled to damages or to
enforce any other remedy in respect of a breach of the contract committed by any
other party to it, but is liable for damages and is subject to any other remedy in
respect of a breach committed by that party.
Proposed section 16H provides that rights that a person may have other than
under the Act are not affected by the proposed Part, and that the proposed Part does
not apply to contracts made before its commencement (or subsequently applied
under such a contract).
Licences
At present, sections 17 and 18 (which deal respectively with misrepresentations
about licences or certificates and representations generally) are contained in
Division 3 of Part 2 of the Principal Act, a Part regulating residential building work
and specialist work.
Schedule 1 (4) converts Division 3 of Part 2 into Part 2B so as to apply the
provisions of sections 17 and 18 both to Part 2 and to the new Part 2A, which
regulates the supply of kit homes.
Schedule 1 (5) amends section 17 so as to prohibit misrepresentation as to the
holding of licences concerning kit homes.
Schedule 1 (6) amends section 19 to enable application to be made for a licence
authorising its holder to contract to do residential building work or specialist work
or to supply kit homes (for construction by another party) or any combination of
those things.
Schedule 1 (7) amends section 20 so as to empower the Corporation to reject an
application for a licence concerning kit homes on the grounds of doubt as to the
applicant's financial resources to undertake the supply of kit homes envisaged if the
applicant does not satisfy that doubt by means of an acceptable financial guarantee
or otherwise.
Schedule 1 (8) (a) amends section 21 so as to extend the authority conferred by
a licence (where so specified in the licence) to cover the holder's contracting to
supply kit homes.
Schedule 1 (8) (b) amends section 21 to make it clear that a licence authorising
its holder to contract to do residential building work also authorises the holder to
supply the building components necessary for that work.
Schedule 1 (9) amends section 22 to specify that the requirement of that section
that a supervisor for a licence be nominated within a set period (on pain of
cancellation of the licence) applies only if the licence authorises its holder to carry
out residential building work or specialist work.
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Building Services Corporation (Kit Homes) Amendment 1990
The amendments made by Schedule 1 (10) and (11) bring the supply of kit homes
within the scope of the existing provisions of the Principal Act in relation to warning
notices and the production of authorities, respectively.
Dispute resolution and discipline
Part 4 of the principal Act (sections 49 - 83) deals with dispute resolution and
discipline.
Schedule 1 (12) inserts definitions of "defective kit home" and (in relation to a kit
home) "failure to deliver" and "purchaser" into section 49, the definition section of
the Part. A defective kit home is one which is incomplete, incapable of assembly (or
capable of assembly only in a manner which would result in a dwelling that does not
satisfy the requirements of an Act or Ordinance relating to dwellings) or comprised
of materials inferior to those represented in the contract of sale.
The amendments made by Schedule 1 (14) (a), (c) and (e) and (15)-(22) adapt the
existing provisions of the Principal Act so as to render the suppliers of kit homes
subject to the provisions relating to conduct, complaints, rectification, investigations
and disputes. The existing provisions of the Principal Act regarding hearings,
suspension, return of cancelled, suspended or varied licences and certificates,
enforcement of cash penalties and payments of costs apply to suppliers of kit homes
without the necessity for any amendment.
Insurance
Schedule 1 (24) amends section 90 to specify that the provisions of the Principal
Act concerning insurance apply to matters concerning the supply of kit homes only
in those cases where the contract to supply the kit home was entered into (or where,
in the absence of a contract, the actual supply took place) after the date of the
commencement of the amendment.
Schedule 1 (25)-(27) and (29) amend the principal Act to bring matters
concerning the supply of kit homes within the scope of the existing provisions
relating to comprehensive insurance protection, the payment of insurance premiums,
notices to be served on the insured and discretionary payments.
Consequential amendments
Schedule 1 (30), (31) and (32) make consequential amendments to the sections
of the Principal Act dealing with the objects of the Corporation and its Trust
Account, and to certificate evidence provided by the Corporation.
Schedule 1 (33) amends the regulation-making powers contained in section 140
to cover matters relating to the supply of kit homes.
Minor amendments
Schedule l (14) (b) and (28) make minor amendments.
The proposed amendment to section 51 provides that conduct described in section
51 (1) ( b), (c) and (d) will be improper conduct for the purposes of disciplinary action
under the Act if it is engaged in by holders of supervisor or registration certificates.
The proposed substitution of section 98 (2) ensures that, although the Building
Services Corporation is subrogated to the rights of any building contractor against
the manufacturers or suppliers of defective material or the designers of a defective
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The expression "penalty unit", used throughout the Bill, has its basis in section 56
of the Interpretation Act 1987. At present, 1 penalty unit is equivalent to $100.
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