Check building guarantees - ComCom

The Commission’s warning comes after the Christchurch District Court yesterday fined a Canterbury builder for failing to supply promised Homefirst building guarantees to a number of home owners.

Flaxmill Ltd director Gerard Thomson was fined $12,800 and ordered to pay $16,700 compensation for false representations about providing Homefirst building guarantees to home owners.

Thomson had earlier pleaded guilty to three charges under section 13(i) of the Fair Trading Act 1986.

The Commission took Thomson to court after three home owners complained they had not received the builder’s Homefirst guarantee that Thomson had said he would apply for.

As it turned out, Thomson never intended to apply for an independent guarantee – which meant his customers didn’t receive the protection they were led to believe they had.

The home owners were unable to remedy the situation as a Homefirst Guarantee application must be made before building work starts.

Commissioner Anna Rawlings said the complainants should have had the peace of mind that they had a Homefirst Guarantee in place if things went wrong, but they were let down.

She said two of the complainants discovered faults in Flaxmill’s workmanship which may have been covered by the guarantee.

But Thomson’s failure to make the application meant they didn’t receive the independent cover that they should have.

Rawlings said representations about building contracts need to be scrupulously accurate and, whether making promises orally or in writing, the building services provider needs to do what they have committed to do.

“We also encourage consumers to follow up where possible to make sure they are getting the service they think they are getting.”

Thomson’s case was not the first time the Commerce Commission has acted against builders who have given false representations about building guarantees.

In 2010, two Balmoral Homes Limited directors were taken to court for telling customers they would receive Master Build Guarantees for their work – even though the company was suspended from the Registered Master Builder Federation.

They were fined $15,000 each and ordered to pay a total of $97,000 in reparation and a further $30,000 for emotional harm reparation for six complainants.