9/3/01
For the first time the State Government is to take up the legal fight for a new-home buyer in dispute with a building company over the payment of the Goods and Service Tax.
Consumer Affairs Minister John Kobelke today announced the Government would employ rarely used powers under the Consumer Affairs Act to defend an appeal by a building company against the new-home buyer.
Mr Kobelke said the clause in the home building contract at the centre of the dispute is common to many such agreements used in Western Australia.
He said the Ministry of Fair Trading had received more than 50 complaints from new-home buyers over disputes with builders over payment of the GST while community action groups claimed they knew of about 250 cases.
"The home buyer we are representing is potentially a test case for the large number of people who entered into similar building contracts around the time the GST was introduced," Mr Kobelke said.
"Many new-home buyers are now claiming they paid thousands of dollars more for their new homes than they expected to.
"For those consumers, some of whom are currently embroiled in similar disputes, the outcome of this particular case will be of great interest."
Mr Kobelke said Cabinet had endorsed a request by Commissioner for Fair Trading Mr Patrick Walker to take up the case in District Court - and associated costs - on behalf of the home-buyer Mr Paul Standley.
He said the appeal challenges Mr Standley's win before the Building Disputes Committee several months ago, that found Commodore Homes (WA) Pty Ltd was not entitled to pass on the GST cost under a home building contract term.
"A decision has already been made in this case by the Ministry's Building Disputes Committee and we believe that decision should stand," Mr Kobelke said.
"In cases such as these, quite often the home-buyer backs away from expensive legal action because the cost is potentially greater than the amount that is in dispute.
"I would not like to see the situation develop by which the party with the most money can use the cost of the legal process to force the other party to concede to their position."
Mr Kobelke said, in the case of Mr Standley, the amount in dispute was $6401 on the contract of construction of a house for about $85,000.
He said it was estimated that in the worst case scenario costs of the legal action would be up to $15,000 - if the appeal was lost and the Government was forced to pay legal costs of Commodore Homes.
"There is a principle at stake here and its importance to a great number of Western Australian new-home buyers deserves the full support of the Government," Mr Kobelke said.
"Our action has ensured that justice will run its full course in this case rather than collapse due to financial constraints."
Media contact: Zac Donovan (08) 9222 9211
