Variations to Residential Building Contracts in Western Australia

What it is

Section 7 of the Home Building Contracts Act 1991 (WA) sets the form of a variation. A variation of a contract must be in writing setting out all of the terms of, and the cost of, the variation, must show the date of the variation, and must be signed by the builder and the owner or their agents.

Section 3 fixes what "date of the variation" means: the day on which the variation was signed by the last party to sign it.

The copy, and the timing that matters

Section 7(2) requires the owner or the owner's agent be given a copy of the signed variation as soon as is reasonably practicable after it has been signed by both parties, and before the work to which the variation relates is commenced.

That second limb is the one builders miss. It is not enough to paper the variation eventually. The signed copy has to be in the owner's hands before the varied work starts. Section 7(3) makes it the builder's job to ensure both subsections are complied with, with a penalty of $500, and regulation 8 of the Home Building Contracts Regulations 1992 makes it a prescribed offence with a modified penalty of $100.

Those are small numbers. They are not where the risk sits.

The two exceptions

Section 8(1) switches off section 7(1) and (2) for a variation made necessary by either a written direction lawfully given by a person acting under a written law, or circumstances that could not reasonably have been foreseen by the builder when the contract was entered into.

The exception is conditional, not automatic. The builder must give the owner a statement setting out the reason for the variation and the cost to be incurred on account of it, plus a copy of any direction. Section 8(2) allows 10 working days from when the builder received notice of the direction, or became aware or should reasonably have become aware of the circumstances. Miss the window and the exception is gone.

Section 8(3) gives the owner a matching 10 working days to complain under section 17 where the owner disputes that the circumstances were unforeseen.

Section 8(4) shuts the obvious loophole. Unforeseen circumstances do not let a builder vary a contract by reason only of an increase in the cost of labour, including related overhead expenses, or materials. Cost escalation is a rise-and-fall issue under section 13, and dressing it up as a variation does not work.

Where Western Australia parts company with the east

In New South Wales and Queensland an unwritten variation is a recovery problem for the builder by design. Western Australia is different, and the difference is section 27(1). A contract or a provision of a contract is not illegal, void or unenforceable only because a requirement of the Act is not complied with, except as provided in section 13(2) or 26(2) or by an order under section 41(3)(a) of the Building Services (Complaint Resolution and Administration) Act 2011.

Section 7 is not on that list. So a variation that was never written down is not automatically void, and the builder is not automatically barred from recovering for it. What the builder faces is a $500 penalty and an evidentiary fight about what was agreed.

Where the owner's real remedy lives

Not in the Act. Section 17 routes a claimed breach of the contract or of Part 2 to a complaint under the Building Services (Complaint Resolution and Administration) Act 2011. Section 41(2) of that Act sets out what a home building work contract remedy order can do, and two paragraphs matter for variations. Section 41(2)(e) allows an order declaring that a specified amount of money claimed, or money claimed for specified work, is not payable by a person. Section 41(2)(c) allows an order declaring that a specified amount is not payable and, if already paid, that it be repaid.

That is the relief. The Building Commissioner or the State Administrative Tribunal can decide that money claimed for an undocumented variation is simply not payable. Separately, where the complaint is about unconscionable conduct under section 15, section 41(3) lets the Tribunal declare the contract or a provision void from the beginning, or modify the provisions in such manner as the Tribunal considers just.

Building and Energy sets the complaint window at three years from the contract date or the cause of action arising.

The verbal instruction trap

The site conversation is where this goes wrong. The owner says move the wall, the builder moves the wall, the invoice lands three months later and the owner says they never agreed to $14,000. Section 27 means the builder is not shut out, so the builder keeps arguing. But the builder now has no signed document, no dated variation, a section 7(3) offence on the record and an owner who can ask the Building Commissioner to declare the amount not payable.

Write it, cost it, sign it, hand it over, then start.