Misleading Conduct in Home Building Contracts

In home building, misleading or deceptive conduct can take many forms. Perhaps a builder assured you of council approvals for their designs, or provided a cost estimate that was later grossly underestimated. Under Section 18 of the ACL, any conduct in trade or commerce that is misleading or deceptive, or is likely to mislead or deceive, is prohibited. This principle was underscored in the Australian Competition and Consumer Commission v TPG Internet Pty Ltd case, emphasising that even conduct that could lead someone astray may be misleading and deceptive.

The High Court of Australia in Butcher v Lachlan Elder Realty Pty Limited [2004] HCA 60 at 109 enunciated principles to assess whether conduct is misleading and deceptive.

“The question whether conduct is misleading or deceptive or is likely to mislead or deceive is a question of fact. In determining whether a contravention of s 52 has occurred, the task of the court is to examine the relevant course of conduct as a whole. It is determined by reference to the alleged conduct in the light of the relevant surrounding facts and circumstances. It is an objective question that the court must determine for itself. It invites error to look at isolated parts of the corporation’s conduct.  The effect of any relevant statements or actions or any silence or inaction occurring in the context of a single course of conduct must be deduced from the whole course of conduct. Thus, where the alleged contravention of s 52 relates primarily to a document, the effect of the document must be examined in the context of the evidence as a whole.  The court is not confined to examining the document in isolation.  It must have regard to all the conduct of the corporation in relation to the document including the preparation and distribution of the document and any statement, action, silence, or inaction in connection with the document.”

False Representations and Building Contracts

A specific area of concern under the ACL is Section 29, which addresses false or misleading representations about the price of goods or services. This is particularly relevant in building contracts, where builders might initially quote a fixed price that later escalates due to unforeseen requirements by the council. The Doepel & Associates Architects Pty Ltd v Hodgkinson case is a pertinent example, highlighting the legal repercussions of misleading cost representations in the building industry.

Representations About Future Matters

Section 4 of the ACL deals with representations about future matters, such as a builder’s assurance about council approvals or the final cost of a project. This section presumes such representations to be misleading if the person making them does not have reasonable grounds for their claims. As elucidated in the Williams, William v Williams, William case, the burden of proof lies with the person making these future representations. This is crucial in construction contracts, where outcomes like council approvals are often subject to change.

The Importance of Contract Terms

Owners should be aware of the terms and conditions of their contracts. Owners may not have a right to claim misleading and deceptive conduct if their contract provides disclosures or waivers. Owners would benefit from having a construction lawyer review and advise on their construction contract prior to signing.

Seeking Legal Advice and Recourse

Given these legal principles, it becomes imperative for homeowners to seek professional legal advice when they face such challenges. A construction lawyer can provide clarity on how your contract terms align with the provisions of the ACL and advise on the best course of legal action. They can also assist in collating evidence to substantiate claims of misleading or deceptive conduct.

Understanding Your Rights- Dealing with Contract Variations in Home Building - Featured Image

Your Legal Options

If you’re embroiled in a dispute due to misleading conduct by your builder trying to increase your contract price due to council changes, then you may have several legal options. These include negotiating a revised contract, seeking mediation to resolve disputes amicably, or, in more severe cases, pursuing legal action to seek compensation or other remedies for any losses incurred.

Navigating contract variations in home building can be daunting, but being armed with knowledge about your rights under the ACL can empower you to address these challenges effectively. Always stay informed and seek professional advice to safeguard your interests.

If your home building contract is facing variations, and you suspect misleading conduct by your builder, don’t hesitate to seek help if your loss exceeds $30,000. As an experienced construction lawyer, I am able to guide you through these complex issues and advise and represent you to enforce your rights. Contact me to discuss your situation and explore your legal options.